Directors’ and Officers’ Liabilities

Directors and officers are subject to a wide range of exposures arising from the management of a company. In Australia alone there are more than 600 State and Territory laws which impose personal liability on directors and officers. In addition, there has been an accelerating trend of securities class action filings due in part to the changing way litigation can now be funded. The emergence of commercial litigation funding has improved access for shareholders to participate in class actions.  In light of the growing environment for litigation and securities class actions in Australia and abroad, it is becoming essential that both public and private companies have a well designed risk management and insurance program.

Directors’ and Officers’ Liability Insurance is designed to provide cover to individual directors and officers for their personal liability arising from the management of a company. It is well recognised within the insurance industry that Directors and Officers Liability Insurance is a complex and highly specialised product. For that reason Strathearn has created the Professional Services Division to ensure that the directors of our clients are provided the most comprehensive level of policy coverage which allows them to discharge their duties in the knowledge that they are appropriately protected.

Risks covered

• Public, private and not-for-profit entities incorporated in both Australia and abroad (including entities traded on the TSX, LSE, AIM, JSE and NYSE)
• Public Offering Securities including debt and equity capital raisings and initial public offerings
• Legal representation expenses and the advance payment of defence costs
• Civil fines and penalties
• Run off coverage for retired directors and officers
• Coverage for the company for securities related claims (Side C company protection)
• Local placement for local underlyers in foreign jurisdictions.

Overseas Placements

The issue of local paper in overseas countries is an important insurance consideration. When an Australian based multinational has overseas subsidiaries, and directors and officers rely solely on the Australian D&O policy for worldwide protection, they may be vulnerable for several reasons.

• Local regulations may require that a D&O policy be issued by a locally licensed carrier.
• Local law may prohibit a local operation from having its parent company’s insurance policy pay claims.
• Indemnity payments by Australian based parent company to individuals in overseas jurisdictions may have adverse implications for the company.
• The local subsidiary may not be able to legally indemnify the director or officer, leaving the individual’s personal assets exposed.

Strathearn can assist in advising and arranging on these placements and have experiencing placing policies throughout the world.