In order to reinforce the authority of the board of directors and to exercise the reinforced authority with sincere, the Korean Commercial Act is providing a high leveled duty of care and strict legal binding to the directors of company. Even stockholders can claim the responsibility of directors’ i...
In order to reinforce the authority of the board of directors and to exercise the reinforced authority with sincere, the Korean Commercial Act is providing a high leveled duty of care and strict legal binding to the directors of company. Even stockholders can claim the responsibility of directors’ illegal actions or issue compensation from their defaults when directors are taking neglectful actions. However, if directors do not have the capability for compensation for indemnity when he or she has been asked for their responsibilities, there will be no actual effect. Therefore, there will be in need of directors and officers liability as a measure of transferring the responsibilities from the directors. In order to get compensation from Directors and Officers Liabilities for the directors, the directors have to experience damages from taking responsibilities for legal compensation after having claims for damages to the insured within the security area of insurance policy. If the directors damaged the company, only damages by duty in good faith or violation of the duty of care will be compensated. Also, in case of that the directors damage the 3rd party, they can get compensation for damages without limits except the major stockholder, but this also has to be excluded from the scope of Insurers' Exclusions. Currently the directors of company have the responsibility for compensations from damages under the commercial laws if they assumed the responsibilities for compensations related to their businesses. However, since there is no regulation for Directors and Officers Liability under the Korean Commercial Act, the company is not providing conditions with comfortable atmosphere from the dangers. Also, recent cases in which the stockholders or third parties claimed a large value of damages indicate increasing importance of employees' liability insurance. However, we still lack regulations to subscribe the insurance in Korea. The United States, on the contrary, permits companies to subscribe the insurance for their employees under the Revised Model Business Corporation Act. Additionally, Korean Depositor Protection Act, in accordance with the Special Act on the Management of Public Funds, requires appointing a bankruptcy trustee in cases of injected public funds for fragile financial institutions (Article 35-8). In this case, the Depositor Protection Act permits Korea Deposit Insurance Corporation to demand that the relevant institutions subscribe a liability insurance in order to cover the property damage resulting from employees' default or tort (Article 35-9 (1)). Therefore, the need is high to revise Korean Commercial Act to enable corporations to subscribe to employees' liability insurance.
In order to reinforce the authority of the board of directors and to exercise the reinforced authority with sincere, the Korean Commercial Act is providing a high leveled duty of care and strict legal binding to the directors of company. Even stockholders can claim the responsibility of directors’ illegal actions or issue compensation from their defaults when directors are taking neglectful actions. However, if directors do not have the capability for compensation for indemnity when he or she has been asked for their responsibilities, there will be no actual effect. Therefore, there will be in need of directors and officers liability as a measure of transferring the responsibilities from the directors. In order to get compensation from Directors and Officers Liabilities for the directors, the directors have to experience damages from taking responsibilities for legal compensation after having claims for damages to the insured within the security area of insurance policy. If the directors damaged the company, only damages by duty in good faith or violation of the duty of care will be compensated. Also, in case of that the directors damage the 3rd party, they can get compensation for damages without limits except the major stockholder, but this also has to be excluded from the scope of Insurers' Exclusions. Currently the directors of company have the responsibility for compensations from damages under the commercial laws if they assumed the responsibilities for compensations related to their businesses. However, since there is no regulation for Directors and Officers Liability under the Korean Commercial Act, the company is not providing conditions with comfortable atmosphere from the dangers. Also, recent cases in which the stockholders or third parties claimed a large value of damages indicate increasing importance of employees' liability insurance. However, we still lack regulations to subscribe the insurance in Korea. The United States, on the contrary, permits companies to subscribe the insurance for their employees under the Revised Model Business Corporation Act. Additionally, Korean Depositor Protection Act, in accordance with the Special Act on the Management of Public Funds, requires appointing a bankruptcy trustee in cases of injected public funds for fragile financial institutions (Article 35-8). In this case, the Depositor Protection Act permits Korea Deposit Insurance Corporation to demand that the relevant institutions subscribe a liability insurance in order to cover the property damage resulting from employees' default or tort (Article 35-9 (1)). Therefore, the need is high to revise Korean Commercial Act to enable corporations to subscribe to employees' liability insurance.
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