1. Didi and Luckin's New York Debacles Shed Light on Corporate Liability Insurance as Shield Against Class Action Lawsuits

    Didi Global's New York listing debacle is shedding light on a little-known area of insurance that protects corporate directors and officers (D&O) from legal liability, as a number of law firms are soliciting shareholders to sign up for class-action lawsuits in US courts. Class action suits related to the securities industry jumped to 334 cases in the United States last year, 49 per cent higher than the average between 1997 and 2019, according to data compiled by Cornerstone Research...

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    1. The Didi incident and the new regulation in China are likely to increase the awareness for the need for D&O insurance.
    2. From a shareholder's perspective, class actions are more commonly seen against companies that have US exposure (via share listings) and as a result of M&A transactions.
    3. There is already an upwards price movement for D&O insurance [premium] in the past two years, and incidents like Didi may lead to further increases.
    4. Didi shall maintain directors' and officers' insurance in an amount determined in good faith by the board to be appropriate.
    5. The increased regulation from the Chinese government and the new legislation being introduced in the US is likely to deter Chinese firms from wanting to list in the US in the future.
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