Directors' liability : a worldwide review / editor: Alexander Loos.
2010
K1328 .D58 2010 (Map It)
Available at Cellar
Formats
| Format | |
|---|---|
| BibTeX | |
| MARCXML | |
| TextMARC | |
| MARC | |
| DublinCore | |
| EndNote | |
| NLM | |
| RefWorks | |
| RIS |
Items
Details
Title
Directors' liability : a worldwide review / editor: Alexander Loos.
Published
Alphen aan den Rijn : Kluwer Law International/International Bar Association, [2010]
Distributed
Frederick, MD : Sold and distributed in North, Central and South America by Aspen Publishers
Copyright
©2010
Call Number
K1328 .D58 2010
Edition
Second edition.
ISBN
9789041132505 (hbk. : alk. paper)
9041132503 (hbk. : alk. paper)
9041132503 (hbk. : alk. paper)
Description
lxxiv, 549 pages ; 25 cm.
System Control No.
(OCoLC)674828207
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Added Author
Added Corporate Author
Table of Contents
About the Editor and the Authors
li
Preface
lxxiii
Index of Countries
lxxv
Index of Abbreviations (Country - Abbreviation)
lxxvii
Index of Abbreviations (Abbreviation - Country)
lxxix
pt. I
Africa
1
ch. 1
South Africa / Patrick Mayer
3
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
3
II.
Recent Cases Dealing with Directors' Liability
5
III.
Socio-Anthropological Issues
7
IV.
Corporate Governance
7
V.
Liability Issues
9
A.
The Act
9
B.
The New Companies Act
10
VI.
Indemnification, Directors' and Officers' Insurance, Other Methods of Protection
13
A.
The Act
13
B.
The New Companies Act
14
VII.
Lawyer Directorship
14
VIII.
The Èuropean Action Plan'
15
pt. II
America
17
ch. 2
Argentina / Laura Lavia Haidempergher
19
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
19
A.
Corporations Legal System in Argentina
19
B.
Board's Authority and Structure
20
1.
Rules; Meetings
20
2.
Duties of the Board
20
3.
Composition of the Board
21
4.
Directors' Compensation
22
C.
Directors' Appointment and Conditions
23
1.
Election of Directors
23
2.
Individuals Precluded to Be Appointed as Directors
23
D.
Delegation
24
E.
Removal of Directors
24
II.
Recent Cases Dealing with Directors' Liabilities
25
A.
Nature of Directors' Liability
25
B.
Directors' Liability and Economic Situation
25
C.
Cases Related to the Administration of the Company
26
D.
Delegation and Activities in Competition with the Company
26
III.
Judicial Review (Tightening of Standards?)
27
A.
Directors' Liability Stems from the Sole Fact of Being a Board Member
27
B.
Standard of Diligence
27
C.
Damages to the Company and Liability: General Conditions
29
D.
Judicial Procedure
29
IV.
Corporate Governance
30
V.
Liability Issues
31
A.
The Responsibility Actions Ruled by the Companies Act
31
1.
Corporate Liability Action Filed by the Company ('Action de Responsabilidad Social')
31
2.
Corporate Liability Action Filed by Any Shareholder
31
3.
Individual Responsibility Action
32
B.
Limits (Caps) and Statutory Limitations
32
C.
Directors' Joint Liability
33
D.
Relevance of Bankruptcy with Regard to Bringing a Directors' Liability Action
33
E.
Costs and Fees in Liability Litigation
34
VI.
Indemnification
34
VII.
Directors' and Officers' Insurance
34
VIII.
Lawyer Directorship
35
IX.
Forecast on Future Legislation Development
35
ch. 3
Bermuda / John Riihiluoma
37
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
37
A.
Role of Chairman and CEO
38
B.
Board Structures
38
C.
Directors' Election
39
D.
Delegation
39
E.
Removal of Directors
40
II.
Recent Cases Dealing with Directors' Liability
40
III.
Judicial Review
41
IV.
Typical Approach to Avoid Directors' Liability
41
A.
Composition of the Board
41
1.
Are the Decision-Making Mechanisms Changing?
41
2.
Board/Management Relationship
41
V.
Corporate Governance
42
VI.
Liability Issues
44
A.
Who Can Sue?
44
B.
Who Could Be Sued?
44
C.
̀De Facto' Directors
44
D.
Thresholds and Caps on Liability
44
E.
Joint Liability/Solidarity
45
F.
Derivative Actions
45
1.
Class Actions
46
2.
Relevance of Bankruptcy of Corporation with Regard to Bringing a Directors' Liability Suit
46
3.
Costs and Fees in Liability Litigation
46
VII.
Indemnification
46
VIII.
Directors' and Officers' Insurance
47
IX.
Other Methods of Protection
47
X.
Lawyer Directorships
47
XI.
Forecast on Future Legislation Development
47
ch. 4
Brazil / Walter Douglas Stuber
49
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
49
A.
Overview
49
B.
Limitada
49
C.
Sociedade Por Acoes ('SA')
51
II.
Recent Cases Dealing with Directors' Liability
53
III.
Judicial Review (Tightening of Standards)
53
IV.
Typical Schemes/Behaviour to Avoid Directors' Liability
54
V.
Corporate Governance
54
VI.
Liability Issues
56
A.
Who Can Sue?
56
B.
Who Can Be Sued?
56
C.
̀De Facto' Director
57
D.
Thresholds and Limitations/Caps of Liabilities
57
E.
Joint Liability/Solidarity
57
F.
Derivative Actions
58
G.
Class Actions
58
H.
Relevance of Bankruptcy of Corporation
58
VII.
Indemnification
59
VIII.
Directors' and Officers' Insurance
59
IX.
Other Methods of Protection
60
X.
Lawyer Directorship
60
XI.
Forecast on Future Legislation Development
60
ch. 5
Canada / Erin Cowling
61
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
61
A.
Two-Tier or Unitary Company Structure
61
B.
Chairman/CEO
62
C.
Board Structures
62
D.
Elections/Staggering
62
E.
Delegation
62
F.
Removal of Directors
63
II.
Recent Cases Dealing with Directors' Liability
64
III.
Judicial Review (Tightening of Standards?)
65
A.
The Shift from Result to Process
65
B.
The Shift from a Subjective to an Objective Standard of Care
66
IV.
S̀ocio-Anthropological Issues'
66
A.
Is the Composition of Boards Changing in Light of Recent Developments?
66
B.
Are Decision-Making Mechanisms Changing in Light of Recent Developments?
66
C.
Relationship between Board and Management
67
V.
Corporate Governance
67
A.
Board Procedures
67
B.
Structures of Oversight
68
VI.
Liability Issues
69
A.
Who Can Sue?
69
B.
Who Can Be Sued?
69
C.
Thresholds and Limitations/Caps of Liabilities
69
D.
Joint Liability
70
E.
Derivative Actions
70
F.
Class Actions
70
G.
Relevance of Bankruptcy
70
H.
Costs and Fees in Liability Litigation
71
VII.
Indemnification
71
VIII.
Directors' and Officers' Insurance
71
IX.
Other Methods of Protection
71
X.
