Public Companies Need Public Company Directors Insurance
The Directors & Officers of publicly traded companies, like those listed on the TSX and CSE regardless of size/market capitalization, are threatened by many potential liabilities including those related to obligations under various securities laws and stock exchange rules.
Directors & Officers of Publicly Traded Companies Have A Duty To Their Shareholders & Stakeholders:
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)
- Duty of Care
- Securities Law
In Canada directors and officers of public companies are subject to more than 100 provincial and federal statutes, securities laws etc. imposing other personal liabilities upon directors and officers most of which are outlined in provincial and/or federal business corporation acts and other securities laws.
Example Of Duty Owed By Directors Of Publicly Traded Companies By The Canadian Business Corporations Act
“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, which are often shareholders bringing suit against the corporation and/or the board and/or individual directors, officers and employees.
Real Canadian examples of other areas which have resulted in allegations of wrongful acts and which have been covered as claims by public company directors insurance include:
- Insider Trading & Tipping
- Criminal Code
- Insider Reporting
- Related Party Transactions
- Prospectus Disclosure
- Continuous Disclosure
- Merger, Acquisitions & Take-overs
- Statutory Secondary Market Liability – Bill 198
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