Proposal for
D irectors & O fficers D irectors & O fficers D irectors & O fficers D irectors & O fficers
L iability In surance L iability In surance L iability In surance L iability In surance
PROFESSIONAL RISKS
2nd Floor John Stow House
18 Bevis Marks London EC3A 7JB
Tel: +44 (0) 20 7623 4957 Fax: +44 (0) 20 7623 4958
PROFESSIONAL RISKS Kerry London Ltd, Professional Risks,
2nd Floor, John Stow House, 18 Bevis Marks, London EC3A 7JB
______________________________________________________________________________________________________
Directors and Officers
Liability Insurance Proposal Form
Please answer all questions leaving no blank spaces.
If you have insufficient space to complete any of your answers, please continue on your headed paper.
Important – All questions must be answered 1 Company title
2 Registered Address (& Head Office if different)
3 Country of
incorporation/registration 4 Please give the date since when
the company has continuously carried on business
5 Please provide a full description of the business activities
undertaken by the company
6 Please state if the company is:
(a) Private YES/NO
(b) Public YES/NO
(c) Listed on any United Kingdom Stock
Exchange YES/NO
(d) Listed on any foreign stock exchanges – please
specify which YES/NO
(e) Listed on the unlisted
securities market YES/NO
(f) Trading in any other way –
please specify YES/NO
If you have answered ‘YES’ to either
6(d) or 6(f) please provide details
7 (a) How many shareholders
does the company have?
(b) Please state the total number of shares issued (Divided by classes if applicable)
(c) Please state the total number of shares held by Directors and Officers of the company both directly and/or beneficially
(d) Please provide details of all shareholders owning more than 10% of any class of shares issued by the company
Name Shareholding
8 During the past six years has:
(a) the name of the parent
company changed? YES/NO
(b) any acquisition or merger taken
place? YES/NO
(c) any subsidiary company been sold or ceased
trading? YES/NO
(d) the capital structure of the parent
company changed? YES/NO
YES/NO
If YES to any of the above, please give details
9 (a) Has the company or any of its subsidiaries publicly revealed that it is considering or planning to implement any new acquisitions,
tender offers or mergers? YES/NO
If YES, please give details
(b) Is the company intending a new public offering of securities in the
next year? YES/NO
10 (a) Has there been any change to the list of Directors & Officers since the company’s last annual report and accounts?
YES/NO
If YES, please supply details
(b) Are there any changes to the list of subsidiary companies since the company’s last annual report and accounts?
YES/NO
If YES, please supply details, including country of registration and percentage of the shares owned
(c) Please give details of any changes in the capital structure of the company since the last annual report and accounts
(d) Are there any qualifications, comments of observations made within the latest annual report and accounts and/or the latest auditor’s report?
YES/NO
If YES, please provide full details translated into English if
necessary
(e) Are there any contingent liabilities/extraordinary items/litigation shown within the latest annual report and accounts?
YES/NO
If YES, please provide full details translated into English if
necessary
11 Has the company changed its external auditors and/or legal advisers in
the past 3 years? YES/NO
If YES, please give details
including the reason for change
12 Since when has the company continually paid cash dividends on:
(a) Common Stock (b) Preferred
Stock
The following questions (13 – 17) only need to be completed if cover is required for companies under the jurisdiction of the United States of America and/or Canada
13 What are the total gross assets of the company and its subsidiary companies in the United States of America and/or Canada?
14 What is the approximate number of employees in the United States of America and/or Canada
15 Please list those subsidiary companies in the United States of America and/or Canada that are not wholly owned, stating who owns the majority stock together with the percentage ownership
16 (a) Does the company or any of its subsidiaries have any stock, shares or debentures in the United States of America and/or Canada?
YES/NO
If YES, on what date was the last offer/tender/issue made?
Was the offer subject to the United States Securities Act of 1933 and/or The Securities Exchange Act of 1934 and/or any amendments thereto?
YES/NO
If any stocks or shares are traded in the form of ADR’s, please advise:
(i) Whether they are sponsored or unsponsored? YES/NO
(ii) The percentage traded as a total of issued share
capital? YES/NO
(iii) The number of ADR shareholders?
(b )
Does the Company or any of its subsidiaries have any debt instruments or commercial paper in North America?
YES/NO
If YES, please provide details
17 Please enclose a copy of the latest 20-F filing made to the USA regulatory authorities. If not applicable, please confirm
18 Does the company or any Director and/or Officer have Directors and Officers Liability Insurance currently in force? (Note, if this is a renewal placed through Kerry London Ltd. there is no need for you to answer this
question) YES/NO
If YES, please supply the following details:
(a) Name of Insurer
(b) Limit of indemnity
(c) Renewal Date
19 Has any claim, whether covered by similar insurance or not, been made against any past or present Director or Officer of the company or its subsidiaries or in their capacity as a Director or Officer for any other company?
YES/NO
If YES, please provide full details
20 Is any Director or Officer, after enquiry, aware of any act, circumstance or incident that could give rise to a claim?
YES/NO
If YES, please provide full details
21 Has any application for similar insurance ever been declined, cancelled or renewal refused, or has any insurance been subject to special
conditions?
YES/NO
If YES, please provide full details
22 What limit of indemnity do you require?
DECLARATION
I declare that the statements and particulars in this proposal are true and that no material facts have been misstated or suppressed after enquiry. I agree that this proposal, together with any other information supplied shall form the basis of any Contract of Insurance effected thereon. I undertake to inform Insurers of any material alteration to those facts occurring before completion of the Contract of Insurance. I further declare that I am duly authorised by the Directors and Officers to act as their agent in respect of all matters of any nature or kind relating to or affecting the proposal and the policy.
