Is It Important that Majority Shareholder Exclusion be deleted from the Policy form?
D&O contracts will frequently have an exclusion for suits brought by someone holding more than a certain percentage of company stock, often 5-10%. This has been viewed as an extension of the “insured vs. insured” exclusion. However, with the “most adequate plaintiff” concept introduced by the Private Securities Litigation Reform Act of 1995, litigation will often be brought or directed by a stakeholder with a significant interest in the company. As a result, any such exclusion is unacceptable in that it could result in a denial of coverage.
