A Directors and Officers (D&O) insurance policy is designed to protect the directors and officers of a company from losses resulting from claims made against them in relation to the performance of their duties.
The Association of Investment Companies (AIC) has recently published guidance for directors of investment companies to help investment company boards obtain the most appropriate D&O policy. Whilst aimed at investment companies, the guidance highlights principles that directors of other types of company may find useful.
Key points of the guidance worth noting include:
- The board of directors should always remain responsible for arranging their own D&O policies so that they are aware of what is and what is not covered. This is particularly important when subsidiary companies are involved under a group company structure.
- If the board is made responsible for putting in place the D&O cover this will help to ensure that all directors on the board are aware of what losses can and cannot be claimed against.
- Directors should receive advice on the D&O policy before making a claim as inaccurate reporting may lead to insufficient recoveries under the policy.
- Any new directors should be provided with a copy of the D&O policy.
- Consideration should be given as to what effect a merger or acquisition may have on the D&O policy.
If you would like further information on D&O policies, or to see the AIC's guide in full, please do not hesitate to contact Emma Cameron, or another member of the corporate team at Matthew Arnold & Baldwin LLP.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.