Lawyer Directorship
72
ch. 6
Cayman Islands / Wendy Stenning
73
I.
Introduction
73
II.
Board Structure
74
A.
Appointment of Directors
74
B.
Delegation
74
C.
Removal of Directors
75
III.
Duties of Directors
75
A.
General Duties of Directors
75
B.
Duty of Honesty and Good Faith
76
C.
Duties of Care and Skill
77
IV.
Liability Issues
77
A.
General Points
77
B.
What Can Be Recovered?
78
C.
Costs
78
V.
Indemnification of Directors
78
VI.
Directors' Reliance on outside Professionals and Professionally Qualified Directors
78
VII.
Winding Up
79
ch. 7
Chile / Cristian Eyzaguirre
81
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
81
A.
The Board of Directors
82
B.
Composition of the Board
82
C.
Powers of the Board and How They are Used
83
D.
Independent Directors and Audit Committee
84
E.
Executive Officers
85
II.
Duties of Directors
85
A.
Duty of Care
85
B.
Duty of Loyalty
86
C.
Duty of Disclosure
87
III.
Liability of Directors
88
IV.
Directors' Insurance
89
V.
Actions to Pursue Redress of the Company
89
VI.
Conclusion
90
ch. 8
Mexico / Juan Jose Lopez-de-Silanes
93
I.
Introduction
93
A.
Investment Promotion Companies ('Sociedades Anonimas Promotoras de Inversion')
93
B.
Stock Exchange Investment Promotion Companies ('Sociedades Anonimas Promotoras de Inversion Bursatil')
94
C.
Stock Exchange Companies ('Sociedades Anonimas Bursatiles')
94
II.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
95
A.
Two-Tier System or One-Tier System
95
B.
Chairman and CEO (One or Two People/Checks and Balances)
96
C.
Board Structures
96
D.
Elections/Staggering
96
E.
Delegation
97
F.
Removal of Directors
97
III.
Judicial Review (E.g., Tightening of Standards?)
98
IV.
S̀ocio-Anthropological Issues'
98
A.
Is the Composition of the Board of Directors Changing in Mexico in Light of Recent Developments?
98
B.
Are the Decision-Making Mechanisms Changing in Mexico in Light of Recent Developments?
98
C.
Board/Management Relationship
98
V.
Corporate Governance
99
A.
Board Procedures
99
B.
Structures of Oversight
99
VI.
Liability Issues
100
A.
Who Can Sue?
100
B.
Who Can Be Sued?
101
C.
Thresholds and Limitations/Caps of Liabilities in Mexico (Statutory Limitations on Directors' Liability)
101
D.
Joint Liability/Solidarity
101
E.
Derivative Actions
102
F.
Class Actions
102
G.
Relevance of Bankruptcy of Corporation with Regard to Bringing a Directors' Liability Suit
102
H.
Costs and Fees in Liability Litigation
103
VII.
Indemnification
103
VIII.
Directors' and Officers' Insurance
103
IX.
Other Methods of Protection
103
X.
Lawyer Directorship
104
XI.
The Èuropean Action Plan'
104
ch. 9
United States of America / Christopher Winckler
105
I.
National Framework for US Corporate Boards
105
A.
Regulatory Structure
105
B.
Board Composition
106
1.
Board and Corporate Structure
106
2.
Number of Directors
106
3.
Age and Nationality Restrictions
106
4.
Independence
106
C.
Multiple Roles
106
D.
Board Procedures
107
E.
Board Elections
107
1.
Classified Boards
107
2.
Cumulative Voting
107
3.
Staggered Board
107
4.
Weighted Voting
108
F.
Delegation
108
G.
Removal of Directors
108
II.
Standards Applicable to Directors
108
A.
General Duties
108
B.
State Statute, Securities Exchange, and Common Law Duties
109
1.
Duty of Care
109
2.
Duty of Loyalty
109
3.
Business Judgment Rule
109
III.
Recent Cases Dealing with Directors' Liabilities
109
A.
Citigroup/AIG/Krasner
109
B.
WorldCom/Enron/Emerging Communications
110
C.
Disney/Van Gorkom
111
D.
Are Decision-Making Mechanisms Changing?
111
IV.
Corporate Governance
112
A.
Regulation
112
B.
Sarbanes-Oxley Act
113
C.
Board Composition/Independence
113
1.
Independence of Majority of Board Members
113
2.
Application to Foreign Private Issuers
113
3.
Corporate Governance Guidelines/Code of Ethics
114
D.
State Law Requirements (Delaware)
114
V.
Liability Issues
114
A.
Who Can Sue?
114
1.
Shareholder Derivative Lawsuit
114
2.
Creditors' Rights
115
3.
Regulator Actions
115
B.
Grounds for Liability
115
1.
Criminal and Civil Liability
115
2.
Securities Law
115
3.
Antitrust
116
4.
Theft and Fraud
116
5.
Other
116
C.
Thresholds and Limitations/Caps of Liabilities
116
D.
Shareholder Liability
116
VI.
Indemnification
117
VII.
Insurance
117
pt. III
Asia
119
ch. 10
Hong Kong / Danny Leung
121
I.
Introduction
121
A.
One-System Body
121
B.
Board Structure and Duality of Chairman and CEO
122
1.
Board Structure
122
2.
Duality of Chairman and CEO
122
C.
Delegation
123
D.
Elections
123
E.
Removal of Directors
123
II.
Liability Issues
123
A.
Directors' Duties
123
1.
Fiduciary Duties
124
a.
Duty to Act in Good Faith in the Best Interests of the Company as a Whole
124
b.
No Fetters on Discretion
124
c.
Duty Not to Compete
124
d.
Duty to Avoid a Conflict of Interest and Not to Make a Secret Profit
124
e.
Confidentiality
125
2.
General Duties
125
a.
Skill, Care, and Diligence
125
b.
Duty Not to Exceed Powers
126
c.
Duty to Creditors
126
B.
Who Can Sue?
126
1.
Duties Owed to Individual Shareholder
126
2.
Duties Owed to Creditors
127
C.
Who Can Be Sued?
127
D.
Derivative Actions
127
1.
Common Law Derivative Action
127
2.
Statutory Derivative Action
128
E.
Unfair Prejudice
128
F.
Representative Actions
129
G.
Insolvency Context
129
1.
Misfeasance
129
2.
Fraudulent Trading
130
3.
Disqualification Order
130
H.
Costs and Fees in Liability Litigations
130
III.
Indemnification
130
IV.
Protection against Wrongs of Directors
131
A.
Ratification
131
B.
Directors' and Officers' Liability Insurance
131
V.
Corporate Governance
131
A.
Existing Corporate Governance
131
B.
Corporate Governance Reform: Difficulties in Hong Kong
132
1.
Family-Controlled Companies
132
2.
Quality of INEDs
132
C.
Going Forward
133
ch. 11
India / Som Mandal
135
I.
Introduction
135
A.
Appointment of Directors
135
B.
Shareholder Rights
136
C.
Government's Right to Appoint Directors
136
D.
Removal of Directors
136
E.
Power of Directors May Be Amended
137
II.
