How useful will D & O insurance be in the context of insolvent trading claims?
Section 199B and 199C of the Act provide that a company must not pay an insurance premium of the company against a liability arising out of conduct involving a willful breach of duty. So long as the D & O policy excludes such claims from its ambit a company is able to take out effective D & O insurance for its directors and officers.Section 199A prevents a company from indemnifying a director against liability incurred for a pecuniary penalty order or a compensation order under s1317H.What should directors do to protect their assets? 1. Planning your personal asset structure is fundamental to preventing assets being disgorged by a liquidator of your company. 2. Structure ownership of your personal assets not only for taxation purposes but also for asset protection purposes. This needs to be undertaken when you are solvent. The insolvency laws only capture transactions, were it appears that they were executed when the person had or ought to have had knowledge of the insolvency of their
