AS A DIRECTOR or OFFICER, HOW MUCH ARE YOU PERSONALLY RESPONSIBLE?

Posted by David Hamilton on Dec 15, 2011 4:13:00 PM


The Canada Business Corporation Act and numerous statutes in each Province impose many duties on the Company Director. The breach of any of these, if it leads to financial loss to the company or to the shareholders or to others, can be grounds for an action for damages. There are further duties established by Common Law.

It is not uncommon for many claims to be unjustified or unfounded; however, the costs associated with their investigation and defense are often substantial.

Allegations which are most commonly made and which have to be defended by Directors include:

  • Acting beyond the scope of their authority.
  • Giving wrong or unprofessional advice.
  • Breach of fiduciary duties.
  • Failure to police the corporation or supervise subordinates properly. Anti-trust violations.
  • Improper or excessive company spending.
  • Unauthorized company borrowing.
  • Conflict of interest.

Remember, the above only need to be alleged for costs to be incurred.

These allegations are most likely to occur following:

  •  Acquisitions/divestitures.
  •  Mergers.
  •  Foreign investment (especially in the USA).
  •  Public offerings.
  •  Management buy-outs.
  •  Lack of growth, reduced dividends, improper handling of negotiations.
  •  Mismanagement or waste of corporate assets.
  •  Employee dismissal.
  •  Board room dispute.
  •  Breach of contract.
  •  Liquidation of the company.
  •  Change in ownership of the company's share capital.

It is also worth remembering that Directors can be held liable for acts committed by other Directors, simply .because they ·sit on the same board. Such damages can extend to the entire personal estate of the Director involved.

Directors and Officers' Liability Insurance is...

  1. Financial protection for personal assets of an individual Director or Officer.
  2. Reimbursement of claims paid by the organization for its Directors and Officers.
  3. Designed especially to meet the cost of:
    • Defending claims
    •  Compensatory damages Which the Director or officer may be legally obligated to pay following a wrongful act arising out of his position within the organization.

A Directors’ and Officers' Liability insurance policy should be a serious business consideration for your company.

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Or for further information please contact:

David Hamilton

Front Row Insurance Brokers

Telephone: 604-684-3456 (direct)

Fax: 604-684-3437

Email: david@frontrowinsurance.com

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Film Production Insurance: Covering Stunts and Special effects

Posted by David Hamilton on Jan 30, 2010 1:19:00 PM
The Film Production  insurance policy contains an exclusion under the Cast Insurance coverage for a person injured when taking part in a hazardous stunt or any special effect in the declared production, without the prior consent of the insurance company.

Although these types of activities are usually reserved for stunt performers, the producer and the director should be aware of this exclusion. If actors are involved in hazardous stunts or special effects, please advise your broker well in advance so that they can make the appropriate arrangements with the insurance company.

In order to properly evaluate the hazards involving stunts used in filming, please provide answers to the following:

1. Synopsis of scenes being filmed.

2. List stunts by tape, location and date.

3. Protective measures used to protect participants and public, equipment and property.

4. What is the experience of the Stunt Coordinator - please attach a resume.

5. How many people are involved in each stunt scene?

Additional information may be requested. The underwriters may cover the scene based on the strength of the information - the stunt coordinator resume is particularly important; otherwise, the underwriter may charge an additional premium, or apply a higher deductible or impose a sub-limit on the limit of coverage, or, they may use a combination of all three to address the risk.

If you are comfortable with a high deductible and sub limit you can often save the cost of an additional premium being charged.

Be sure to talk to your Entertainment  Insurance broker before you film any stunts or SPFX scenes that were not origionally in the script that your broker provided the insurance company.

Tags: d&o insurance, D&O liability, DICE Policy, Annual Film Insuruance, Documentary Insurance, Film Insurance, Documentary Films, Film Production Insurance, Production Insurance, Entertainment Insurance, Film insurance broker, DICE Insurance, DICE Insurance, Entertainment Insurance Broker, Hazardous stunts, Stunt Insurance, SPFX Insurance, Special Effects Insurance

Directors and Officers Insurance for Film Production Companies

Posted by David Hamilton on Jan 30, 2010 12:54:00 PM

Small to medium sized privately owned film production companies face several of the same management exposures as larger corporations - yet many don't purchase directors and officers liability insurance. A simpler approach could change all of that.

There are several hundreds of production companies in Canada and it is clear they are important to Canada's economy. What's less clear is why so few of them buy management protection in the form of directors and officers (D&O) or Employment Practices (EPL) liability insurance. Several studies show that the take-up rate of management liability protection amongst production companies has been slow.