Signed
To be signed by Chairman/Chief Executive
Company
Date
Please tick & enclose with this Proposal Form:
(a) The last two Annual Reports and Accounts for the company
(b) The last two Interim Statements (if applicable)
(c) Any Offer Document/Listing Particulars published in the last 12 months
(d) Copy of the latest 20-F filing made to the USA regulatory authorities (if applicable)
E.U. Disclosure Clause (UK) Notice to the Proposed/Assured
The parties are free to choose the law applicable to this Insurance Contract.
Unless specifically agreed to the contrary, this insurance shall be subject to English Law.
Any enquiry or complaint should be addressed in the first instance to your Broker.
Kerry London Ltd
2nd Floor John Stow House 18 Bevis Marks London EC3A 7JB
Tel: 020 7623 4957 Fax: 020 7623 4958 Registered in England No. 2006558
Authorised and regulated by the Financial Conduct Authority
DIRECTORS & OFFICERS LIABILITY INSURANCE
An Overview of D&O Liability Insurance -
In the course of operating a business, the company and their Directors and Officers operate within an increasingly demanding regulatory climate.
Any mistakes made which adversely affect shareholders, employees, creditors and other parties of the company can lead to requirement to defend an action.
Circumstances under which a company is permitted to indemnify its Directors and Officers are limited under the Company’s Act and if sued in their personal capacity, whilst acting on the company’s behalf, they may not be able to rely upon the company to protect them.
Unlike the company, this personal accountability may be unlimited and can lead to bankruptcy, the seizure of assets and estates, potentially including those owned by a spouse.
Directors and Officers liability insurance provides cover for those persons authorised to act on behalf of the company in respect of their wrongful acts leading to a loss and reimburses the company itself where the company is required or permitted to indemnify such persons for such loss.
Cover can be arranged toextend to:
• Include defence costs
• Employment Practices' Liability *
• Environmental Liability defence costs
• Outside board directorships
• Spouses
* In addition, specific cover is available to protect the company itself, its’ directors and employees against the uncertainty of employment related actions
DIRECTORS & OFFICERS LIABILITY INSURANCE
D&O Liability Insurance – Further Explained
What is meant by ‘Responsible Position’?
Directors' duties are set out in an amalgam of obscure case law and relevant sections from various statutes and regulations. It is not surprising that directors are often ignorant as to what their duties actually are. Unfortunately ignorance is no defence. Directors who transgress can find themselves personally liable to the company, its shareholders, investors, creditors and even the general public. In some instances they could face criminal sanctions.
Why the duty of ‘Care and Skill’ is so important?
This common law duty requires Directors to carry out their duties with 'the care an ordinary man would take in the same circumstances on his own behalf' and with the skill one would expect from someone of his 'particular knowledge and experience'. If duties are delegated to managerial staff, directors must be completely satisfied that the manager is suitably experienced, honest and reliable or they themselves may be held personally responsible for their actions. If a director breaches these duties, the company can sue for recovery of its property or damages.
What are ‘Fiduciary Duties’?
A director must act honestly, in good faith and in what he considers to be the best interests of the company, in all his dealings with or on behalf of the company.
If a director's personal interests and those of the company’s conflict, the interests of the company must take precedence. A director has a positive obligation to promote or protect the interests of the company at all times. If a director breaches these duties they may face civil actions brought by the company, its shareholders or, in certain circumstances those doing business with the company. This would be termed as a breach of their Fiduciary Duties / Responsibilities.
What are Directors’ ‘Statutory Duties’?
Statutes impose an expanding range of duties upon directors. In the Companies Acts alone there are more than 200 provisions for imposing fines and penalties upon directors. Amongst others the following statutes impose duties upon directors:
Companies Act 1985; Insolvency Act 1986; Financial Services Act 1986; Environmental Protection Act 1990;
Health and safety at Work etc. Act 1974. Breaches of statutory duties may lead to criminal prosecution with sanctions including imprisonment and fines. A director may also find himself subject to disqualification proceedings.
What ‘Other Duties’ befall a Director?
There are a number of further pitfalls, for example, a director who personally directs and procures the company to commit a tort is himself liable to the victim no less than the company. A director may be liable for substantial damages to be paid from his personal wealth. Directors cannot rely upon indemnities provided by the company. Generally speaking, such indemnities are void in so far as they are incompatible with s.310 Companies Act 1985. In any event the directors' interests and those of the company are not always compatible. Indemnities from companies with which directors are in conflict, or where the company is insolvent, are not worth the paper they are written on. The best protection for directors is to insure against their potential liabilities.
Should ‘Non-Executive Directors’ be concerned?
Following the collapse of Enron in 2002, the DTI commissioned Derek Higgs to undertake a review into the role and effectiveness of non-executive directors in the UK.
The Higgs review was published on 20th January 2003 and focuses directly on the effectiveness of non-executive directors in their position of promoting the performance of the company and accountability. A number of recommendations were made with the aim of increasing transparency in the appointment process and widening the spread of experience. The outcome of all this will be a new level of responsibility owed to a company by it's executive and non-executive directors, whereas in the past, it has usually been the executive directors that have been in the firing line. In view of the increased status and pay of non-executive directors, it is likely that their role in failing to prevent corporate collapses will be more closely scrutinised by both claimants and regulators. Non-executive directors will be expected to be of a higher calibre in the future and paradoxically, due to the increased expertise and standards, at greater exposure to liability.
