Regulating Independent Directors Impact in Brics States: Fundamental Issues and Contemporary Challenges
Abstract
The authors of the study investigate institution of independent directors in BRICS state members (Brazil, Russia, India, China, South Africa) as a transplanted element of Anglo-American corporate governance. A goal of exploration is to test the widespread assumption that increasing a number of “independent” directors automatically improves corporate oversight in jurisdictions with concentrated ownership and strong state participation. Methodologically the research relies on comparative doctrinal analysis of legislation, stock exchange rules and soft law codes, complemented by a critical review of empirical studies and statistics on corporate board composition and liability trends. The argument develops in three main parts. First, the legal framework section maps how independence requirements are formulated and enforced in BRICS, highlighting differences in the level, form and strictness of regulation. Second, the “fundamental issues” section links the independent director to contested corporate governance goals (shareholder value versus stakeholder welfare) and to the agency problem under capital concentration, showing why the classic U.S rationale does not straightforwardly apply here. Third, “contemporary challenges” section examines a gap between formal and real independence, specific tensions of independent directors in state-owned or state-influenced companies, incentive structures shaped by reputation, remuneration and liability insurance, and Russia’s anti-sanctions regime as an experimental suspension of board level independence. The authors conclude formal independence criteria and numerical quotas are neither sufficient nor context neutral. In the field of BRICS members the performance of independent directors depends on clarifying whose interests they are meant to protect and on aligning incentives so that genuinely autonomous judgment is possible despite concentrated ownership, state influence and rising personal liability risks.
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