directors' liabilities

A recent judicial ruling out of the U.K. provides an interesting perspective on directors’ duties under applicable law when a bankrupt company is in liquidation. As discussed below, the Court held that a director’s duties continue in relevant respects even if the director’s powers cease as of the date of the bankruptcy filing. The circumstances of the case provide an interesting example of a claim that arose against a former director post-liquidation. As discussed below, the circumstances also provide an illustration of why the purchase of post-liquidation run-off coverage is advisable. Though the circumstances arose under U.K. law, the situation bears enough similarities to what might arise under equivalent U.S. law that the liability and insurance lessons are instructive even in the U.S. context.
Continue Reading Directors’ Duties in Insolvency and the D&O Insurance Implications

Francis Kean

In the following guest post, Francis Kean, Executive Director FINEX Willis Towers Watson, reviews some interesting recent historical academic research on directors’ duties and the business judgment rule in the U.K.  A version of this article previously was published on the Willis Towers Watson Wire blog (here). I would like to thank Francis for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to thig blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article.
Continue Reading Guest Post: The Truth about Directors’ Duties in the UK and the Business Judgment Rule

chris smith
Christopher Smith

In our increasingly global economy, corporate boards are increasingly diverse, and among the diversities boards increasingly encompass are geographic and cultural diversity. However, while diverse directors may serve for many reasons, they still must be able to discharge their duties to the corporation. In the following guest post, Christopher Smith of the Sydney office of the the Clyde & Co. law firm, take a look at an interesting recent case from an Australian Court, in which the court held that directors who sign corporate documents must be able to read and understand the documents in order to discharge their duties. A copy of the August 11, 2016 Federal Court of Australia ruling to which Chris refers in his guest post can be found here. I would like to thank Chris for allowing me to publish this article as a guest post on this site. Readers interesting in submitting guest posts should contact me directly. Here is Chris’s guest post.
Continue Reading Guest Post: Company Directors Who Cannot Read or Understand English Warned by Australian Court

weilIn the following guest post, Paul Ferrillo of the Weil Gotshal law firm and Christophe Veltsos, CISSP, CISA, and CIPP, and an Associate Professor at Minnesota State University, Mankato, take a look at a recent NASDAQ survey of corporate officials in multiple countries on the topic of cybersecurity accountability. As Paul and Christophe detail, there is reason to be concerned about the apparent lack of cybersecurity literacy, awareness and risk assessments among corporate officials surveyed. The authors also take a look at the steps companies can take to address these concerns.

I would like to thank Paul and Christophe for their willingness to publish their guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul and Chrisophe’s guest post.
Continue Reading Guest Post: Grading Global Boards of Directors on Cybersecurity

gavelapril2013It will not come as news to anyone that corporate directors face the possibility of direct personal liability for their actions or omissions in the capacities as directors. However, the scope of these individuals’ potential liability exposures can and does change. As a result of recent legal developments, at least two new areas of potential liability exposure for corporate directors have emerged. As discussed below, a recent federal district court decision suggests that directors can be held personally liable under both the Sarbanes-Oxley Act and the Dodd-Frank Act for whistleblower retaliation, and a recent California legislative enactment provides that corporate directors can be held personally liable for violations of the state’s wage and hour laws.
Continue Reading New Dimensions in Director Liability Exposure

del1Because the vast majority of U.S. publicly traded companies are incorporated in Delaware, legal developments in Delaware have a particularly important impact on legal standards governing corporate conduct in the U.S. Delaware law is particularly influential with respect to the responsibilities and potential liability exposures of corporate directors. In a series of recent opinions written by Chief Justice Leo E. Strine Jr., the Delaware Supreme Court has, according to an October 22, 2015 memo from the Skadden law firm (here) “reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored important protections for directors that had been weakened by prior court decisions.”
Continue Reading A Trio of Delaware Decisions Reaffirms Corporate Director Protections

europeOne of the vestiges of the global financial crisis is that company directors and officers now face more scrutiny than ever. This scrutiny, in turn, has led to a greater liability exposure for corporate officials, as well.  This increased scrutiny and amplified liability exposure applies not only in the U.S., but in other countries, including, in particular, in Europe, according to a recent report. The report, issued earlier this week by the European Confederation of Directors’ Associations (ecoDa) in conjunction with AIG and entitled “Guide to Directors’ Duties and Liabilities” (here) examines the risks facing directors of European countries and highlights the specific risks in a number of countries. As the report details, the nature of directors’ duties and liabilities and the manner in which they are enforced can be affected by the differences in legal environments and board structures across Europe. The report also discusses the role of D&O insurance in helping to address these risks. The October 5, 2015 press release from ecoDa about the report’s publication can be found here.  
Continue Reading A Guide to Directors’ Duties and Liabilities in Europe