In 2004, the DTI investigated nearly 4000 companies, with each investigation taking up to two years to complete. This resulted in nearly 1500 directors being disqualified from holding directorships for up to 15 years.
The HSE conducted 11,000 investigations and successfully prosecuted in 1,000 cases.
Recent employment cases have seen allegations of sexual discrimination result in awards of £900,000.
These are some worrying statistics but were you aware that as a director or officer of a company you could personally be held liable for failure to meet your responsibilities which could leave you open to criminal and civil actions.
What are a director's responsibilities?
A director's duties fall into three main categories:
- Fiduciary - a duty of good faith towards the company
- Duty of skill & care - a director must exercise the due care and skill that can reasonably be expected of someone in their position
- Statutory - largely defined by The Companies Act and The Insolvency Act, concentrating mainly on disclosure, prospectuses and accounts.
There are many areas from which a director or officer could face a claim. For example:
- Health & Safety at Work Act
- Data Protection Act
- Racial & Sexual Discrimination Act
Anybody who can demonstrate a loss as a result of a director's failure to competently carry out their duties can make a claim. This could be shareholders, creditors, employees, suppliers or regulatory authorities.
What are the consequences of failure?
The penalties of a breach of duty can be severe and far-reaching. These can include fines or imprisonment, compensation awards, official enquiries or investigations, and disqualification of directors.
What is the solution?
MasterPolicy is able to offer you an exclusive Directors' & Officers' policy underwritten by Zurich.
This policy indemnifies directors from the financial loss associated with claims for negligence or breach of duties. It can also reimburse the company and assist directors with the costs incurred.
Who is covered by the Zurich D&O policy?
- Directors, including non-exec directors, shadow directors
- Officers, including company secretary, chief accountant, personnel manager
- Managers and supervisors
- Any employees named as co-defendants
- Anybody appointed by the company as liquidator administrators
What is covered?
- Legal defence costs
- Civil awards
- Court judgements
- Criminal acts (defence costs only)
- Pollution claims (defence costs and shareholder actions for lost value)
- Employment claims (defence costs incurred from actions brought by past, present and prospective employees)
- Shareholder costs (covers shareholders' costs in pursuing a claim against the insured when ordered by a court)
- Liability incurred when acting as an external director, eg: on a subsidiary board
For more information please click here to read the Zurich Directors' & Officers' Liability "Key Facts".
Protection for you and your business is just a phone call away, and premiums for this exceptional policy start at less than £200 per annum. MasterPolicy are here to help so please either download and complete our proposal form or call us now on 01767 318200.
If you are concerned about other forms of litigation against your company, please consider our DAS Commercial Legal Expenses scheme.