Directors and Officers
In terms of various statutes, including the Companies Act, and common law, a director of a company may be held personally, jointly and severally liable for any loss, damages or costs sustained by the company or any stakeholder as a consequence of any breach or dereliction of their duties and responsibilities (fiduciary or statutory).
The ITOO D&O policy is structured as follows:
- Directors & Officers – Provides cover for non-indemnified events – i.e. protects a director against personal liability or expenses not paid for by the company, and advances defence costs
- Company Reimbursement – Reimburses the company when the company has indemnified a director for an insured event, including any defence costs and expenses
- Company Securities – Cover for the entity where it is joined as a defendant with the directors in respect of actions relating to the sale or purchase of the company’s securities or shares
The policy provides legal defence costs and indemnification where legally permissible to insure.
The policy features a number of automatic or elective extensions and may be structured to preserve section 1 coverage.
Policy triggers / loss examples:
- Breach of health and safety legislation, e.g. manslaughter (culpable homicide) following industrial or workplace accidents
- Personal suits for breach of the Labour Relations Act
- Shareholder action following a drop in share price caused by lack of due diligence in merger or acquisition process
- Inadequate diligence in setting strategy or change in strategic direction
- Insolvency or liquidation order – creditors pursue a section 417 enquiry
- Failure in responsibilities to play an effective role in cyber-risk oversight
- Alleged criminal behaviour in breach of environmental laws and regulations