Page 152 - Liability Insurance IC74

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Q8. (a) What is the need for designing a policy for
providing protection to Directors and Officers of
a Company ?

Ans. Repeat Q10 (b) of May 2007 & Q3 of Nov 2008

This policy is very popular in U.K, U.S.A and other
developed countries, having been recently introduced in
India. Directors and Officers of Companies hold
positions of trust and they have responsibility to their
company, the shareholder, employees, the public at large.

They may become liable to pay for damages for wrongful
acts such as failure of supervision of the affairs of the
company etc. Apart from common law responsibilities,
the duties of directors under the Companies Act relate
to the prudent management of the Company.

These duties can be delegated to the members of
management .Specific duties may also be expressed in
the Articles of Association.

Thus, the directors and officers may be liable to :
(a) employees , e.g for unfair dismissal

(b) shareholders e.g, for imprudent expansions or loans
or investments

(c) creditors e.g, for misrepresentation of financial

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