Directors & Officers (D&O) cover is imperative for business owners in the UAE.
D&O at it’s core is an insurance policy intended to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business. It can also cover the legal fees and other costs the organization may incur as a result of such a suit.
For the majority of policies, there are three sides of cover:
- Side A coverage covers directors and officers for claims where the company refuses to or is financially unable to pay for indemnification.
- Side B coverage covers the losses of directors and officers when the company does grant indemnification.
- Side C coverage, also called “entity coverage,” extends coverage for the corporate entity itself.
Many people assume that as Director, Officer or Shareholder in an LLC company, they are immune from their personal assets being seized in the UAE. This is fundamentally not the case. It is a frequent occurrence within the UAE that courts seize, or hold the personal assets of Directors, Officers, Managers and Shareholders of companies for suits against them as a result of their position within the business.
These suits can range from action to inaction, from creditors to customers and may include investors.
Example of suits/claims which D&O Insurance may include:
- Misrepresentation of material fact during a sale
- Breach of Fiduciary Duty
- Creditor Claims
- Conspiracy & Negligence
- Shareholder Disputes
- Breach of Investment Agreement
- Misrepresentation/Deceptive Trade Practices
- Inaccurate Disclosure to shareholders
- And a host more of examples.
Given the increasingly litigious society we live in, and our growing economy, this cover is fundamental to the risk management of all businesses, business owners and business directors.
