In today’s corporate world directors and officers face unprecedented levels of scrutiny. They are challenged on all sides by legislation, governance and compliance. And there has been a dramatic increase in litigation against them. Whether the organization is private, publicly traded, or even a nonprofit, directors and officers owe a duty of care to the corporation which compels them to act without negligence. This duty may also apply to other stakeholders such as employees, creditors and customers. In Canada, corporate statutes state directors and officers have a fiduciary duty to act honestly, in good faith and in the best interests of the corporation – underpinned by the introduction of Bill 198 which was introduced to protect investors from misleading, insufficient or late corporate disclosures.
Failing to meet these standards can give rise to personal liability and, by accepting their position within the corporation, directors and officers are putting their personal assets at risk for the benefit of shareholders. Aside from any court-related settlements, fines or damages, the legal costs for any lawsuit against directors and officers can be enormous. D&O insurance, which is paid for by the corporation, protects against these risks. Without D&O insurance coverage it can be extremely difficult to attract and retain competent and successful people.
At Axis Insurance Managers Inc. we work hard to understand the risks faced by every client, which helps us to design broad protection geared specifically to the needs of the corporation or organization and its board – giving directors and officers peace of mind and the freedom to get on with their work.