Journal of Research and Development in Comparative Law

Journal of Research and Development in Comparative Law

The Comparative Study of the Institution of Independent Directors in the Legal Systems of Iran and Russia

Articles in Press

Document Type : scientific research paper

Authors
Seyed Foad Alavi 1
Saeed Siahbidi Kermanshahi 2
1 Imam Sadiq University
2 University of Tehran
10.22034/law.2026.2067663.1681
Abstract
The institution of independent directors, as one of the vital pillars of modern corporate governance, has increasingly gained attention from various legal and economic systems worldwide over the past two decades. This institution is designed and implemented with specific objectives, including enhancing transparency in corporate decision-making processes, mitigating potential conflicts of interest between executive managers and shareholders, and ensuring effective protection of minority shareholders’ rights. The significance of this role is amplified in transitional economies, which have a long history of state ownership and management. In this regard, the present research conducts a comparative study of the institution of independent directors in Iran and Russia. Both countries, having experienced a transition from centralized state-controlled economies to market economies, face unique challenges in establishing and operationalizing this institution. This study particularly focuses on aspects related to the financial independence of directors and the nature of their relationships with government entities and major shareholders, which can impact the actual effectiveness of this institution. The main research question revolves around elucidating the differences and similarities in the formation and functioning of the institution of independent directors in the legal systems of Iran and Russia, as well as examining the cultural, economic, and political contexts influencing it. The research methodology is descriptive-analytical with a comparative approach, analyzing relevant laws, regulations, and legal and economic literature in both countries to compare the challenges, characteristics, and achievements of the independent director institution. The results of this analysis indicate that despite structural differences and specific legal frameworks in each country, there are common and profound challenges concerning the assurance of true independence for independent directors and the effective oversight of their performance in both legal systems. These challenges often stem from ownership structures, the influence of state entities, and the incomplete maturity of corporate governance culture. The article’s findings emphasize that adopting a gradual and adaptable process in legislating and implementing the requirements for independent directors, coupled with educating and raising awareness among stakeholders, can lead to significant improvements in the efficiency and effectiveness of this key institution in both countries and contribute to strengthening capital market trust.
Keywords
Conflicts of Interest
Independent Directors
Iran
Russia
Transparency

Subjects

1.       Armstrong, C. S., Core, J. E., & Guay, W. R. (2014). Do independent directors cause improvements in firm transparency. Journal of Financial Economics, 13(2), 383-403. https://doi.org/10.2139/ssrn.2031801
 
2.       Bameri, Z., & Safa, M. (1400). The effect of independent directors with prominent connections on financial trade credit in companies listed on the Tehran Stock Exchange. Journal of Ethics and Behavior Studies in Accounting and Auditing, 1(1), 141-160. https://journals.iau.ir/article_687742.html  (in Persian) 
 
3.       Baum, H. (2016). The rise of the independent director: A historical and comparative perspective. Max Planck Private Law Research Paper, 16(20), 4-6. https://ssrn.com/abstract=2814978
 
4.       Clarke, D. C. (2007). Three concepts of the independent director. Delaware Journal of Corporate Law, 32(1), 73-111. https://ssrn.com/abstract=975111
 
5.       Dinga, A. K. (2009). Ownership structure and firm performance in the UK: Evidence from the agency perspective. Working Paper University of Durham. https://doi.org/10.5281/zenodo.10625904
 
6.       Dmitriev, E. O. (2013). Place and role of independent directors in the board of directors (supervisory board) of joint stock companies. Herald of Omsk University, 3(13), 127-134. https://herald-journal.omsu.ru/issues/136/6426.php  (in Russian)
 
7.       Eskini, R. (1388). Commercial Law: Commercial Companies (11th ed.). Tehran: Samt Publications. (in Persian)
 
8.       Federal Law of 26.12.1995 N 208-FZ “On Joint Stock Companies” (1995). (in Russian)
 
9.       Fedoseev, S. V. (2023). Independence compliance in the exercise of functions by the board of directors of joint stock companies. Courier of Kutafin Moscow State Law University (MSAL), 5(23), 178-187. https://doi.org/10.17803/2311-5998.2023.105.5.178-187  (in Russian)
 
