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D&O Policy

DIRECTORS AND OFFICERS LIABILITY INSURANCE


Brief notes about the coverage and exclusions:
The Directors & Officers Liability insurance policy operates under two sections.
Section A
This section shall pay the loss of each insured for a wrongful act in the insureds
capacity as a director, officer or employee of the company to the extent that the
company has not indemnified the insured.
Section B
This section shall pay the loss of the company for a wrongful act in the insureds
capacity as a director, officer or employee of the company but only when and to the
extent that the company has indemnified the insured for the loss.
Defence Costs
The policy shall pay defence costs in advance of final judgement.
Who is Covered?
The cover applies to former, present and future members of the Board of Directors and
the Management comprising officers and employees in a managerial or supervisory
capacity. The policy normally covers the Parent company and all subsidiaries of the
Parent Company as mentioned in the Last Annual Audited accounts submitted with the
Proposal form. Should it be required to cover the Directors of newly acquired companies
(through mergers, acquisitions, take-overs) or shadow Directors the same could be noted
on the policy. The policy is designed to operate on an unnamed basis covering all
directors /officers and employees of the Policyholder.
What are the types of wrongful acts which can be alleged against the directors ?

Misuse of Corporate Funds


False Advertising Allegations
Companies Act Violations
Customers Suit
Fiduciary Responsibilities
Stockholders Suits
False Statements to Government Agencies
Breach of Duty to Minority Shareholders

Mergers and Acquisitions


Bankruptcy Suits
Granting Stock Options
Actions by Creditors
Conflicts of Interest
Anti-trust Violations
Auditing & Accounting Practices
Management Integrity

Irregularities in Securities Issues


Questionable Payments
Failure to Honour Employment Contracts

Quality of Management
Questionable Practices
Civil Rights Denial

Misleading Representations
Inadequate Supervision
Financial Loss to Corporation
Public Activists Groups

Imprudent Expansion
Actions Brought by Competitors
Collusion to Defraud
Conspiracy to Defraud

Where can the liability come from

Receivers, Liquidators and Administrators


Shareholders
Factory Inspectorate, Enforcement Directorate and Other Government Bodies
Creditors
Customers and Suppliers
Employees
Others
What is not covered?

Claims based on or arising out of the following (including but not limited to):

Willful/intentional infringement of law

Criminal behavior, fraudulent and/or intentional acts or omissions of an insured

The gaining in fact of any profit or advantage to which the insured was not legally
entitled

Acts committed prior to the inception date of the Policy.

Libel, slander or other defamation

Environmental damage or pollution

Bodily injury or property damage

Fines, penalties and other penal liability

Insured versus insured claims (other than Employment Practice Liability claims)

Major shareholding

Professional errors and omissions

Infringement of copyright or patent

In a capacity as trustee or fiduciary under law (statutory or non-statutory including


common) or administrator of any pension, profit sharing or employee benefits

program or employee retirement or employment termination benefits, including but


not limited to an actual or alleged violation of the responsibilities, obligations or
duties imposed by the Employee Provident Fund Act of 1952 (India) or the Payment
of Gratuity Act, 1972 (India), Employee Pensions Scheme, 1995 (India), Employee
Retirement Income Security Act of 1974 (USA) or the Pensions Act 1995 (UK).
Extensions under the Policy

Representation at Investigations and Examinations


New Subsidiaries
Outside Directorships
Discovery Period
Heirs, Estates and Legal Representatives
Joint Property Liability

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