The Companies Act 2014 has, for the first time in Irish law, set out in statute the fiduciary duties of a director of a company registered in Ireland. If you are a company director, it is vital that you are aware of your responsibilities and that you have a clear understanding of your legal obligations and statutory duties and responsibilities. Broadly, a director’s duties are to run a company in the best interests of the company, while acting with honesty, integrity and using professional skills to the advantage of the company.
Directors are currently facing unprecedented regulatory scrutiny.
Protection – Directors Insurance
What happens if some of the duties owed or the decisions made give rise to disaffection among shareholders or breach company law? Directors could be held personally liable for any negligence committed by them in their office as a director a company. Personal wealth and assets could be on the line if faced with litigation.
Although not a legal requirement, director’s insurance is strongly advised.
Directors insurance protects directors from any personal liability that might incur in the exercising of their duties. This provides insurance cover for the provision of a defence against a multitude of potential actions which could be brought against a director.
Consequences of having no Insurance:
There has been a deluge of claims brought against directors and former directors going through the Irish courts presently.
In family owned companies where traditionally the directors are also shareholders, such a dispute could cause untold damage to the company and involve legal and profession fees to try resolve matters.
Directors & Officers Insurance provides cover for Directors & Officers for defence costs and legal liability for claims & prosecutions made against them personally while acting in their role within the insured’s business. It also covers costs incurred during investigations by the regulators or authorities.
My advice is talk to an independent professional in confidence.