It could happen to you!
Being a company director – big or small – carries significant responsibility, but it also brings personal risk. In an increasingly litigious and regulated environment, directors and senior decision-makers can face legal action for the decisions they make on behalf of their business.
In recent years, we’ve seen a marked shift in the legal and regulatory landscape. From shareholder disputes and corporate insolvencies to allegations of professional misconduct, the risks for business leaders are growing. Regulatory bodies are more proactive, and employees, shareholders, and third parties are more willing to pursue legal claims, sometimes against individual directors.
What happens if…
- You sign a company cheque but leave out the word “Limited” from the payee line. The cheque is dishonoured, and by the time it’s reissued, the company has entered liquidation. You as a director, may be personally liable for the full amount.
- A fatal workplace incident leads to claims of unsafe conditions. If you are found to have failed in your duty of care, you could be summoned to appear in court in a personal capacity.
- You join a new company and accidentally use confidential information from your previous role to win business. Your former employer could sue you for breach of fiduciary duty.
“In an era of rising personal accountability and legal exposure, Directors & Officers insurance is not a luxury, it’s a critical safeguard. It helps protect those who take responsibility for leading businesses, ensuring they can do so with confidence and peace of mind.”
In Singh v Bains and another company [2025] EWHC 141 (Ch), the High Court rejected a claim that the claimant was owed a share in the defendant’s company. The case illustrates the legal complexity directors can face, especially in informally run businesses. Without clear documentation, misunderstandings and legal claims can arise, potentially against individual officers.
Given these exposures, Directors & Officers (D&O) cover, as part of a broader Management Liability Insurance policy, plays a crucial role in protecting senior leaders. It helps cover legal defence costs, compensation, and settlements resulting from claims made against directors and officers for alleged wrongful acts such as negligence, breach of duty, or regulatory non-compliance.
Without this protection, directors could be held personally liable, even when acting in good faith and in what they believed to be the best interests of the company
What is Directors and Officers Insurance?
* Video Source: Zywave
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