Can company indemnities and D&O really protect directors?

THE global rise of shareholder activism has been paralleled by increased regulatory attention.

This has created an environment under which board performance and corporate governance have come under unprecedented scrutiny, while directors face ever increasing risks of personal liability for financial or corporate governance lapses.

Under such conditions, is it any wonder that directors are demanding from companies the maximum protection by way of contractual indemnities, or directors and officers liability insurance (D&O)?

A company may be willing to offer broad indemnities, but these cannot be freely negotiated because of restrictions in the Companies Act.

Similarly, D&O policies are subject to market norms, and monetary and time limits. More to the point…