| Directors'and officers'liability insurance is familiar to the Chinese because it has formally come into being for nearly ten years; it is also strange for us because only very few people and companies use it, most people and companies couldn't understand and use it well. So, the key problem, the necessity to analyze the applicability/feasibility of directors'and officers'liability insurance comes out, which also is a fundamental preparation to construct the directors'and officers'liability insurance institutions in China. The paper stretches out the study making the practice of American directors'and officers'liability insurance as a reference to probe the applicability/feasibility of directors'and officers'liability insurance in U.S.A. Meanwhile, the paper also deeply explore the true and critical reasons why the directors'and officers'liability insurance doesn't have a good performance in nowadays China according to its present situation with the purpose to inspire more people to pay attention to the development of directors'and officers'liability insurance in China.Chapter one introduces the background of the paper's creation, the realistic value of the paper, purpose of writing, the current situation of the project, theoretical innovation comparing to exist documents, the ways of probing and writing, the limitations and perspective of the project. The newly promulgated Company Law of the People's Republic of China doesn't provide a new wonderful prospect to the development of the application of the directors'and officers'liability insurance in China. China Insurance Regulatory Commission as a typical representative of the official body, big insurance companies, people of vision still try their best to defend and advocate the directors'and officers'liability insurance. Giving that we really need the directors'and officers'liability insurance, then when it can formally develop and be widely accepted? Why the directors'and officers'liability insurance couldn't be welcomed and accepted in China since its birth nearly ten years ago? All the questions press us hardly to deeply and thoroughly think about the applicability/feasibility of the directors'and officers'liability insurance in China. Comparing other countries'practice could give us many valuable hints, so it is helpful for us to draw lessons form the experience of American practice where the directors'and officers'liability insurance is best used. Other European countries and Japan also regard America as an example to improve the practice of the directors'and officers'liability insurance in their own territories. The well development of the directors'and officers'liability insurance needs many other conditions to support, which also needs a multidisciplinary study. It will be partial if we just take the directors'and officers'liability insurance as a single-subject question. Although there are many creatures concerning the study to the directors'and officers'liability insurance, the case study is rare. The directors'and officers'liability insurance has been transplanted into Chinese economic system according to the background that China is infuse into global economics day by day. The disadvantages to the transplantation of the directors'and officers'liability insurance for China listed in the paper just with the purpose to give some hints for people to break out the barricades for the directors'and officers'liability insurance's application in China.Chapter two focuses on the research of the applicability/feasibility of American directors'and officers'liability insurance. The directors'and officers'liability insurance is a subproject of liability insurance. Why it has a best situation in America other than its birthplace? The most important reason is it suits the needs of development of American economics. Comparing with other countries, America has a highly developed legal and judiciary system, besides, Americans have a strong aware of struggling for rights, all of which make company litigation extremely well-developed in America. The targets of company litigation commonly focus on the directors and officers in public companies. But America needs these people to create fortune, public companies need these people to manage the companies, and themselves need to avoid being rapped by company litigation, all of which needs make the directors'and officers'liability insurance emerge and has a best development. It is not hard to find out from the development of the directors'and officers'liability insurance in America that the insured and insured liabilities keep fixed and stable although this kind of insurance is widely used. The directors'and officers'liability insurance is well supported by clear and exact institutions. All states have their company law, and all laws support the directors'and officers'liability insurance. What needs to be specially mentioned is that all the parties of the insurance policies are highly sophisticated and have strong capacities to negotiate, so the format and contents of policies are different to each other. It also indicates the flexibility of American directors'and officers'liability insurance, which makes it suit various demands from different companies and directors and keeps a strong life force. American directors'and officers'liability insurance has a tough development progress. These years, it has been influenced by the crisis of 70-80s, the trough of 2001-2002 and the impact of financial crisis in 2008. American directors'and officers'liability insurance has overcome the first two crises through the efforts of government, layers and understandings. It is likely for it to get through the nowadays