Individuals under investigation: questions to ask regarding D&O cover and company indemnities
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A manager or executive under investigation, either internally by the company, or by an authority, should understand the protection offered by D&O policies and company indemnity contracts, and in particular what those products do (and don’t) cover.
It’s worth being on the front foot, and asking the following questions of your employer regarding eg, policy limits, types of investigation covered, and cover for legal representation:
- With which categories of employee, at what level of seniority, do I share the D&O limit purchased by the company on my behalf?
- Is my D&O limit also shared with the company itself and, if so, in what respects and to what extent?
- Is access to my D&O insurance policy dependent on a failure or refusal by the company to indemnify me?
- Does the company agree to indemnify me in respect of all legal expenses (including, where I consider it necessary, seeking independent legal advice) in my capacity as a senior manager, to the extent legally permissible?
- In pre-enforcement dealings with regulators, what cover (if any) is available to me to seek independent legal advice under the employer’s D&O insurance programme?
- Will there be cover for internal investigations?
- Will there be cover for travel expenses for meetings with regulators (both in the directors’ home country and abroad)?
- Is the indemnity wide enough to cover all board appointments (including appointments to clients, any joint ventures or subsidiaries which are not wholly owned)?
- If the answer to 4 and/or 5 above is ‘No/None’, has the company considered purchasing additional legal expenses for me in pre-enforcement dealings with regulators?
- What restrictions are imposed (both by indemnity and insurance) on my freedom to select lawyers of my choice and in the conduct and control of my defence?
- Does the policy provide a mechanism under which insurers will advance all defence costs and legal representation expenses to me, pending resolution of any dispute between the company and the insurers as to the extent of such costs ultimately covered under the policy?
- What protection do I have against future claims against me if I retire or resign during the policy period, or if during such period the company is the subject or object of mergers and acquisitions activity?
- Does my D&O policy contain provision to enable me to take proceedings to clear my name in appropriate cases?
For more information on what is, and what is not, covered by company indemnities and D&O policies in the context of investigations and litigation, please read A guide: practical tips on D&O and indemnities.