NEWS // Companies Act 2006 - New Duties for Directors (continued)
Directors and Officers (D&O) Insurance
Directors should review their current provisions for D&O Insurance and consider whether these require to be amended in light of the new provisions in the Act. The cost of dealing with and defending any derivative action could be significant for both the director and the company.
If a court refuses leave to continue an action brought by a shareholder, the shareholder will bear the cost of the application. However this is unlikely to cover all costs incurred by the company or director. If the courts give leave for the case to proceed the company may be required to reimburse the costs incurred by the shareholder in bringing the action. Clearly in such circumstances the company will have to bear two sets of costs - appropriate D&O insurance should cover this exposure!
For further information please contact Mark Michie on 0131 226 8204
or email mark.michie@mbmcommercial.co.uk.