Recent Cases and Anthropological Approach to Directors' Liabilities
137
A.
Financial Scams
138
B.
Judiciary
139
III.
Government's Approach towards Ensuring Greater Corporate Accountability
139
IV.
Liability Issues
142
A.
Officer in Default
143
B.
Contractual Liabilities
143
C.
Tortious Liability
144
D.
Apprehension of Prosecution
144
E.
Compounding Offences, a Way Out?
144
F.
Managing Director/Whole-Time Director/Nominee Director/Professional Director
145
G.
Object and Scope of Section 633
145
H.
Directors' Liability Insurance
145
ch. 12
Israel / Yael Navon
147
I.
National Basis: The Companies Law 1999
147
A.
History of the Current Company Law
147
B.
The Board's Role as a Gatekeeper
148
C.
The Structure of the Controlling Powers of a Company
148
1.
The General Assembly of Shareholders
148
2.
The Board of Directors
149
3.
Ancillary Articles Relating to the Board's Activities
149
4.
Dismissal of a Director
150
a.
The Power to Dismiss a Director
150
b.
The Duty to Dismiss a Director
150
c.
An Outside Director Can Only Be Dismissed as Follows
150
5.
The Chief Executive Officer
150
II.
Main Aspects of the Law Relevant to Directors' and Officers' Liability
151
A.
Liability towards the Company
151
1.
Duty of Care
151
2.
Duty of Trust
151
3.
Directors with Special Expertise
152
B.
Directors' and Officers' Liability towards the Shareholders
152
C.
Directors' and Officers' Liability towards Third Parties
153
D.
Director and Officer Criminal Liability
155
E.
Liability under Specific Laws
157
1.
Liability According to the Securities Act of 1968
157
2.
Presumption Set in Various Laws Concerning Directors' and Officers' Liability
157
III.
Claims against Directors and Officers: Procedural Aspects
157
A.
Procedure for Claiming
157
1.
Claim Filed by an Individual
158
2.
Derivative Action
158
3.
Class Action
158
B.
Claims Against Directors and Officers During Liquidation
158
IV.
Exemption, Indemnification, and Insurance
160
A.
General
160
B.
Exemption from Liability
160
C.
Indemnification
160
D.
Directors' and Officers' Liability Insurance
161
E.
Invalid Stipulations
162
F.
Special Approvals
162
ch. 13
Japan / Norio Mitsuuchi
165
I.
Introduction
165
II.
Basic Structures (to Have a Board or Not, Etc.)
166
A.
Overview
166
B.
KK without a Board
166
C.
KK with a Board
166
D.
KK with Committees
166
III.
CEO, President, and Other Officers
167
IV.
Structures of Board and Committees
167
V.
Elections
167
VI.
Delegation
168
VII.
Removal of Directors
168
VIII.
Other Recent Changes
168
A.
Outside Director
168
B.
Decision-Making Mechanism
168
IX.
Judicial Review
169
A.
Relationship between KK and Directors/Executive Officers
169
B.
Business Judgment Rule
169
X.
Corporate Governance
169
A.
Convocation of the Board
169
B.
Resolutions
170
C.
Structure of Oversight
170
XI.
Liability Issues
170
A.
Who Can Sue?
170
1.
Company
170
2.
Shareholder
170
3.
Third Party
171
B.
Who Can Be Sued?
171
C.
Thresholds and Limitation of Liabilities
171
1.
Negligence Requirement
171
2.
Exemption from Liabilities
172
3.
Partial Exemption from Liabilities
172
4.
Prior Agreement to Limit Liabilities
172
D.
Relevance of Bankruptcy of a KK with Regard to Bringing a Directors' Liability Suit
172
E.
Costs and Fees in Liability Litigations
172
F.
Insurance
173
G.
Other Methods of Protection
173
H.
Lawyer Directorship
173
XII.
Conclusion
173
ch. 14
Mongolia / Dashnyam Zoljargal
175
I.
Introduction: General Principles of Mongolian Corporate Law
175
A.
The Company Law of Mongolia
176
B.
Three-Tiered Body for Corporate Governance
176
C.
Executive Administration
178
D.
Board Composition
179
E.
Delegation
179
F.
Directors' Elections
179
G.
Chairman of the Board
179
H.
Directors' Term of Appointment
180
I.
Board Meetings
180
J.
Removal of Directors
180
II.
Recent Cases Dealing with Directors' Liability: Anod Bank
180
III.
Judicial Review
181
IV.
Corporate Governance
181
V.
Liability Issues
182
A.
Who Can Be Sued?
182
B.
Who Can Sue?
183
C.
Thresholds and Limitations/Caps of Liabilities
183
D.
Joint and Several Liability
183
E.
Derivative Actions
183
F.
Class Actions
183
VI.
Directors' and Officers' Insurance
184
VII.
Lawyer Directorship
184
VIII.
Forecast on Future Legislation Development
184
ch. 15
The People's Republic of China / Ke Chen
185
I.
Introduction
185
A.
Three-Tiered Corporate Governance Body
186
1.
Shareholders
186
2.
Board of Directors or Executive Director
186
3.
Board of Supervisors
187
B.
Board Structure and Concurrent Offices
187
1.
Board Structure
187
2.
Concurrent Office
188
C.
Delegation
188
D.
Elections
188
E.
Removal of Directors
188
F.
Qualification of Directors
188
II.
Liability Issues
189
A.
Directors' Duties
189
1.
Fiduciary Duty
189
2.
General Duties
189
3.
Legal Representative
190
4.
Apparent Authority
190
B.
Who Can Sue?
191
1.
Duties Owed to the Company
191
2.
Duties Owed to Shareholders
191
3.
Duties Owed to Creditors
191
C.
Who Can Be Sued?
192
D.
Derivative Actions by Shareholders
192
E.
Unfair Prejudice
192
1.
Compulsory Buy Back
192
2.
Compulsory Winding Up
193
F.
Representative Actions
193
G.
Insolvency Context
193
H.
Costs and Fees in Liability Litigations
193
III.
Indemnification
194
IV.
Protection against Wrongs of Directors
194
A.
Ratification
194
B.
Directors' and Officers' Liability Insurance
194
V.
Corporate Governance
194
ch. 16
The Russian Federation / Oxana Balayan
197
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
197
A.
Two-Tier or Unitary Company Structure
197
B.
Chairman/CEO
198
C.
Board Structures
198
D.
Directors' Elections/Staggering
198
E.
Directors' Term of Appointment
199
F.
Delegation
199
G.
Removal of Directors
199
II.
Recent Cases Dealing with Directors' Liability
200
III.
Judicial Review (Tightening of Standards?)
200
IV.
Typical Schemes/Behaviour to Avoid Director's Liability
200
V.
Corporate Governance
201
A.
Difference between JSCs and LLCs
201
B.
Corporate Governance Code
201
VI.
Liability Issues
201
A.
Who Can Sue?
201
1.
The Company
201
2.
The Shareholder
202
3.
Creditors and Third Parties
203
4.
The Government
203
B.
Who Can Be Sued?
204
C.
̀De Facto' Director
204
D.
