Legal Liability of Directors and Company Officials Part 1: Substantive Grounds for Liability (Report to the Russian Securities Agency)
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)
Fordham University School of Law; European Corporate Governance Institute (ECGI)
Seoul National University School of Law; University of Michigan Law School
University of York - York Law School
Mathias M. Siems
Durham University - Durham Law School; University of Cambridge - Centre for Business Research
Linia Prava Law Firm
Columbia Business Law Review, pp. 614-799, 2007
ECGI - Law Working Paper
U of Texas Law, Law and Econ Research Paper No. 112
This Article is an excerpt from a World Bank-sponsored Report, prepared in December 2006, to the Russian Federal Service on the Securities Market. We discuss the liability under company law of directors, senior company officials, and controlling shareholders of public companies in Canada, France, Germany, Korea, Russia, the United Kingdom, and the United States (with a more limited look at Austria, the European Union, Italy, Japan, and Latvia), and recommend amendments to Russian Company Law. We propose measures to 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; and protect directors against liability for business decisions adopted without a conflict of interest. It includes an Introduction by Prof. Black which provides an overview of Russia's progress in creating a modern company law.
A related Article, also excerpted from this Report, addresses procedural rules for shareholder lawsuits and administrative and criminal liability of directors and company officials. See 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), COLUM. BUS. L. REV. (forthcoming 2008), available at http://ssrn.com/abstract=1010307.
The full Report is available at http://ssrn.com/abstract=1001990 (English version) and http://ssrn.com/abstract=1001991 (Russian version). It also addresses duties of directors for a company in financial distress, duties of a managing organization, the role of labor law in governing the relationship between a company and its directors and officials, whether this relationship is contractual or legal in nature, and differences between public and nonpublic companies.
Number of Pages in PDF File: 185
Keywords: Russia, company law, liability of directors and officers
JEL Classification: K22
Date posted: January 11, 2008 ; Last revised: October 19, 2010