The directors of any corporation have important duties and
obligations which, in certain cases, can entail their personal
liability.1 As in any area of human activity,
allegations of fault can be made against directors, and the latter
must defend themselves in order to show that the allegations are
either baseless or that the director acted with due diligence.
These defence initiatives most often require that the director
being sued, or targeted by a demand letter or a regulatory
investigation, be assisted by a lawyer or other experts. This can
lead to very considerable costs for an individual, in addition to
the amount he or she may be ordered to pay as damages to an injured
third party or as a penal fine to the government, not to mention
the associated reputational risks. It is therefore essential that
directors who are or risk being sued or prosecuted have adequate
means to defend themselves. Whence the importance of
indemnification and insurance plans.