Thresholds and Limitations/Caps of Liabilities
204
E.
Joint Liability/Solidarity
204
F.
Derivative Actions
205
G.
Class Actions
205
H.
Relevance of Bankruptcy of Corporation with Regard to Bringing a Directors' Liability Suit
205
VII.
Indemnification
206
VIII.
Directors' and Officers' Insurance
206
IX.
Lawyer Directorship
207
X.
Forecast on Future Legislation Development
207
ch. 17
Singapore / Andrew M. Lim
209
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
209
A.
Directors' Liabilities in General
209
B.
Board Structures
211
1.
Code of Corporate Governance
211
2.
Chairman and CEO
211
3.
Board Composition and Guidance
211
C.
Elections and Appointment
212
D.
Delegation
212
E.
Removal of Directors
212
II.
Cases Dealing with Directors' Liability
213
A.
Lim Weng Kee v. Public Prosecutor
213
B.
Vita Health Laboratories Pte Ltd & Ors v. Pang Seng Meng
213
C.
W & P Piling Pte Ltd (in liquidation) v. Chew Yin What & Ors
214
D.
Public Prosecutor v. Lee Thian Soon and Other Decisions
214
E.
Public Prosecutor v. Ong Chow Hong
214
III.
Recent Developments
215
A.
Corporate Governance Council
215
B.
Audit Committee Guidance Committee
215
C.
Legislative Proposals
216
D.
Financial Services Industry
216
IV.
Corporate Governance
217
A.
Independent Directors
217
B.
Oversight Committees
217
V.
Liability Issues
218
A.
Who Can Sue?
218
B.
Who Can Be Sued?
219
C.
Thresholds and Limitations on Directors' Liabilities
219
D.
False Reports
219
E.
Joint/Several Liability
220
F.
Derivative Actions
220
G.
Oppression Actions
220
H.
Release of Directors' Duties
220
VI.
Indemnification and Insurance
221
ch. 18
Turkey / Serdar Paksoy
223
I.
Introduction
223
II.
Who Can Be Elected as Director?
224
A.
Becoming a Director
224
1.
Qualifications of Directors
224
2.
Proposed Amendments
224
III.
Composition of the Board
225
IV.
Fiduciary Duties of Directors
225
V.
Liabilities of Directors
226
A.
Situations in which Directors Are Held Liable
226
1.
Incorrect Payments of the Shareholders for Their Capital Contributions
227
2.
Distributed Dividends That Do Not Reflect the Actual Situation
227
3.
Non-existing or Unduly Kept Corporate Books and Company Records
227
4.
Shareholders Resolutions That Are Not Implemented without a Just Cause
227
5.
Directors' Deliberate or Negligent Failure to Perform Other Duties Delegated by the TCC or the Articles of Association
228
6.
Failure to Appoint Capable Executives
228
B.
Negligence Principle
228
C.
Who Can Sue the Directors?
229
1.
Company
229
2.
Shareholders
229
3.
Third-Party Claims
229
D.
Liability of Directors under the CML
230
E.
Liabilities of Directors Arising out of Extraordinary Transactions
230
1.
Capital Increases
230
2.
Issuing Bonds
231
3.
Liability in Case of Bankruptcy
231
F.
Liability of Directors under the Tax Laws
231
G.
Liability of Directors under Social Security Law
231
H.
Liability of Directors under the Banking Law
232
I.
Liability of Directors under Criminal Law
232
VI.
Defences of Directors
232
VII.
Ceasing to Be a Director
232
ch. 19
United Arab Emirates / Charlotte Douglass
235
I.
UAE Legal Regime
235
A.
Introduction
235
B.
Free Zones
236
C.
Permitted Corporate Vehicles
236
II.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
237
A.
Company Structure
237
B.
Chairman and CEO
238
C.
Board Structures
239
D.
Directors' Elections
239
E.
Directors' Term of Appointment
239
F.
Delegation
240
G.
Removal of Directors
240
III.
Corporate Governance
240
A.
Ministerial Decision No. 32/R of 2007
241
B.
Decision 518
241
IV.
Liability Issues
243
A.
General Concept
243
1.
General Liabilities: Onshore Companies
243
2.
Criminal/Other Liabilities: Onshore
244
3.
General Liabilities: DIFC Companies
244
a.
Loyalty
245
b.
Conflict of Interest
245
c.
No Secret Profits
245
d.
Confidentiality
245
e.
Care, Skill, and Diligence
246
V.
Who Can Sue?
246
VI.
̀De Facto' Director
246
VII.
Thresholds and Limitations/Caps of Liabilities
247
VIII.
Relevance of Bankruptcy of Corporation
247
IX.
Indemnification
247
X.
D&O Insurance
247
XI.
Forecast on Future Legislation Development
248
ch. 20
Vietnam / Phong Nguyen
249
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
250
A.
Legal Framework and the Enterprise Law
250
B.
Company Forms under the Enterprise Law and Two-Tiered or Unitary Company Structure
250
1.
Limited Liability Company
250
2.
Joint Stock Company
252
C.
Definition of ̀Director'
252
D.
Chairman/CEO (General Director)
252
E.
Board Structures
253
F.
Directors' Elections/Staggering and Directors' Term of Appointment
254
G.
Delegation
254
H.
Removal of Directors
255
II.
Recent Cases Dealing with Directors' Liability
255
III.
Judicial Review (E.g., Tightening of Standards?)
256
IV.
Typical Schemes/Behaviour to Avoid Directors' Liability
256
V.
Corporate Governance
256
VI.
Liability Issues
257
A.
Who Can Sue?
257
B.
Who Can Be Sued?
258
C.
̀De Facto' Director
258
D.
Thresholds and Limitations/Caps of Liabilities
258
E.
Joint Liability/Solidarity
258
F.
Derivative Actions
259
G.
Class Actions
259
H.
Significance of Bankruptcy of Corporation
259
VII.
Indemnification
259
VIII.
D&O Insurance
259
IX.
Other Methods of Protection
260
X.
Lawyer Directorship
260
XI.
Forecast on Future Legislation Development
260
pt. IV
Australia and New Zealand
261
ch. 21
Australia / Michael Scarf
263
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
263
A.
Two-Tiered or Unitary Company Structure
263
B.
Chairman and CEO (One or Two People/Checks and Balances)
264
C.
Board Structures
264
D.
Elections/Staggering
264
E.
Delegation
265
F.
Removal of Directors
265
II.
Recent Cases Dealing with Directors' Liability
265
III.
Judicial Review (Tightening of Standards?)
266
IV.
S̀ocio-Anthropological Issues'
266
A.
Is Board Composition Changing in Australia in Light of Recent Developments?
266
B.
Are the Decision-Making Mechanisms Changing in Australia in Light of Recent Developments?
267
C.
Board/Management Relationship
267
V.
Corporate Governance
268
A.
Board Procedures
268
B.
Structures of Oversight (Mechanisms, Etc.)
268
VI.
Liability Issues
269
A.
Who Can Sue?
269
1.
The Company and Individual Shareholders
269
2.
Australian Securities and Investments Commission
269
3.
Creditors
269
B.
