Directors Insurance For A Private Company
Q. Do You Need Directors Insurance For A Private Company?
A. Yes. Directors insurance for a private company has value regardless of size because they are threatened by many of the same liability and criminal exposures that public companies face and are share the same level of duty to the organization they are part of.
Directors & Officers of Private Companies Have A Duty:
Performing Director or Officer responsibilities, a breach of the following which can lead to corporate and/or personal liability:
- Fiduciary Duty (duty of loyalty to the company); and
- Duty of Care.
In Canada directors and officers of private companies are subject to more than 100 provincial and federal statutes imposing other personal liabilities upon directors and officers most of which are outlined in provincial and/or federal business corporation acts.
“Every director and officer of a corporation in exercising his powers and discharging his duties shall,
(a) act honestly and in good faith with a view to the best interests of the Corporation” (i.e. Business Corporations Act (Ontario) (“OBCA”), section 134(1), Canada Business Corporations Act (“CBCA”), section 122(1)).
Examples of breach of this duty can lead to stakeholders bring suit against the corporation and/or the board and/or individual directors, officers and employees.
Real Canadian examples of breaches which resulted in allegations of wrongful acts and which have been covered as claims by directors insurance for a private company include:
- Realizing secret profits or unfair gain through personal
transactions with or on behalf of the corporation;
- Conflicts of interest;
- Competing with the corporation to its detriment;
- Realizing personal gain from the use of material, non-public
corporate information (insider trading); and
- Taking personal advantage of a corporate opportunity.
To learn more about directors insurance for a private company, ALIGNED and/or our commitment to providing insurance expertise and the best insurance products or solutions, talk to one of our advocates today. We can help you secure the best products, services and solutions for your business.
|ALIGNED Across Canada 100% Canadian owned, ALIGNED is a premiere insurance brokerage that serves more than 1,400 clients across the country. ALIGNED’s offices in Toronto, Calgary and Vancouver are supported by a national operations centre in Cambridge, Ontario. Uniquely within the industry, ALIGNED creates, negotiates and delivers the best business insurance and risk management strategies/solutions to organizations like yours.