oa Comparative and International Law Journal of Southern Africa - D and O insurance for directors and officers - what is this and is it a viable option in South African law?
In terms of section 247 of the Companies Act 61 of 1973, it is not open to the company to exempt a director from liability for breach of duty or trust or to indemnify him against claims in respect thereof. However, the question has been raised whether it is open to a company to take out an insurance policy giving the indemnity against liability for negligence. Regrettably, South Africa has not, to a great extent, embarked upon, nor formulated an indemnity insurance scheme, either through the statute book or through the common law and pressure of public policy demands, in terms of which directors and officers could adequately protect themselves against liability and financial risk. Furthermore, it has been stated that no insurance could ever be available to directors or officers of a company against liability for dishonesty. It is hoped that South African company lawyers will, in the near future, take cognizance of the fact that an indemnity insurance scheme should be considered for the South African situation.
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