Who Can Be Sued?
269
C.
On what Basis Can a Director Be Sued?
270
D.
Thresholds and Limitations/Caps of Liabilities in Australia (Statutory Limitations on Directors' Liability)
270
1.
Duty of Care and Diligence
271
2.
Duty to Prevent Insolvent Trading
271
E.
Joint Liability/Solidarity
271
F.
Derivative Actions
272
G.
Class Actions
272
H.
Bankruptcy and a Directors' Liability Suit
273
I.
Costs and Fees in Liability Litigation
273
VII.
Indemnification
273
VIII.
Directors' and Officers' Insurance
274
IX.
Other Methods of Protection
274
X.
Lawyer Directorship
275
ch. 22
New Zealand / Jess Hogan
277
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
277
A.
Òne System' Approach
277
B.
Definition of ̀Director'
278
C.
Separation of Chairman and CEO
278
D.
Board Structures
278
E.
Elections/Staggering
279
F.
Delegation
279
G.
Board Meetings
280
H.
Disclosure of Conflicts of Interest
280
I.
Removal of Directors
280
II.
Judicial Review (Tightening of Standards?)
280
III.
Corporate Governance
281
A.
Changes to Regulatory Regime
281
1.
NZX Corporate Governance Best Practice Code
281
2.
Securities Commission: Corporate Governance Principles
282
B.
Use of Board Committees
282
C.
Other Oversight Structures
283
IV.
Liability Issues
283
A.
Who Can Sue?
284
1.
The Company
284
2.
Shareholders
284
3.
Creditors
284
4.
Regulatory Bodies
284
B.
Who Can Be Sued?
285
C.
Statutory Limitations on Directors' Liability
285
D.
Joint Liability
285
E.
Derivative Actions
285
F.
Class Actions
286
G.
Relevance of Liquidation
286
H.
Costs in Liability Litigation
286
V.
Recent Cases Dealing with Directors' Liability
286
A.
Reckless Trading
286
B.
Directors' Duties
287
C.
Silent Directors
288
D.
Directors of Finance Companies
288
E.
Other Statutory Liability
288
VI.
Judicial Review
288
VII.
Indemnification and Insurance
289
A.
Indemnity
289
B.
Insurance
289
VIII.
Forecast on Future Legislation Development
290
IX.
Conclusion
290
pt. V
Europe
291
ch. 23
The European Action Plan / Thorsten M. Volz
293
I.
Introduction
293
II.
The Scope of the European Action Plan
294
III.
The Proposed Time Schedule of the European Action Plan
295
IV.
Provisions on Directors' Liability within the European Action Plan
296
V.
The Implementation within the European Community
297
VI.
The Implementation within Member States' Legislation
298
A.
Austria
298
B.
Belgium
298
C.
Czech Republic
299
D.
Denmark
299
E.
Finland
299
F.
France
299
G.
Germany
299
H.
Ireland
300
I.
Italy
300
J.
Luxembourg
300
K.
Netherlands
301
L.
Poland
301
M.
Portugal
301
N.
Spain
301
O.
Sweden
302
P.
Switzerland
302
Q.
Ukraine
302
R.
United Kingdom
302
ch. 24
Austria / Christian Dorda
303
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
303
A.
Composition and Structure of Boards
304
B.
Appointment, Election, Delegation, and Removal of Directors
304
C.
General Principles of Directors' Liability
305
1.
Liability of Directors towards the Company
305
2.
Liability of Directors towards Third Parties
305
II.
Recent Cases Dealing with Directors' Liability
306
III.
Judicial Review: Tightening of Standards?
307
IV.
Typical Schemes to Avoid Directors' Liability
307
A.
Changing Composition of Boards
307
B.
Changing Decision-Making Mechanism
308
C.
Board/Management Relationship
308
V.
Corporate Governance
308
VI.
Liability Issues
309
A.
Who Can Sue?
309
1.
The Company
309
2.
Shareholders
310
3.
Third Parties
310
B.
Who Can Be Sued?
310
1.
Directors
310
2.
The Company
310
C.
Thresholds and Limitations
310
D.
Joint Liability/Solidarity
311
E.
Derivative Actions
311
F.
Class Actions
311
G.
Relevance of Bankruptcy
311
H.
Costs and Fees in Liability Litigations
312
VII.
Indemnification
312
VIII.
Directors' and Officers' Insurance
312
IX.
Other Methods of Protection
312
X.
Lawyer Directorship
313
XI.
The Èuropean Action Plan'
313
ch. 25
Belgium / Jens Van Hecke
315
I.
Introduction
315
II.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
315
A.
One- and Two-Tier Systems
315
B.
Board Structure
316
C.
Elections/Staggering
316
D.
Chairman and CEO
317
E.
Removal
318
F.
Representation of the Company
318
G.
Conflicts of Interest
318
III.
Corporate Governance
318
A.
Duty of Care of the Director
319
B.
Enforceability
319
IV.
Liability Issues
320
A.
Introduction
320
B.
Civil Liability
320
1.
Contractual Liability
320
a.
Who Can Sue?
320
b.
When Can a Director Be Held Liable?
321
i.
Fault
321
ii.
Damage
321
iii.
Causal Relation
321
c.
What Kind of Liability?
321
2.
Liability for Violations of the Articles and of the Company Code
322
a.
Who Can Sue?
322
b.
When Can a Director Be Held Liable?
322
i.
Fault
322
ii.
Damage
323
iii.
Causal Relation
323
c.
What Kind of Liability?
323
d.
Specific Case: Bankruptcy
323
e.
Specific Case: Social Security Fraud
324
f.
Specific Case: Founders' Liability
324
3.
Tort Liability
324
a.
Who Can Sue?
324
i.
Relation Director: Company
324
ii.
Relation Director: Third Parties
325
b.
When Can a Director Be Held Liable?
325
c.
What Kind of Liability?
325
C.
The Act of 3 July 1978 Concerning Employment Agreements
325
V.
Judicial Review
325
VI.
Ways to Avoid or Limit Directors' Liability
326
A.
The Use of Legal Entities
326
B.
Whistleblowing
326
C.
Exoneration Clauses
326
D.
Hold Harmless Clauses
327
E.
Discharge
327
1.
Validity of the Discharge
327
2.
Scope of the Discharge
328
3.
Contractual Commitments to Grant Discharge
328
F.
Resignation
328
G.
Directors' Insurance
328
H.
Statute of Limitations
328
VI.
Lawyer Directorship
329
VII.
Forecast on Future Legislation
329
ch. 26
Czech Republic / Martin Solc
331
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
331
A.
Basic Powers of the Statutory Bodies
332
1.
Board of Directors
332
2.
Supervisory Board
333
B.
Composition of Company Bodies, Membership, and Requirements for the Performance Office
333
1.
Composition of Company Bodies
333
2.
Election and Removal, Membership Requirements
334
C.
Decision Making by Statutory Bodies, Prohibition of Parallel Functions, Ban on Competition, Restrictions on Parallel Employment
335
1.
Decision Making by Company Bodies
335
2.
Parallel Performance of Functions and Ban on Competition
335
3.
