185 Pages Posted: 11 Jan 2008 Last revised: 19 Oct 2010
Date Written: 2007
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.
Keywords: Russia, company law, liability of directors and officers
JEL Classification: K22
Suggested Citation: 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, Legal Liability of Directors and Company Officials Part 1: Substantive Grounds for Liability (Report to the Russian Securities Agency) (2007). Columbia Business Law Review, pp. 614-799, 2007; ECGI - Law Working Paper; U of Texas Law, Law and Econ Research Paper No. 112. Available at SSRN: https://ssrn.com/abstract=1010306
Analysis on Legal Regulation of the Liability of Members of the Board of Directors and Executive Organs of Companies (as of December 2006) (Отчет о результатах сравнительного анализа правового регулирования ответственности членов органов управления хозяйственных обществ (по состоянию на Декабрь 2006 года) (Russian Language Version)
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)