(Economic Observation) What is the "explosion" of directors' liability for listed Chinese companies?
China News Agency, Beijing, May 12 (Reporter Chen Kangliang) An insurance product "Director's Liability" is becoming popular among Chinese listed companies. According to media statistics, since this year, 72 A-share companies have announced that they will purchase directors' liability insurance. Among them, in the month of April alone, 58 companies plan to insure, which is higher than last year.
The so-called director's liability insurance, that is, the liability insurance of directors, supervisors and senior management personnel, refers to when the company's "director of directors and supervisors" in the process of exercising their powers and duties, due to faults, resulting in third parties suffering economic losses and should bear the risk of economic compensation liability, The use of this insurance product can transfer the risk to the insurance company, and the insurance company shall bear the financial compensation liability according to the contract.
Zhao Xijun, deputy dean of the School of Finance and Economics of Renmin University of China, said in an interview with the China News Service on the 12th that it is rare for Chinese listed companies to intensively issue insurance plans for directors ’liability insurance recently. Applaud the situation. The important reason behind this lies in the implementation of the new securities law and the improvement of other relevant securities systems.
Zhao Xijun further pointed out that China will implement the new securities law from March 1st. The new law not only increases the penalties for violations of information disclosure regulations, but also proposes to explore the establishment of a securities civil litigation system. The expected changes in the legal environment have increased the uncertain risks faced by the “Dong Jian Gao”, and the significance of directors ’liability insurance has also been highlighted accordingly.
For example, the new securities law gives full play to the role of investor protection institutions, allowing them to accept the commission of more than 50 investors as representatives to participate in litigation; in another example, the new securities law has established an "implicit participation" and "explicit withdrawal" litigation mechanism It provides convenient institutional arrangements for investors to use legal weapons to protect their legitimate rights and interests.
In response, Zhou Fang, head of the financial insurance department of Anda Insurance China, also held a similar opinion. Zhou Yifang further pointed out that in addition to the increasingly standardized and strict legal environment, Ruixing Coffee's financial fraud is also an important reason for the insurance of directors and insurance. After the incident of Ruixing Coffee's financial fraud, the company received a large number of inquiries from directors and insurance companies every day. This shows that this type of insurance has attracted great attention in A-share listed companies.
According to public information, Ruixing Coffee purchased the director's liability insurance before going public in the United States. The total policy insured amounted to 25 million US dollars, involving many insurance companies such as China Ping An Property and Casualty.
However, some analysts reminded that Dong Ligong may "can't save" Ruixing Coffee. Zhu Junsheng, deputy director of the Insurance Research Office of the Development Research Center of the State Council, said that directors ’liability insurance usually covers investors’ losses caused by false statements and major omissions caused by negligence, but if it is intentional, it is generally a responsibility to exempt the project, and the insurance company does not need to pay. , So it also depends on how the event of Ruixing will be qualitative.
Zhao Xijun also said that Dong's liability insurance is a tool for risk transfer, but it is by no means a "protection umbrella" for malicious fraud or crime. Misconduct is subjectively and deliberately negligent, and the director's liability insurance covers the liability of honest operators, that is, negligent liability. Only when reasonable obligations have been fulfilled in the operation, but there are still faults, can they be included in insurance liability. However, the liability for compensation caused by deliberate violations is generally not within the scope of compensation.
Zhao Xijun further pointed out that with the continuous deepening of China ’s capital market reforms, investors will become more rational and professional, which will also put forward higher requirements for the listed company ’s “Director Supervisor”. Listed companies must “practice their internal skills” and eliminate them. The violations should also be reasonably used for hedging of insurance products such as directors 'liability insurance. It is expected that there will be more room for the development of directors' liability insurance in the future. (Finish)