Kilgetty Statutory Services has entered into a sub-agency agreement with Risk Benefit Solutions (Pty) Ltd in order to provide Kilgetty clients and clients of other auditing and legal practices with a Director and Officer Liability Insurance (D&O) product.
Managing Director of Kilgetty, Chris Wilson, has stated that in terms of the new Companies Act, a Director or prescribed officer of any Company may be held liable for loss, damages or costs sustained by the company based on three specific issues.
These liabilities arise either as a consequence of any breach by the director of a duty contemplated in the standard of Director’s conduct, or a failure to disclose a personal financial interest in a particular matter, or any breach by the Director or prescribed officer of a provision of the Companies Act or the Company’s Memorandum of Incorporation.
Directors and Officers Liability Insurance (D&O) has become closely associated with broader management liability insurance, which covers liabilities of the corporation itself, as well as the personal liabilities for directors and officers of the corporation. D&O Liability Insurance is not only a necessary coverage for large corporations, but is also an essential aspect to help protect small businesses and their owners.
According to Section 78(7) of the Companies Act, allowance is made for a company to purchase D&O Liability Insurance which is designed to protect past, present and future Directors and Officers of companies from damages resulting from wrongful acts they may have committed while in their positions.
The policy also provides protection in the event of any actual or alleged error, miss-statement, and omission, misleading statement or breach of duty, while some policies are designed to extend to the same coverage for employees.
When a Board of Directors is assembled, a D&O Liability Insurance is needed, while investors usually require that you have D&O Liability Insurance as part of the conditions for funding your company.
This cover includes reimbursement for civil damages, defence costs, judgements, settlements and reimbursement to the D&O’s company or employer for any indemnification to the director or officer for any such costs.
Having reviewed the recent Cricket South Africa Debacle and the Centro Properties Group court case in Australia, which highlighted the potential risk to directors, Chris Wilson believes that the nominal cost of the insurance premium is negligible in comparison to the risks associated with a claim made by shareholders, employees or creditors under the new Act.
If your company has no D&O Liability Insurance product in place, contacting Kilgetty Statutory Services in order to review this risk should be treated as a matter of urgency. In terms of the costs of the insurance premiums, they can be paid either as an annual premium or on a monthly basis.
Please view the table of costs and cover for your D&O Liability Insurance here and protect your company from any crippling losses by contacting the Kilgetty team of specialists for expert guidance!