Spot check for directors and officers: indemnity deeds, D&O insurance

Directors and officers deeds of access, indemnity and insurance, and liability insurances (D&O insurance) provide important protection for companies, and their directors and officers.

What you need to do

• Periodically review your indemnity deeds and D&O insurance policies to ensure they are in line with current laws, best market practice and afford adequate coverage given the risk profile of the company.
• Ensure that any limitations to company indemnities and D&O insurance are understood by the company, directors and officers.

Indemnity deeds

An indemnity deed typically:

• provides a director with contractual rights to be indemnified in respect of costs, expenses and other losses incurred by the director as a consequence of acting as a director, and contractual rights to an advancement of those costs and expenses;
• imposes an obligation on the company to effect, or use its best endeavours to effect, D&O insurance for the period of the directorship and for a period (usually seven years) after the termination of the directorship; and
• provides a director with greater access to documents and records of the company than provided for under Australian corporations legislation, even after the director ceases to be a director of the company (including, importantly, rights to access D&O insurance after the director has left the company).