Director and Officer Liability Insurance in the People’s.ppt

Director and Officer Liability Insurance in the People’s Republic of China Edward E. Lehman LEHMAN, LEE XU Definition DO Insurance: DO insurance is a legal liability policy which provides for wrongful acts made by a Director or Officer of a company or its subsidiary whilst engaged in such capacity. The policy is always triggered by an allegation of wrongful act brought against the Director or Officer, either in writing or verbal communication. Growth of DO Insurance in PRC. China sits as the fourth largest economy in the world. ( U.S., Japan, Germany, China); In 2006, the new Company law places duties of Loyalty and Due Diligence towards a company on its senior executive; Directors and Officers can be held jointly or severally liable for actions such as false or misleading records, disclosure omissions or others causing loss to the company; Shareholders are allowed to bring derivative claims or direct claims against executives and the company; How the individual property of directors and officers be protected against the law suit? Insurance Law of PR China - Liability insurance refers to insurance that makes the liability to indemnities of the insured to the third party as the object. Administrative Codes of Listed Companies - Upon approval by the shareholders’ general meeting, listed companies are allowed to purchase insurance for their directors save for liabilities resulting from the directors’ breach of the laws or regulations or articles of association. The Guide for Establishing the Independence Director Institution of Listed Company - Listed companies are allowed to establish a compulsory Independent Directors’ Liability Insurance mechanism to reduce the risks associated with the ordinary performance of the duties of independent directors. In 2002, Ping An and Chubb jointly issued the DO insurance policy upon approval by the China Insurance Regulatory Commission (CIRC), and VANKE Joint Stock Limited Company ( One of the larges