Directors and officers of Australian corporations face
ever-increasing exposure to claims. As well as the liability for
any wrongdoing, the increasing use of investigative powers by the
Australian Securities and Investments Commission, the Australian
Competition and Consumer Commission and the Australian Prudential
Regulation Authority demonstrate the potential additional liability
for the cost of defending such investigations. Such inquiries gain
considerable media attention and can run a lengthy course which
means the cost of arranging representation or responding to an
inquiry can be very high.
This article reflects on the risks and pitfalls for directors
and officers in performing their duties, and the two main methods
of protection - indemnity and insurance. We specifically consider
directors' and officers' (D&O) insurance, and the
potential gap between the directors' perception of the scope of
the indemnities given to them and the actual scope of