crisis, too.Chapter three collects both affirmative and negative opinions to the directors'and officers'liability insurance in China after comparing the different effect of this insurance in Chinese and American practice. As the insurance rates as concerned, America ranks first, nearly all public companies buy the directors'and officers'liability insurance, Britain followed, and then the other European countries and Japan, about 60-70 percent companies in Hong Kong district buy this insurance, 30-40 percent of companies in Taiwan district buy the insurance, and less than 10 percent of companies in the mainland district buy the insurance. In connection with dismally status of the directors'and officers'liability insurance in the mainland district, some scholars suggest that keeping on selling the directors'and officers'liability insurance is necessary and meaningful, other scholars go further and present some advice to improve the insurance in mainland China. There are still some scholar don't believe mainland China possesses the conditions to spread the directors'and officers'liability insurance, and if insist on spreading the insurance, maybe there will be some negative effect. It should be said that both sides have enough reasons to persevere their claims. The directors'and officers'liability insurance derives from the spirits of the common law, there are many differences between the common law and the civil law, addition to the differences on the aspects of national conditions and folklore between China and America, the American style insurance inevitably acclimatized to China. It is investable to make a choose from two choices to spread the directors'and officers'liability insurance, changing the present system in order to suit the American style insurance or creating a Chinese style insurance to suit present Chinese situation. But the key problem is there isn't one uniform standard to define the directors'and officers'liability insurance. Most existing insurance policies are copying the American style insurance's format and contents, which make the Chinese insurance lacks of realistic accordance; meanwhile, the present Chinese conditions don't support the application of American style insurance.Chapter four deeply probes the key elements for the healthy development of the directors'and officers'liability insurance which we don't possess: Firstly, the pattern of separation of ownership and management hasn't completely shaped up. Chinese directors'actual position and functions couldn't be comparable to American directors'. The ambiguity of directors'position let down Chinese directors'willingness to buy the insurance. Chinese economic developing path is different from American path. Private economy is the main stream of American economy; Chinese economic development model is national control, even though the model is gradually changed to certain extent and the Chinese corporation structure of powers demonstrates the tendency of separation of ownership and management formally. As a matter of fact, the situation of state owned shares oriented is still popular. In Chinese public companies, directors and other officers always are appointed by the controlling shareholders and their representatives, which make the directors lack of initiative to behave. Directors could exempt from the liability resulting from their wrongful duty behavior because they are conducting according to the directions of the controlling shareholders;Secondly, the differences between Chinese and American legal cultures make it difficult to spread the directors'and officers'liability insurance in China. The Chinese style legislation and the lag of laws make Chinese laws could not satisfy various needs for social life. Justices in civil law countries have to strictly abide by the laws, but the laws are always ambiguous, which let down justices'willingness to be involved into company affairs. A key prerequisite to apply the directors'and officers'liability insurance is the confirmation of the directors do violate their fiduciary duty which only could be confirmed by the courts. Chinese justices are reluctant to get involved into company litigation, the situation also makes the directors'and officers'liability insurance seems doom and gloom. Besides, China doesn't possess the tradition of the division of law court and equity court, consequently, the fiduciary duty under the ideal of equity law couldn't be completely duplicated in China, and what's more, Chinese justices have no accurate rules to abide by and cases to compare. Thirdly, existing Chinese directors'and officers'liability insurance policies haven't been rationally designed makes it difficult to be accepted. (1) The scope of the insured is so limited, just concerning on chairman of the board of directors and independent directors, which leads to the insurance lost many potential and qualified insurant. (2) The exceptions of the policy designed according to laws makes the scope of the insured liabilities very limited. Many risks in reality to directors and officers are not covered, which decrease the insurance's attraction. (3) Chinese laws formulate that the directors'and officers'liability insurance only could be bought by the agreement of shareholders meeting. The difficulty to start a shareholders meeting and controlling shareholders'dominant role make controlling shareholders actually have the power to decide whether to buy the insurance or not. The procedural limitations to buy the directors'and officers'liability insurance prevents minority shareholders to purchase the insurance. (4) Chinese laws don't provide the way of purchasing the directors'and officers'liability