Page 79 - Liability Insurance IC74

Guide for Liability Insurance

These policies, though popular in UK and USA has been
newly introduced in India. Directors and officers of
companies hold positions of trust and they are
responsible to their company, the shareholders, the
employees, and 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 :
1. employees , e.g for unfair dismissal

2. shareholders e.g, for imprudent expansions or loans
or investments

3. creditors e.g, for misrepresentation of financial
conditions

4. government regulatory bodies e.g, for breach of
legislation

5. members of the public e.g, for financial reliance on
incorrect or inadequate or negligent statement of
financial condition etc.

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