Report to Russian Center for Capital Market Development: Comparative Analysis on Legal Regulation of the Liability of Members of the Board of Directors and Executive Organs of Companies (English Language Version)

323 Pages Posted: 7 Sep 2007 Last revised: 29 Jun 2011

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Martin Gelter

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Hwa-Jin Kim

Seoul National University School of Law; University of Michigan Law School

Richard Nolan

University of York - York Law School

Mathias M. Siems

Durham University - Durham Law School; University of Cambridge - Centre for Business Research

Linia Prava

Linia Prava Law Firm

Date Written: February 1, 2008

Abstract

The Russian version of this paper is available at http://ssrn.com/abstract=1001991.

An updated Russian language version was published as Правовое Регулирование Ответственности Членов Органов Управления: Анализ Мировой Практики, and is available at http://ssrn.com/abstract=1528182.

This Report was prepared, with support by the World Bank, for the Russian Center for Capital Market Development and the Russian Federal Service on the Securities Market (FSFM). We discuss the liability under company law of members of the board of directors, senior managers, and controlling shareholders of public companies in Canada, France, Germany, Korea, the United Kingdom, and the United States (plus a more limited look at Austria, the European Union, Italy, Japan, and Latvia), and apply this comparative analysis to the Russian context. We recommend amendments to the Russian Law on Joint Stock Companies and related legislation. We propose measures to enhance the effectiveness of derivative suits; define the concepts of good faith and conflict of interest; establish duties of disclosure and confidentiality; extend duties under company law to controlling shareholders and de facto directors for conflict of interest transactions; protect directors against liability for business decisions adopted without a conflict of interest. We do not recommend the creation of significant administrative or criminal liability, nor expanded duties of directors for a company in financial distress. This document includes a separate Overview of the Report by Professor Black which provides an overview of Russia's progress in creating a modern company law.

The Overview and Chapters 1 and 3 were published separately as Legal Liability of Directors and Company Officials Part 1: Substantive Grounds for Liability (Report to the Russian Securities Agency), 2007 Columbia Business Law Review 614-799, available at http://ssrn.com/abstract=1010306. Chapters 8-9 and 11-13 were published separately as Legal Liability of Directors and Company Officials Part 2: Court Procedures, Indemnification and Insurance, and Administrative and Criminal Liability (Report to the Russian Securities Agency), 2008 Columbia Business Law Review (forthcoming), available at http://ssrn.com/abstract=1010307.

Keywords: Russia, company law, liability of directors and officers

JEL Classification: K22

Suggested Citation

Black, Bernard S. and Cheffins, Brian R. and Gelter, Martin and Kim, Hwa-Jin and Nolan, Richard and Siems, Mathias M. and Prava, Linia, Report to Russian Center for Capital Market Development: Comparative Analysis on Legal Regulation of the Liability of Members of the Board of Directors and Executive Organs of Companies (English Language Version) (February 1, 2008). ECGI - Law Working Paper Series 103/2008; U of Texas Law, Law and Econ Research Paper No. 110. Available at SSRN: https://ssrn.com/abstract=1001990 or http://dx.doi.org/10.2139/ssrn.1001990

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

Brian R. Cheffins

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom
+44 1223 330084 (Phone)
+44 1223 330055 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Martin Gelter

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States
646-312-8752 (Phone)

HOME PAGE: http://www.fordham.edu/info/23135/martin_gelter

European Corporate Governance Institute (ECGI)

Brussels, B-1050
Belgium

HOME PAGE: http://www.ecgi.org/members_directory/member.php?member_id=621

Hwa-Jin Kim

Seoul National University School of Law ( email )

San 56-1 Kwanak-gu, Shilim-dong
Seoul
Korea

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

Richard C. Nolan

University of York - York Law School ( email )

University of York
Heslington, York YO10
United Kingdom

Mathias M. Siems

Durham University - Durham Law School ( email )

Stockton Road
Durham, County Durham DH1 3LE
United Kingdom

HOME PAGE: http://www.dur.ac.uk/mathias.siems

University of Cambridge - Centre for Business Research ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

HOME PAGE: http://www.cbr.cam.ac.uk/people/research-associates/mathias-m-siems/

Linia Prava

Linia Prava Law Firm ( email )

Gorky Park Tower
15A Leninski Prospekt
Moscow
Russia

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