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)

Abstract

This Article is Part 2 of a two-part article, which contains selected Chapters of a World Bank sponsored Report on reforms of Russian company law, delivered in December 2006 to the Russian securities agency, known as the Federal Service for Financial Markets (FSFM), and the Russian Center for Capital Market Development, under the title Comparative Analysis on Legal Regulation of the Liability of Members of the Board of Directors and Management Organs of Companies. The Report provides a detailed comparative analysis of Russia’s current law and the laws of several common law countries (Canada, United Kingdon, Unites States) and civil law countries (Austria, Italy, Japan, and Latvia). It then offers detailed recommendations for reform of Russia’s company law. This Article proposes 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 suty. See Legal Liability of Directors and Company Officiant Part 1: Substantive Grounds for Liability (Report to the Russian Securities Agency), 2007 Colum. Bus. L. Rev. 614 (2007), available at http://ssrn.com/abstract=1010306.