The following Corporate practice note provides comprehensive and up to date legal information covering:
A director of a company limited by shares is exposed to a wide range of potential liabilities that could arise as a result of their acts or omissions carried out during the course of business of the company. One way in which a director might be protected from liability is by the company purchasing a directors' and officers' insurance policy (D&O policy).
This Practice Note summarises the:
Companies Act 2006 (CA 2006) provisions in relation to indemnifying directors against liabilities
reasons why companies purchase D&O policies
common terms, conditions and structures of D&O policies
common extensions and exclusions within D&O policies
underwriting considerations likely to be made by the insurance companies offering such D&O policies
procedure for notification of a claim to an insurance company
CA 2006 contains a general prohibition against exempting or indemnifying directors against liabilities. However, there are statutory exceptions to the general rule providing that directors can be protected from liability by:
the acquisition and maintenance of insurance by the company for its directors against liabilities
the company giving qualifying indemnities to its directors against certain liabilities
Prior to 2005, companies were prohibited from acquiring insurance or giving indemnities to protect its directors. Such permission came about due to recognition of the need for a proportionate balance between:
ensuring that directors do not act dishonestly or negligently
sufficiently protecting directors from
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