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)

171 Pages Posted: 11 Jan 2008 Last revised: 19 Oct 2010

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: 2008

Abstract

This Article contains chapters 8-9, 11-13, and the Conclusion of 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.

A related article includes chapters 1 and 3 of the Report, and an introduction to the overall project by Prof. Black. These chapters address the substantive bases for liability of directors and company officials for breach of duty. See Legal Liability of Directors and Company Officials Part 1: Substantive Grounds for Liability (Report to the Russian Securities Agency), 2007 Columbia Business Law Review, pages 614-799, available at http://ssrn.com/abstract=1010306.

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, indemnification, insurance, derivative suits

JEL Classification: K22, K41

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 2: Court Procedures, Indemnification and Insurance, and Administrative and Criminal Liability (Report to the Russian Securities Agency) (2008). Columbia Business Law Review, pp. 1-171, 2008; ECGI - Law Working Paper; U of Texas Law, Law and Econ Research Paper No. 113. Available at SSRN: https://ssrn.com/abstract=1010307

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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