Relations between a Member of the Board of Directors and the Company under Labour Law
335
4.
Remuneration
336
II.
Liability Issues
336
A.
Basic Obligations, Consequences of Breach, Burden of Proof
336
B.
Persons Authorized to Claim Compensation for Damage and Limitation Periods
337
C.
Basic Criminal Law Aspects
338
D.
Liability of Other Persons with Influence on the Acts of the Company
338
1.
Brief Introduction to the Law on Corporate Groups
338
2.
Liability of Statutory Bodies to the Controlling Entity
339
3.
Liability of Other Persons with Influence on Management of the Company
339
a.
Protection for Members of Statutory Bodies
339
b.
The National Climate
340
ch. 27
Denmark / Mads Poulsen
341
I.
The Danish Management System
341
A.
General
341
B.
Election of Directors and Managers
342
C.
The Division of Power
342
II.
Directors' Liability
343
A.
Legal Prerequisites to Liability
343
B.
Tasks and Duties
344
C.
Directors in Listed Companies
345
III.
Recent Cases Dealing with Directors' Liability
346
A.
Introduction
346
B.
Liability for Violation of the Companies Act
346
C.
Liability for Predecessors' or Successors' Acts
347
D.
Liability for Violating the Financial Statements Act
348
E.
Duties in Pursuance of Special Legislation
348
F.
Operation of a Company in Difficulties
349
IV.
Developments in the Liability of Directors
350
V.
Corporate Governance
350
VI.
Limitation of Liability
351
A.
Introduction
351
B.
Agreed Exemption From Liability
351
C.
Discharge from Liability: Adoption of Accounts
351
D.
Reduction of Liability
351
VII.
Insurance
352
A.
Common Directors' and Officers' Liability Insurance
352
B.
Lawyers' Liability Insurance
352
C.
Effect of Insurance Coverage
352
ch. 28
Finland / Riikka Leinonen
355
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
355
A.
Company Organs
356
B.
Board of Directors
357
1.
Number of Board Members, Their Election, and Term of Duty
357
2.
Duties of Board Members under the Companies Act
358
3.
Finnish Corporate Governance Code and Finnish Panel on Takeovers and Mergers
359
II.
Liability of Board Members
360
A.
Liability under the Companies Act
360
B.
Damage, Negligence, and Causality
361
C.
Scope of Liability
361
D.
Amount of Compensation and Legal Costs
362
III.
Division of Liability
362
A.
Delegation
362
B.
Adjustment and Allocation of Damages
363
IV.
Limitation of Liability
363
ch. 29
France / Jacques Buhart
365
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
365
A.
Two-Tiered or Unitary Company Structure
365
B.
Chairman and CEO (One or Two People/Checks and Balances)
366
1.
Unitary Structure
366
2.
Two-Tiered Structure
366
C.
Board Structures
366
D.
Director's Elections/Staggering
367
1.
Unitary Structure
367
2.
Two-Tiered Structure
367
E.
Directors' Term of Appointment
367
F.
Delegation
367
G.
Removal of Directors
368
1.
Unitary Structure
368
2.
Two-Tiered Structure
368
II.
Recent Cases Dealing with Director's Liability
368
III.
Judicial Review (Tightening of Standards?)
368
IV.
S̀ocio-Anthropological Issues'
369
A.
Is the Composition of the Board of Directors Changing in France in Light of Recent Developments?
369
B.
Are the Decision-Making Mechanisms Changing in France in Light of Recent Developments?
369
C.
Board/Management Relationship
369
1.
Unitary Structure
369
2.
Two-Tiered Structure
370
V.
Corporate Governance
370
A.
Board Procedure
370
B.
Structures of Oversight
370
VI.
Liability Issues
371
A.
Who Can Sue?
371
1.
Shareholders
371
2.
The Company Itself
371
3.
Third Parties
372
B.
Who Can Be Sued?
372
1.
Directors
372
a.
Directors' Civil Liability
372
b.
Directors' Criminal Liability
372
2.
Supervisory Board Members
373
C.
̀De Facto' Director
373
D.
Thresholds and Limitations/Caps of Liabilities/Caps of Liabilities in France (Statutory Limitations on Directors' Liability)
373
E.
Joint Liability/Solidarity
374
F.
Derivative Actions
374
G.
Class Actions
374
H.
Relevance of Bankruptcy of Corporation with Regard to Bringing A Directors' Liability Suit
374
1.
Directors' Liability
374
a.
Directors' Civil Liability
375
b.
Directors' Criminal Liability
375
c.
Extension of Bankruptcy Proceedings to Director
375
2.
Liability of Supervisory Board Members
376
3.
Costs and Fees in Liability Litigations
376
VII.
Indemnification
376
VIII.
Directors' and Officers' Insurance
376
IX.
Other Methods of Protection
376
X.
Lawyer Directorship
377
A.
French Lawyers May Not Directly Run a Company unless they Are Appointed in Companies Owned by their Own Families
377
B.
French Lawyers May Be Appointed as Director
377
XI.
The Èuropean Action Plan'
377
ch. 30
Germany / Alexander Loos
379
I.
Basic Principals for Directors' Liability
379
A.
Single-Body Companies or Two-Tier System
379
B.
Management Structure and Chairman
380
C.
Delegation of Management Powers
380
D.
Removal of Directors
381
II.
Typical Liability Cases
381
A.
Internal Liability towards the Company
381
1.
Violation of Non-compete
381
2.
Poaching of Business from the Company
382
3.
Disbursements from Restricted Equity of the Company
382
4.
Violation of Arm's Length Principles
383
5.
Knowing Disregard of Avoidable Risk
383
B.
External Directors' Liability
383
1.
Gross Negligence to Pay Taxes and Public Levies
384
2.
Illicit Non-payment of Social Security Contributions
384
3.
Late Filing for Insolvency
384
III.
Liability Issues
385
A.
Enforcement of Director's Liability
385
1.
Who Can Sue?
385
2.
Costs of Litigation and Class Actions
386
B.
Joint Liability of Directors
387
C.
Indemnification
387
IV.
Directors' and Officers' Insurance
387
V.
Lawyer Directorships
388
VI.
The European Action Plan
388
ch. 31
Ireland / David Dobbyn
389
I.
Ǹational Basics' and National Legal Theories of Directors' Liability
390
A.
Board Structures
390
B.
Chairman and CEO
391
C.
Composition of the Board
392
D.
Election and Term of Appointment
393
E.
Delegation
393
F.
Removal of Directors
394
II.
Recent Cases Dealing with Directors' Liability
395
A.
Responsibilities under Environmental Law
395
B.
Non-executive Directors
396
III.
Corporate Governance
397
A.
Combined Code
397
B.
Directors' Compliance Statements
398
IV.
Liability Issues for Directors
400
A.
Who Can Sue?
400
1.
Public Authorities
400
2.
The Company
400
3.
Shareholders and Employees
400
4.
Creditors
401
5.
Third Parties
401
B.
Who Can Be Sued?
401
1.
Executive and Non-executive Directors
401
2.
Shadow Directors
402
C.
̀De Facto' Director
402
D.
Penalties
402
E.