While Canadian data is scarce, a recent survey by Chubb Insurance found that 37% of U.S. companies do not purchase any type of management liability or professional liability insurance. In a survey of private companies, the majority of survey participants (63%) did not buy directors and officers liability or employment practices liability insurance. Based on our experience, the same trends likely apply in Canada.

Smaller privately owned companies may think their exposure to management liability risks is low or negligible, but that is not necessarily the case. In fact, another study by Chubb Insurance Company of Canada showed that private firms both here and south of the border are facing similar rates of lawsuits against their directors and officers, legal action involving general management liability and lawsuits from their customers.

In a survey released in September 2008, Chubb discovered that private companies in Canada and the U.S. faced similar lawsuits from customers (16%), competitors (5%), Vendors (6%) and partners or shareholders (3%) in the last five years. The average cost of the affected Canadian companies was $338,699. One-third of Canadian companies and almost a quarter of U.S. firms experienced an employment-practices related incident in the last five years. Judgments, settlements, fines and legal fees for such incidents cost affected companies an average of $63,724.

Based on our experience, there are numerous factors as to why film production companies tend to decline management liability protection. Many of the privately held film production companies we talk to say the application process is too cumbersome and the information requirements too broad. The second is that film production companies tend to perceive the price as too high.

Film production companies also tend to have fewer internal control mechanisms, such as human resources or compliance officers and company protocols, than larger suppliers.

Moreover, private held companies are likely to face short-term cash flow issues, which is reflected in relatively higher bankruptcy rates for small businesses.

The bottom line is the film production companies can, and do, face a number of liability issues related to directors and officers and employment practices. Executive and non-executive business owners are increasingly being held accountable for their actions.

We know of several distinct examples of privately held companies facing litigation related to bankruptcy, misrepresentation, wrongful dismissal and dissolution of a partnership. In one case, a retail company over expanded during a time of economic difficulty. Its revenues shrank, but inventory and supplies continued to grow. The result was bankruptcy. The company faced statutory liabilities and the directors were left exposed to pay for amounts owing 9including unpaid wages). The settlement amount came to $765,000 (including $165,000 for defence costs).

In Ontario, Bill 198 has also made it easier for shareholders to sue companies along with their directors and officers. In the last 18 months, the number of lawsuits has increased significantly as a result of this legislation.

It's clear there is a potentially significant coverage gap for many privately held companies in Canada when it comes to management liability. The main purpose of any new D&O or EPL insurance solution should help to protect these organizations.

Tags: d&o insurance, d&o insurance, d & o insurance, d&o insurances, D&O liability, directors & officers insurance, directors & officers liablity, Film insurance broker, Film Production Companies

You are a Director or an Officer, do you need D&O insurance?

Posted by Meghan Stickney on Apr 3, 2009 5:35:00 AM

The Canada Business Corporation Act and numerous statutes in each Province impose many duties on the Company Director. The breach of any of these , if it leads to financial loss to the company  or to the shareholders or to others, can be grounds for an action for damages. There are further duties established by Common Law.

Get a Free Quote Now!
 

It is not uncommon for many claims to be unjustified or unfounded; however, the costs associated with their investigation and defense are often substantial.

Allegations which are most commonly made and which have to be defended by Directors include:

Acting beyond the scope of their authority

  • Giving wrong or unprofessional advice
  • Breach of fiduciary duties
  • Failure to police the corporation or supervise subordinates properly. Anti-trust violations.
  • Improper or excessive company spending
  • Unauthorized company borrowing
  • Conflict of interest.

Remember, the above only need to be alleged for costs to be incurred.

These allegations are most likely to occur following:

  • Acquisitions/divestitures
  • Mergers
  • Foreign investment (especially in the USA)
  • Public offerings
  • Management buy-outs.
  • Lack of growth, reduced dividends, improper handling of negotiations.
  • Mismanagement or waste of corporate assets.
  • Employee dismissal.
  • Board room dispute
  • Breach of contract
  • Liquidation of the company
  • Change in ownership of the company's share capital.

It is also worth remembering that Directors can be held liable for acts committed by other Directors, simply because they sit on the same board. Such damages can extend to the entire personal estate of the Director involved.

Directors' and Officers' Liability (D&O Insurance) is...

Financial protection for personal assets of an individual Director or Officer. 

  1. Financial protection for personal assets of an individual Director or Officer.
  2. Reimbursement of claims paid by the organization for its Directors and Officers.
  3. Designed especially to meet the cost of:
  •  Defending claims
  •  Compensatory damages which the Director or Officer may be legally obligated to pay following a wrongful act arising out of his position within the organization

A D&O insurance policy should be a serious business consideration for your company.

Tags: directors & officers liablity, directors & officers insurance, D&O liability, d&o insurances, d & o insurance, d&o insurance, d&o insurance

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