Directors and Officers Liability

In today’s competitive world, there is a strong urge to take quick decisions to run the business and stay ahead. Sometimes such decisions may land the decision maker in legal trouble. It may invite regulatory action or legal action by aggrieved stake holders putting his/her personal assets at risk. Furthermore, though one may run a business in India, decision makers action may invite litigation from anywhere in the world. Whilst the Companies Act, 2013 holds responsible the key managers of the company for their decisions, it also makes mandatory for the company to make good the cost of defense if the employee successful defends himself/herself. A director or key personnel can face litigations from any of the stakeholder viz, the regulators, public authority, government action, customers, vendors, employees, competitors, shareholders and all those that may get affected by the decision of the management.
  • Some of the actions that may result into potential lawsuit claims are:

      • Reporting Errors.
      • Mispresentation in prospectus.
      • Exceeding authority limits.
      • Employee Practise – Harassment, Discriminations or out of turn promotions.
      • HR related Issues.
      • Failure to comply regulations.
      • Errors or failure to follow laid tender terms.
      • Shareholder actions.

Directors & Officers Insurance provides coverage for a wrongful act of omission by an employee and protects its all past, current and future directors including non-executive directors. For securities and employee practice acts, the policy can be extended to cover the company also.