Impact of Insolovency
403
V.
Indemnification
404
VI.
Directors' and Officers, Insurance
404
VII.
Other Methods of Protection
405
VIII.
Lawyer Directorships
405
IX.
Forecast on Future Legislation Development
406
ch. 32
Italy / Gabriele Fagnano
409
I.
Corporate Governance Structure and Directors' Liability
409
A.
Traditional, Single-Body, and Two-Tier System; Structures of Internal Control
409
B.
Appointment and Removal of Directors
410
C.
Board Structure and Main Executive Roles
411
D.
Delegation and Information Flow within the Board of Directors
412
E.
Directors' Interests in Relation to Company Action
413
II.
Directors' Duties and Recent Cases Dealing with Directors' Liability
413
A.
Directors' Duties
413
B.
Judicial Approach to Directors' Standard of Care and Diligence and Limits to Judicial Review of Directors' Business Errors: Tightening of Standards
414
II.
Liability Issues
416
A.
Who Can Sue?
416
1.
Company Action against Directors and Relevant Indemnification
416
2.
Action of Company Creditors and Relevant Indemnification
417
3.
Action of Third Parties and Individual Shareholders, Relevant Indemnification
417
B.
Who Can Be Sued?
418
C.
Statute of Limitations and Other Limitations of Liability
418
1.
Statute of Limitations
418
2.
Other Limitations
419
D.
Joint and Several Liability
419
E.
Derivative Actions and Class Actions
420
F.
Relevance of Bankruptcy with Regard to Bringing a Directors' Liability Suit
420
ch. 33
Luxembourg / Saskia Konsbruck
421
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
421
A.
Òne- or Two- Tiered System'
421
B.
Chairman and CEO
422
C.
Board Structures
422
D.
Elections/Staggering
423
E.
Delegation
423
F.
Removal of Directors
424
II.
Recent Cases Dealing with Directors' Liability
424
III.
Judicial Review (E.g., Tightening of Standards?)
425
IV.
S̀ocio-Anthropological Issues'
425
V.
Corporate Governance
425
VI.
Liability Issues
426
A.
Who Can Sue?
426
1.
Liability for Management Errors (Article 59. [§] 1 of the Law)
427
2.
Liability for Infringement of the Law or the Articles of Incorporation (Article 59, [§] 2 of the Law)
427
3.
Liability in Tort
427
4.
Liability under Criminal Law
427
B.
Who Can Be Sued?
428
1.
Liability for Management Errors (Article 59, [§] 1 of the Law)
428
2.
Liability for Infringement of the Law or the Articles of Incorporation (Article 59, [§] 2 of the Law)
429
3.
Liability in Tort
429
4.
Liability under Criminal Law
430
C.
Thresholds and Limitations/Caps of Liabilities
430
D.
Joint Liability/Solidarity
430
1.
Liability for Management Errors (Article 59, [§] 1 of the Law)
430
2.
Liability for Infringement of the Companies Law or the Articles of Incorporation (Article 59, [§] 2 of the Law)
431
3.
Liability in Tort
431
4.
Liability under Criminal Law
431
E.
Derivative Actions
431
F.
Class Actions
432
G.
Relevance of Bankruptcy of the Corporation with Regard to Bringing a Directors' Liability Suit
432
H.
Costs and Fees in Liability Litigations
432
VII.
Indemnification
433
VIII.
Directors' and Officers' Insurance
433
IX.
Other Methods of Protection
433
X.
Lawyer Directorship
434
XI.
The European Action Plan
434
ch. 34
The Netherlands / Martin Grablowitz
437
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
437
A.
Two-Tier System or One-Tier System Body
437
B.
Chairman and CEO (One or Two People/Checks and Balances)
438
C.
Board Structures
438
D.
Elections/Staggering
439
E.
Delegation
439
F.
Removal of Directors
439
II.
Recent Cases Dealing with Directors' Liability
440
III.
Judicial Review (Tightening of Standards?)
440
IV.
S̀ocio-Anthropological Issues'
441
A.
Composition of the Board of Directors
441
B.
Decision-Making Mechanism
441
C.
Board/Management Relationship
441
V.
Corporate Governance
441
VI.
Liability Issues
442
A.
Who Can Sue?
442
1.
The Company
442
2.
The Shareholder
442
3.
Trustee in Bankruptcy
442
4.
Creditors and Third Parties
442
5.
The Government
443
B.
Who Can Be Sued?
443
C.
Thresholds and Limitations/Caps of Liabilities in the Netherlands (Statutory Limitations on Directors' Liability)
443
D.
Joint Liability/Solidarity
443
E.
Derivative Actions
444
F.
Class Actions
444
G.
Relevance of Bankruptcy of Corporation with Regard to Bringing a Directors' Liability Suit
445
H.
Costs and Fees in Liability Litigations
445
VII.
Indemnification
445
VIII.
Directors' and Officers' Insurance
446
IX.
Lawywer Directorship
447
X.
The Èuropean Action Plan'
447
A.
Modernizing the Board of Directors
447
B.
Implementation
447
ch. 35
Poland / Tomasz Zak
449
I.
Ǹational Basics' and National Legal Theories of Directors' Liability
449
A.
Two-Tired or Unitary Company Structure
449
B.
Chairman and CEO
450
C.
Board Structure
450
D.
Directors' Election/Staggering
451
E.
Directors' Term of Appointment
451
F.
Delegation of Powers
451
G.
Removal and Suspension of Directors
452
II.
Typical Schemes/Behaviour to Avoid a Directors' Liability
452
III.
Corporate Governance
453
A.
Management Board
453
B.
Supervisory Board
454
IV.
Liability Issues
454
A.
Liability Towards the Company
454
B.
Liability towards Third Parties
455
C.
Derivative and Class Actions
457
D.
Costs
458
E.
Criminal Liability
458
V.
Indemnification
458
A.
Liability towards Third Parties
458
B.
Liability towards the Company
459
VI.
Directors' and Officers' Insurance
459
VII.
Lawyer Directorship
459
ch. 36
Portugal / Bruno Sampaio Santos
461
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
461
A.
Two-Tier System or One-System Body
461
B.
Chairman and CEO (One or Two People/Checks and Balances)
462
C.
Board Structures
462
D.
Elections/Staggering
462
E.
Delegation
463
F.
Removal of Directors
463
II.
Recent Cases Dealing with Directors' Liability
464
III.
Judicial Review (Tightening of Standards?)
464
IV.
S̀ocio-Anthropological Issues'
465
A.
Is the Composition of the Board of Directors Changing in Portugal in Light of Recent Developments?
465
B.
Are the Decision-Making Mechanisms Changing in Portugal in Light of Recent Developments?
466
C.
Board/Management Relationship
466
V.
Corporate Governance
466
VI.
Liability Issues
467
A.
Who Can Sue?
467
1.
Liability towards the Company
467
2.
Liability towards Shareholders (and Other Third Parties)
467
3.
Liability towards Creditors of the Company
468
4.
Liability before Tax Authorities and Social Security
468
B.
Who Can Be Sued?
468
C.
