09: Protective action
Informed and experienced directors take proper and reasonable steps to protect themselves from personal liability. These include:
- Accurately defining their functions and responsibilities.
- Ensuring they are informed fully of the company’s current and anticipated trading position
- Seeking professional advice immediately if doubts arise about the company’s future viability.
- Documenting all decisions affecting the company’s activities.
- Arranging appropriate insurance cover. Directors can insure against many of the risks by taking out a directors’ and officers’ liability policy. Care should be taken to match the policy to the needs of the company and its directors.
