Directors and Officers (D&O) insurance is a critical risk management tool that safeguards individuals holding leadership positions within a company. D&O insurance for company secretaries, who play a pivotal role in corporate governance, offers a layer of protection against financial losses and legal repercussions arising from decisions made in good faith during the course of their duties.
The duties of a company secretary are extensive and encompass a variety of critical tasks:
While company secretaries strive for accuracy and adherence to regulations, even minor missteps can have significant consequences:
A company secretary at a prominent Delhi-based real estate firm faced a lawsuit for alleged non-compliance with new SEBI regulations, claiming a lapse in corporate governance. The lawsuit demanded ₹15 crores in damages. With a D&O Insurance policy covering up to ₹20 crores, the company secretary was able to navigate the legal complexities without personal financial risk. The insurance covered ₹3 crores in legal defence costs and aided in negotiating a settlement of ₹10 crores, shielding the company secretary from financial repercussions in their governance roles.
Securing the right D&O insurance policy requires careful consideration. Here are key factors company secretaries should evaluate:
Company secretaries can maximise D&O insurance effectiveness through a three-step approach:
Conclusion
D&O insurance serves as a vital shield for company secretaries, safeguarding them from the financial and reputational repercussions of unforeseen circumstances. It protects against personal liability for well-intentioned decisions gone away, provides financial backing for regulatory investigations, and fosters a culture of good corporate governance. By prioritising D&O insurance, company secretaries can discharge their duties with confidence, knowing they are well-protected. To ensure your D&O insurance solution is tailored to the specific needs and evolving risks faced by company secretaries, visit Policybazaar.com and talk to an expert today.
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