Protection money for directors

Directors often complain that the indemnities available from the companies they serve are too limited. This can create a real injustice, particularly where there is no insurance cover.

The Government has introduced legislation providing something of a lifeline. The relevant provisions came into force in April. As a result companies now have a much wider ability to indemnify directors and to advance their defence costs.

But the new law is permissive only. That is, it permits certain indemnities and advances of costs; it does not insist on them. In these circumstances, any indemnity or advance will need to be the subject of agreement between the director and the company. Directors will no doubt want to agree these before anything goes wrong. Once a claim is made, the scale of liability or the tenor of the allegations might make the company think better of agreeing anything.

For further information, please contact:
Adam Epstein
Tel +44 (0)20 7440 7102
adam.epstein@mishcon.com