Independent Commissioners: How Independent?

Abstract

Companies are managed by directors whose decisions and actions are overseen by a board of commissioners, which includes both commissioners and independent commissioners. An independent commissioner is a party that shares no relationships with the company's directors or the company itself. However, the independence of independent commissioners in performing their duties is questionable. This research examined the independence of independent commissioners using a normative juridical research method based on primary data, secondary data, and other relevant information. The juridical research method focuses on existing realities or implementation in the real world compared to the normative expectations or standards. The results showed that independent commissioners are not entirely independent, particularly in state-owned enterprises where connections with affiliates persist. Additionally, independent commissioners often had direct or indirect relationships with the government, with some being former civil servants or government supporters. Meanwhile, private companies tend to appoint commissioners based on prior personal relationships, such as friendships, rather than familial or business affiliations. Despite these connections, independent commissioners remain crucial for stakeholders interested in the company's governance. This research highlights the complexities surrounding the independence of commissioners and underscores the need for clearer definitions and enforcement of independence in corporate governance.