Awareness of the need for Directors and Officers Insurance has increased largely as a result of a change to S310 of the Companies Act, giving statutory recognition to the practice of Directors and Officers insuring their liabilities.
A company was set up which provided various services to Council Tenants to help them buy their homes.The services included arranging mortgages, loans for improvements and appropriate insurance covers
The company ran up losses of £6M and a DTI investigation was prompted.Creditors of the company can claim against the directors for any losses suffered as a result of the liquidation and the directors could seek reimbursement under a Directors and Officers Policy.
A holiday company collapsed leaving 700 customers stranded abroad.
Receivers were called in to look into the affairs of the company and as a result of their findings, High Court writs were issued against the directors for alleged wrongful trading.
Under a D & O Policy, the defence costs in a wrongful trading action would be covered, as would any judgement awarded.
One company made a bid to take over another.The chairman of the company, subject to the takeover, wrote to all its shareholders advising them to take no action, i.e. not to sell their shares because the share price offered was less than that recommended.
When the offer was finally accepted, the share price was less than the original offer.
One investor is currently considering an action in respect of the loss suffered as a result of acting on the chairman’s advice. Any shareholders suffering a loss would be able to take action against the Company Board and a D & O Policy would reimburse the Board for their liability in respect of any losses.
Two companies, A and B merged.Later the newly merged company announced the discovery of a large fraud.The fraud was uncovered after payments for a contract suddenly ceased.Investigations revealed that 2 of the 5 supply companies had been wound up before the alleged contracts were signed
The shareholders of the newly merged company can sue the original directors of Company B, in respect of the losses incurred as a result of the decrease in value of the new company shares.The directors can claim reimbursements under a D & O Policy
The director of a subsidiary of a house builder faced an action under Environmental Legislation, alleging a protected population of newts had been disturbed by construction of new housing.
The Health and Safety Executive brought an action against a director of a wood distributor for corporate manslaughter following the death of an employee.The legal costs of defence were covered under the D & O Policy.
The minority shareholder and former director of a family run property consultancy brought an action against her former fellow directors alleging breach of trust and unfair dismissal. The legal costs of defence were covered under the D & O Policy.
