Study On Directors And Officers Liability Insurance

Transforming the management mechanism of enterprises and perfecting the management framework of corporations are the big-points in Corporation Law since 1993. Both in state-owned corporations and new-set corporations, there are many problems about incomplete management framework, which leads to such problems as " a single powered stock", "associated exchange" and directors always stand in their own light to handle corporation work. To perfect corporative management framework, the government has constituted a series of laws and rules, among which the most important one is to strengthen the directors and officers liabilities.But this rule has a passive influence that is talented people wouldn't likely to assume the office of director. So it's essential to protect the director's interests. This is why < Listed Company Management Guide Line >comes into being in Jan. 2002. Subsequently, Directors' Officers' Liabilities Insurance (D&O Insurance) operation was developed and expanded. People come to discuss D&O Insurance from every aspect. It mainly refers to the necessity, validity and feasibility about D&O Insurance.In virtue of many unique causes, there are many problems in D&O Insurance Contract in our country, which result in the slow development of D&O Insurance. D&O Insurance institution is an important part of management framework of corporations. So we should take some appropriate countermeasures to advance the development of D&O Insurance and to perfect corporative management framework.D&O Insurance comes forth in western countries firstly. For this reason, I will introduce overseas D&O Insurance theory and practice at first. Then the author analyses the problems in the range of D&O Insurance currently in China. In second chapter, author mainly discuss Director Personal Liability Insurance and Corporate Reimbursement. Directors personal liability insurance typically provides coverage directly to the directors and officers for loss-including defense costs-resulting from claims made against them for their wrongful acts. Director personal Liability Insurance is the basic of the other Liability Insurances. The other Liability Insurances evolve from it and are optional. Corporate Reimbursement reimburses a corporation for its loss where the corporation indemnifies its directors and officers for claims against them.In the D&O insurance, the directors and officers, outside directors of parent company and subsidiary, and their lawful spouse or domestic partner, inheritor, legal representative can all be regarded as the insured. The third party who can claim againstthe D&O include company's shareholder, creditor, security buyer, employee etc., when the third party claim against their wrongful acts, the directors and officers must offer powerful evidences to prove that they pay much attention to their work, or they can not obtain compensation. Loss generally includes damages, judgments, awards, settlements, and defense costs. Insurers often stipulate deductible amount, coinsurance clause and limit of liability in their contracts, so as to the directors and officers carry one part of the losses and costs. Certainly, insurer does not compensate all the loss that the directors and officers suffered, the loss that the insurers refuse to compensate is looked as exclude responsibility. Corporate Reimbursement reimburses a corporation for its loss where the corporation indemnifies its directors and offers for claims against them, the prerequisite is the law allows companies to compensate their D&O. But the compensation can't conflict with the public policy.At last, the author brings forward some countermeasures of my own, which are the issues should be noticed during the course of replanting of D&O Insurance; The modelof replanting---indirect replanting. In addition, we should pay attention toharmonizing some related institutions. The perfecting measures include perfecting D&O Insurance related laws and rules and perfecting D&O Insurance contracts.