Thresholds and Limitations/Caps of Liabilities in Portugal (Statutory Limitations on Directors' Liability)
468
D.
Joint Liability/Solidarity
469
E.
Derivative Actions
469
F.
Class Actions
469
G.
Relevance of Bankruptcy of Corporation with Regard to Bringing a Directors' Liability Suit
469
H.
Costs and Fees in Liability Litigations
470
VII.
Indemnification
470
VIII.
Directors' and Officers' Insurance
470
IX.
Other Methods of Protection
470
X.
Lawyer Directorship
471
XI.
The Èuropean Action Plan'
471
ch. 37
Spain / Idoya Fernandez
473
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
473
A.
Two-Tier versus Òne-System' Body
473
B.
Chairman and CEO
474
C.
Board Structure
474
D.
Elections/Staggering
474
E.
Delegation
475
F.
Removal of Directors
475
II.
Recent Cases Dealing with Directors' Liability
475
A.
General Rules
475
B.
Infra-capitalization
476
III.
Judicial Review
476
IV.
S̀ocio-Anthropological Issues'
477
V.
Corporate Governance
477
VI.
Liability Issues
478
A.
Who Can Sue?
478
1.
Corporate Action
478
2.
Individual Action
479
B.
Who Can Be Sued?
479
1.
Directors
479
2.
Corporate Entities as Directors
479
3.
̀De Facto' Directors
479
4.
Liquidators
480
5.
Persons Holding Powers of Attorney
480
C.
Thresholds and Limitations
480
1.
Statute of Limitations
480
2.
Negligence
480
D.
Joint Liability/Solidarity
481
E.
Derivative Actions
481
F.
Class Actions
481
G.
Relevance of Bankrupcty of Corporation with Regard to Bringing a Directors' Liability Suit
482
VII.
Indemnification
483
VIII.
Directors' and Officers' Insurance
483
IX.
Other Methods of Protection
484
X.
Lawyer Directorship
484
XI.
The Èuropean Action Plan'
485
ch. 38
Sweden / Sverker Bonde
487
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
487
A.
Business Form and the Legal Framework
487
B.
Basic Organization and Corporate Bodies of a Swedish Aktiebolag
488
C.
Responsibilities of the Different Organs and Delegation
488
D.
Election and Removal of Directors
489
II.
Recent Cases Dealing with Directors' Liability
490
III.
Judicial Review of Directors in Sweden
490
IV.
Corporate Governance
491
A.
Composition of the Board
491
B.
Decision-Making Mechanisms: Board Committees
491
C.
Duties of Directors toward the Company
492
D.
Duties of Directors towards Majority and Minority Shareholders
492
E.
Duties of Directors in Case of Bankruptcy
492
V.
Liability Issues
493
A.
Legal Framework
493
B.
Who Can Sue and Be Sued?
493
1.
The Company
493
2.
Shareholders: Derivative Actions
494
3.
Creditors and Other Third Parties
494
4.
Insolvency Administrators/Trustees in Bankruptcy
494
C.
Directors' Criminal Liability
494
D.
̀De Facto' Directors' Liability
494
E.
Thresholds and Limitations to Liability
495
F.
Class Actions
495
G.
Costs and Fees in Liability Litigations
495
VI.
Indemnification by the Company and Insurance
495
VII.
Other Methods of Protection
496
VIII.
Lawyer Directorship
496
IX.
Forecast on Future Legislation Development
496
ch. 39
Switzerland / Felix R. Ehrat
499
I.
Directors' Liability in Switzerland: The Basic Legal Regime
499
A.
Introduction
499
B.
Flexible One-Tier System
500
C.
Board Structures, Chairman and CEO
500
D.
Election and Removal of Directors, Nationality and Domicile Requirements
501
E.
Delegation
501
II.
Recent Cases Dealing With Directors' Liability
502
A.
Claims of the Company in Good Standing
502
B.
Late Filing for Insolvency
504
C.
Liability for the Issuance of Prospectuses
504
III.
Standards of Judicial Review
505
IV.
Corporate Governance
505
V.
Liability Issues
506
A.
Grounds for Liability and Prerequisites in General
506
B.
Who Can Sue?
507
C.
Derivative Actions in Particular
508
D.
Who Can Be Sued?
509
E.
No Thresholds and Limitations on Directors' Liability
509
F.
Joint and Several Liability
510
G.
No Class Actions
510
H.
Costs and Fees in Liability Litigations
510
VI.
Indemnification
511
VII.
Directors' and Officers' Insurance
511
VIII.
Other Methods of Protection for Directors on the Board of a Swiss Corporation
512
ch. 40
Ukraine / Pavlo Khodakovsky
513
I.
Ǹatinal Basics' and National Legal Theories of Directors' Liabilities
513
A.
Two-Tiered or Unitary Company Structure
513
B.
Chairman/CEO Executive Body
515
C.
Board Structures
515
D.
Directors' Elections/Staggering
515
E.
Directors' Term of Appointment
516
F.
Delegation of Authorities (Powers)
517
G.
Removal of Directors (Dismissal, Recalling, and Suspension)
517
II.
Recent Cases Dealing with Directors' Liability
518
III.
Judicial Review
519
IV.
Typical Schemes/Behaviour to Avoid Directors' Liability
519
V.
Corporate Governance
520
VI.
Liability Issues
521
A.
Who Can Sue?
521
B.
Who Can Be Sued?
522
C.
̀De Facto' Director
522
D.
Thresholds and Limitations/Caps of Liabilities (Limits of Directors' Liability)
522
E.
Joint Liability/Solidarity
523
F.
Derivative Actions
524
G.
Class Actions
524
H.
Relevance of Bankruptcy of Corporation
524
VII.
Indemnification
524
VIII.
Directors' and Officers' Insurance
525
IX.
Other Methods of Protection
525
X.
Lawyer Directorship
525
XI.
Forecast on Future Legislation Development
525
ch. 41
United Kingdom / Karla Dudek
527
I.
Ǹational Basics' and National Legal Theories of Directors' Liabilities
528
A.
Two-Tiered or Unitary Company Structure
528
B.
Chairman and CEO
528
C.
Board Structures
528
D.
Directors' Elections/Staggering
529
E.
Directors' Term of Appointment
530
F.
Delegation
530
G.
Removal of Directors
530
II.
Recent Cases Dealing with Directors' Liability
531
III.
Judicial Review
532
IV.
Typical Schemes/Behaviour to Avoid Director's Liability
532
V.
Corporate Governance
533
A.
Board Procedures
533
B.
Structure of Oversight
534
VI.
Liability Issues
535
A.
Who Can Sue?
535
B.
Who Can Be Sued?
535
C.
̀De facto' Director
536
D.
Thresholds and Limitations/Caps of Liabilities
536
E.
Joint Liability/Solidarity
536
F.
Derivative Actions
536
G.
Class Actions
537
H.
Relevance of Bankruptcy of the Corporation
537
VII.
Indemnification
538
VIII.
Directors' and Officers' Insurance
538
IX.
Other Methods of Protection
538
X.
Lawyer Directorship
539
XI.
Forecast on Future Legislation Development
539
Subject Index
541