10.    Harchilava, H. P. (2015). Place and role of the Corporate Governance Code in the activities of Russian companies. Vestnik Universiteta, 7(15), 38-44. https://www.researchgate.net/publication/346561305_Evolucia_korporativnogo_upravlenia_Mezdunarodnyj_opyt_Evolution_of_Corporate_Governance_-_International_Experience  (in Russian)
 
11.    Hayati, A., Shahniai, A., & Dehdar, F. (1400). A reflection on the third chapter of the “Corporate Governance Instructions of Companies Listed on the Tehran Stock Exchange and Iran Fara Bourse” and how to apply it. Journal of Securities Exchange, 14(54), 176-206. http://dx.doi.org/10.22034/jse.2020.11216.1431  (in Persian)
 
12.    Heidari, M., Alikhani, R., & Maranjory, M. (1397). The effect of board independence on the quality of social information disclosure in annual reports. Quarterly Journal of Management Accounting and Auditing Knowledge, 7(27), 51-62. https://www.jmaak.ir/article_12886.html  (in Persian)
 
13.    Khodayari, P., & Pakbaz Kataj, M. (1403). The legal nature of shares with emphasis on proprietary right theories (A comparative study in Iranian and English law). Quarterly Journal of Research and Development in Comparative Law, 6(20), 137-156. doi: 10.22034/law.2023.1999798.1232 (in Persian)
 
14.    Code of Corporate Governance (2014). Approved in 2014. (in Russian)
 
15.    Litvinova, A. A. (2014). Institute of Independent Directors: Current state and development prospects. Economy and Business, 21(4), 104-108. https://sciup.org/170180133  (in Russian)
 
16.    Manzoor, D., & Taheri, M. (1392). Economic rationality in the critique of behavioral economics. Quarterly Journal of Economic Research and Policies, 21(68), 159-174. http://qjerp.ir/article-1-566-fa.html  (in Persian)
 
17.    Pasban, M. (1389). Capacity of commercial companies and limits of authority of directors of commercial companies. Legal Research Quarterly, 13(51), 127-164. https://lawresearchmagazine.sbu.ac.ir/article_56256.html  (in Persian)
 
18.    Pasban, M., & Farahani, R. (1400). Analytical comparative study of establishing independence of independent directors in corporate governance. Journal of Comparative Law Studies, 12(2), 481-499. http://dx.doi.org/10.22059/jcl.2021.324390.634201  (in Persian)
 
19.    Pasban, M., & Milani, J. (1402). The position of the General Administration of Registration of Companies and Non-Commercial Institutions in identifying and stabilizing the personality of legal entities. Quarterly Journal of Research and Development in Comparative Law, 6(18), 116-140. doi: 10.22034/law.2023.1989859.1225 (in Persian)
 
20.    Pukhova, M. M. (2014). Features of the activities of independent directors in Russia. Transport Business in Russia, 13(1), 181-184. https://morvesti.ru/izdaniya/tdr/archive/2014/01/347.726.6  (in Russian)
 
21.    Rezazadeh, J. (1394). The effect of ownership concentration on shareholder conservatism. Journal of Financial Accounting Knowledge, 2(2), 33-72. https://jfak.journals.ikiu.ac.ir/article_1246.html  (in Persian)
 
22.    Requirements for the issuer’s corporate governance, compliance with which is a condition for inclusion of shares in the First and Second Level (2014). Approved in 2014. (in Russian)
 
23.    Shahsavandi, E., Gholinia, R., Bozorgmehr, A., & Mashhadizadeh, A. (1402). Independence of directors of commercial companies from concept to reality: A comparative study in the legal systems of the United States, England and Iran. Comparative Law Research Quarterly, 27(4), 61-97. http://clr.modares.ac.ir/article-20-72546-fa.html  (in Persian)
 
24.    Sharifi Mandi, H., & Shoorvarzi, M. (1402). The relationship between non-executive directors with executive positions in other companies and firm performance. Journal of Accounting and Auditing Research, 15(59), 45-62. http://dx.doi.org/10.22034/IAAR.2023.185326  (in Persian)
 
25.    Shulin, M. I. (2005). Formation of the Institute of Independent Directors in Russia. Management of Economic Systems, 17(3), 24-32. http://uecs.mcnip.ru/modules.php?name=News&file=article&sid=16  (in Russian)
Journal of Research and Development in Comparative Law

Articles in Press, Accepted Manuscript
Available Online from 08 January 2026