5. Indemnity and Insurance
5.1 Indemnity
A company will not be able to exempt a director from any liability for negligence, default, breach of duty or breach of trust in relation to the company. (Liability under derivative claims, brought on behalf of the company, will be covered by this section.)
The company may, however, indemnify the director against defence costs, or costs incurred in an application for relief under section 1157 provided that the director repays the costs if he is unsuccessful.
Directors should review the terms of any indemnity given to them by the company to determine whether such third party liabilities are covered.
5.2 Insurance
Section 233 permits a company to purchase insurance for its directors, and those of an associated company, against any liability attaching to them in connection with any negligence, default, breach of duty or breach of trust by them in relation to the company of which they are a director.
Directors should also review the terms of their D&O insurance to ensure that the defence of derivative claims under the 2006 Act is covered.
If you have any question on any of those matters, or on any of the matters covered below, whether now or in the future, you should contact David Heys at Lawson West LLP on 0116 212 1027 or by email at dheys@lawson-west.co.uk.
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