insurance, in other words, the Chinese directors'and officers'liability insurance is not a compulsory insurance. Besides, the laws don't provide the proportion of the premium. Therefore, the Chinese directors'and officers'liability insurance is slow in sale. (5) Chinese company law doesn't possess provisions about company compensation, so even if the insurance policy contains the articles concerning company compensation insurance, it won't work in reality. Generally, the company will afford most premiums, the directors'and officers'liability will lost attraction if the compensation insurance doesn't work.Chapter five argues the legal dilemma for Chinese directors'and officers'liability insurance. Theoretically speaking, there are two choices for China to develop the directors'and officers'liability insurance, one is to improve the Chinese system to spread the insurance, and the other is to create a Chinese style insurance. But virtually, only the former one is operational. Tiny differences on the style and product design couldn't make the insurance suit for Chinese company legislation, corporate governance and company litigation. No matter how much we change the directors'and officers'liability insurance, its core spirit and special ideal, aims and values won't change, otherwise, the insurance is no longer to be called as directors'and officers'liability insurance. So changing the environmental conditions of the directors'and officers'liability insurance is the only real way. The paper summarizes several disadvantages to spread the directors'and officers'liability insurance in China: Firstly, the basic nature of Chinese and American company law is very different, which hinders the development of American style directors'and officers'liability insurance in China. Americans set up union government according to their needs after they live separately for a long time. But any state keeps a lot of powers of legislation and jurisdiction, for example, every state has a unique company law. Every state makes their company law more suitable for people to use, so their company laws demonstrate a tendency granting rights and freedom for the users. But Chinese company law is made by the central government to fit the need of governing and regulating, so Chinese company law keeps many restrictions to the users, which limits the free development of company and persons recharge for management. Secondly, the laws about directors'and officers'liabilities are very ambiguous, which leads to the dilemma of company litigation. The institutions concerning directors'duties and liabilities are still not clear, even after the amendment to the company law in 2005. Chinese judicial system restrains justices strictly abide by the articles and couldn't make any change. Besides, company litigation is very complicated and technological. All the above conditions result in delay of the final judgment, so private settlement is an acceptable alternative choice. And then, it is hard to start the directors'and officers'liability insurance; Thirdly, the fundamental ideal and basic value of directors'and officers'liability insurance and tort law are not completely compatible, which hinder the development of the directors'and officers'liability insurance. It is widely accepted that tort law and its theory of fault liability have the function to remind people to keep attention and restraint illegal act. But the birth of the directors'and officers'liability insurance violates and breaks the functions mentioned above. The conflict has been paid high attention to since the insurance's birth even in America, but it was accepted at last and made a nice performance. Many European countries are reluctant to accept it until today, so the insurance is not developed as good as its achievement in America; Fourthly, Chinese reluctance to get involved into litigation decreases the application rate of the directors'and officers'liability insurance. Traditionally, Chinese are reluctant to get involved let alone to start a lawsuit, so the company litigation generally could not occur. And the existing procedural laws about company litigation are also not convenient for minority shareholders or investors to start a company lawsuit. The situation makes the directors'and officers'liability insurance lost relevance because directors'and officers'liabilities couldn't be determined only if the courts make a decision out from company litigation.Chapter six presents several reasonable suggestions for the development of directors'and officers'liability insurance in China. First of all, it is clear that the directors'and officers'liability insurance shouldn't be compulsory, or else, it would lead to an imbalance situation both for parties of directors'and officers'liability insurance and insurance market; and then, it is necessary to make sure independent directors to act dutifully, which will make the directors'and officers'liability insurance useful; thirdly, the dispute concerning the directors'and officers'liability insurance always be the judgment to the nature of directors'behavior will be finally determined by judicial judgment, on which the directors'and officers'liability insurance's operation rely. So making company law and company litigation convenient is important for the directors'and officers'liability insurance; lastly, the directors'and officers'liability insurance's operation need the judicial judgment, but courts need the business judgment rules to help them to make out the judicial judgment, so introduce and make good use of the business judgment rules is useful for the directors'and officers'liability insurance's operation, too.
|
PDF Full Text Request