Directors and Officers Liability Insurance is designed to protect the personal assets of directors and officers, by providing indemnity for loss arising from a claim, as a result of a ‘wrongful act’ committed by them in the course of performing their fiduciary duty. A Wrongful Act is usually defined as an error, misleading statement, mis-statement, conduct, omission, neglect or a breach of duty.
Who is covered?
Directors and Officers are the people involved with managing and running the organisation. It covers the individual person, not the company. The people generally covered include:
- A director, secretary or executive officer;
- An employee;
- Past, present & future natural persons; and
- A natural person as deemed by legislation
- Coverage and/or reimbursement of costs is only available where the company has indemnified the individual/s.
Duties and Obligations:
The law imposes duties upon the Directors and Officers of companies which they are personally liable for, including:
- exercising a reasonable amount of care and diligence in the conduct of their duties and use of the power of their position;
- to not misuse information or their position to gain advantage for themselves, or to disadvantage shareholders of the company; and
- preventing the company from trading whilst insolvent.
Anybody involved in the management have duties and obligations which may arise from one or more of the following statutes (but not limited to):
- Corporations Law;
- Workers Compensation legislation;
- Occupational Health & Safety legislation;
- Superannuation legislation;
- Trade Practices Act and Fair Trading Acts; and
- Anti-Discrimination legislation.