Key Points:
The legislation for the Carbon Pollution Reduction Scheme
highlights the need to consider carefully the scope of D&O
insurance policies.
The Bills introduced into Parliament to implement the Carbon
Pollution Reduction Scheme will impact directly a large number of
entities and their directors and officers. There will also be a
broad, indirect impact when emissions trading starts. The CPRS
Bills draw attention to key areas of D&O insurance
policies.
Liability of executive officers and insurance for pecuniary
penalties
Under Part 20 of the Carbon Pollution Reduction Scheme Bill 2009
(Cth), an executive officer will contravene a civil penalty
provision if they are involved in a contravention by their company.
This makes executive officers personally liable for misconduct of
the company if they have been reckless or negligent. The result may
be significant pecuniary penalties imposed on the executive
officer.
