| Directors' & officers' liability insurance (D&O insurance) is a kind of insurance designed to prevent directors and officers from liability for the third party. The liability comes from directors'& officers' wrongful acts and, neglect acts when they do their duty. It's a type of new profession liability insurance in our country. D&O insurance plays a positive role in balancing the interest among the corporation, directors and investors, as well as stabilizing public order, because it is able to disperse directors' and officers' professional risks, free from their mind of fear of disturbance in the rear and compensate the investors' damage.D&O insurance is a sort of third party insurance, which is different from the traditional property insurance in target and insurance coverage. The target of the insurance is protecting the victims' interests, just like the system of civil liability. But the Civil Liability System is the base of D&O insurance, its change pushes forward the development of D&O insurance. Meanwhile, the insurance is a useful supplement to the Civil Liability System in relieving directors from their liability.The main terms of D&O insurance contracts includes insurance coverage, insurers' exclusive liability and the distribution of insurance premium. The concept of some words such as the third party who has the right to sue the directors' and officers', damage and wrongful acts are also important terms in the contract. They are helpful to define the insurance coverage. The law in our country doesn't define the directors' wrongful acts, however, in accordance with the principle of the investigation of civil liability and our present compensation liability for the third party caused by directors' false statement. As far as the relation between D&O insurance and the Shareholder Representative Litigation System concerned, because the liability the SRLS causes is what for the corporation, which is not included in the insurance coverage, so the SRLS can only affect the development of D&O insurance indirectly. The system of the relief of directors' liability should be regulated definitely and be limited strictly, so both D&O insurance and the SRLS are able to give full play to protect directors' and shareholders' interests. |
