35 Positive Cases and 76 Penalty Notices: Independent Directors' Duties Enter the "Substantive Implementation Era"

AI · How Do Independent Directors Use Innovative Supervision Methods in Positive Cases?

Reported by Lei Chen, 21st Century Business Herald, Beijing

The independent director system is undergoing a profound transformation. According to the recent “Implementation Brief of the Independent Director System (Issue 8)” released by the China Association of Listed Companies, by 2025, 35 positive cases of independent directors fulfilling their duties have emerged in the capital market. Meanwhile, 76 independent directors were penalized by regulators for inadequate performance, with the highest fine reaching 1.2 million yuan.

These contrasting data points outline a clear trajectory of the independent director role shifting from “formal compliance” to “substantive performance.”

35 Positive Cases: Five Major Paths Reshaping Duty Fulfillment

The 35 typical cases selected by the China Association of Listed Companies show that the way independent directors perform their duties is undergoing a substantial change.

In the area of financial supervision, a listed company in 2023 was found to have recognized revenue without actual shipment, overstating operating income by 223 million yuan. After the independent directors and audit committee identified issues during the annual audit, they strengthened communication with the auditors, urged the company to correct errors before the annual report disclosure, and retrospectively adjusted relevant annual and interim financial statements.

Another company received a warning letter from regulators about delayed capitalization of construction-in-progress but did not rectify it promptly. The chair of the audit committee, an independent director, organized three special meetings and conducted on-site inspections, ultimately pushing the company to correct errors in the 2024 annual report.

In investigation and verification, independent directors have begun employing hard measures such as independent third-party audits.

A listed company in 2024 contracted 65.63 million yuan for general contracting services from related parties. Due to delayed recognition of related-party equity changes as related-party transactions, the independent directors proposed commissioning independent third-party asset valuation and audit agencies for special verification, holding four independent director meetings to verify the fairness of the transactions. Another company saw its donation amount surge from 25.71 million yuan in 2021 to 400 million yuan in 2023. The independent directors paid close attention and requested a third-party accountant to conduct a special audit. The audit found no abnormalities, addressing market concerns.

In terms of urging rectification, independent directors demonstrated ongoing follow-up.

A listed company faced risks of mandatory delisting due to non-operational funds occupation by its controlling shareholder. Three independent directors sent three supervisory letters between May 2024 and February 2025, ultimately helping the company settle all occupied funds through “cash repayment + debt offset.” Another company’s actual controller failed to fulfill performance commitments on time. The independent directors repeatedly pressured the chairman, ultimately helping the company recover about 170 million yuan in performance compensation for 2021 and 2022 by December 2025.

76 Penalties: Five Major Violations Reveal Duty Risks

Contrasting with positive cases, in 2025, 76 independent directors were penalized or subjected to regulatory measures by the CSRC, local regulators, and stock exchanges for violations, involving 29 cases. The most common violation was failure to effectively supervise financial reporting and disclosure, accounting for 62.1%.

In cases of financial reporting supervision failure, many companies involved fabricated contracts, invoices, bank receipts, etc., to create fake sales transactions or artificially inflate revenue and profits through manipulated business links. The relevant independent directors generally failed to fulfill their diligent responsibilities. One listed company artificially increased its 2021 revenue by 115 million yuan through fictitious trade, accounting for 86.54% of the disclosed revenue for that period. The then-chair of the audit committee signed the annual report without faithfully performing duties, resulting in a 500,000 yuan fine from the CSRC and public censure from the stock exchange.

The second major violation involved misappropriation of funds and illegal guarantees. A listed company’s actual controller provided 336 million yuan in guarantees for related parties without internal approval and failed to disclose 55 major lawsuits. Seven independent directors, despite the audit firm issuing non-standard unqualified opinions and related litigation information being publicly available, did not actively perform their duties. They were ultimately warned and fined by the CSRC.

Regarding penalty severity, the CSRC and local regulators imposed administrative penalties on 35 independent directors, with fines ranging from 90,000 to 1.2 million yuan, averaging 482,000 yuan; 29 independent directors received warning letters; and 43 faced disciplinary actions from stock exchanges. Notably, members of audit committees became a key group of those penalized, with many held directly responsible for violations of information disclosure due to failure to perform prior review and supervision functions.

This round of reform in the independent director system centers on shifting from “identity compliance” to “substantive performance.” The 2025 practical examples show that regulators are increasingly defining specific behavioral standards for diligent and responsible independent directors.