International Executive Liability Update
The Amended Companies Act (ACA) set to take effect on or before June 11, 2021 allows a stock company to reimburse its directors/officers for judgments, settlements and advancement of costs.
The Amended Companies Act (ACA), set to take effect on or before June 11, 2021 (exact date to be determined via Cabinet Order), introduces corporate indemnification for directors and officers. The Law allows a stock company to reimburse its directors and officers for judgments, settlements and
advancement of costs via an indemnity agreement. Any such contract must be approved by the board (or by shareholders’ resolution in the event there is no board). Indemnity is limited to matters involving alleged wrongful acts committed in the execution of a director’s or officer’s service on the board. Indemnification for losses arising out of willful misconduct or gross negligence are not permitted. Premium increases accelerated in the second quarter as insurers generally made upward pricing adjustments across multiple Management Liability lines, including Directors’ & Officers’ Liability (“D&O”), Employment Practices Liability (“EPL”), Fiduciary Liability, and Crime.
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