In this litigious society Directors and Officers of companies have greater responsibilities and therefore face greater exposures in their day to day businesses. Accordingly they can be held personally accountable for their actions. i.e. responsibilities under the Companies code , Trade Practices breaches and Workplace health & safety are becoming common issues.
We believe that all directors of PTY LTD companies should carry Management Liability policy .This offers protection to you personally in respect of wrongful acts, breach of duty and provides cover for legal costs incurred to defend such actions.
Director means any person who:
Claims can come from a number of areas, competitors , compliance issues under the control of Statutory Government departments such as the EPA, or Tax dept., collection of GST/Payroll/Trade Practices breaches and the like. The Statutory Liability extension under the policy– Provides cover for innocent breaches of the many acts which control the business operations.
Protects the company, its directors, officers and employees from claims brought by current, past or prospective employees. e.g. wrongful dismissal, incorrect payment issues, failure to protect (bullying) etc. – employees and subcontractors
An employee of a transport company wrote numerous negative comments about the company and his fellow employees on a social media site. The employee was dismissed without notice when the company was notified of the comments made. In response, the employee commenced Unfair Dismissal proceedings with the Fair Work Commission.
The case settled for $26,000 and incurred defence costs of $17,000.
Breaches of government acts with potential for fines/ litigation / legal inquiries – pays fine and legal costs
A licensee of a bar received a complaint from the police alleging it had failed to properly manage the premises in accordance with the legislation and properly preserve the safety, health and welfare of patrons, resulting in the licensee being liable to pay a penalty.
The matter was resolved by the licensee agreeing to conditions being placed on its license in lieu of a penalty and $28,000 of Defence Costs were incurred.
Proceedings from the government (director only covered for this if it relates to a company audit)
A used car dealership received a notice from the Australian Taxation Office (the ATO) notifying them that it was to undertake an audit of its records to determine whether or not the Dealership had met its taxation obligations for a specific period of time. The ATO requested that the Dealership provide completed statements to the ATO.
In the event that the Dealership was to be found not to have contributed sufficient tax. it would have been liable to pay a penalty. Consequently, the Dealership appointed a firm of accountants to respond to the audit.
Cover was granted to the Dealership in respect of the audit on the basis that the organisation had Tax Audit Expenses available to it. Accordingly, an amount of $11,000 was paid being the cost of the audit.
Protects the directors and officers against claims resulting from management decisions.
Proceedings were commenced by the minority shareholders against a clothing store chain and its majority shareholder. The minority shareholders alleged that their interests had been unfairly prejudiced by a recent share option, which was uncommercial and diluted their interests. An order was sought that the majority shareholder or the business acquire their respective interests at a specific price per share.
The matter settled on the first day of hearing on the basis that the majority shareholder agreed to buy the minority shareholders' interests at an agreed price on a without prejudice basis. The clothing store chain was advanced Defence Costs and incurred a total of $725,000.
A delivery driver for a flour mill entered into arrangements with customers of the mill to sell them flour at a discounted rate of half the price the mill was offering. The delivery driver edited his logbook so the additional pallets of flour he delivered were not noticed. The driver continued his scheme until a dissatisfied customer advised the company of the arrangements in place.
The company implemented an investigation, which determined the delivery driver had taken approximately $450,000 worth of flour, The driver was charged and the investigation process cost the company $60,000.
Protects the company against traditional publishing related exposures created by the existence of a company website.
A vitamin manufacturer's website provided information on all of Its products. On the website the company stated that its 'Super VitaminB' products contained 10 times the amount of Vitamin B than 'VB+', a competitor's product. The competitor sued the vitamin manufacturer for defamation, claiming damages in excess of $500,000. The competitor also alerted the ACCC to the claims, who in turn commenced an investigation into the company.
The vitamin manufacturer managed to settle the matter with the competitor for $350,000. The ACCC agreed to the company undertaking to place a retraction and apology on their website and in several national newspapers. Lawyer's costs of $48,000 were incurred.
Protects the company, management and employees involved in the management of the Superannuation Fund and the Funds themselves against losses.
The Company shall reimburse the Principal Organisation for direct loss of property or other consideration surrendered as payment by or on behalf of an Principal Organisation resulting from Kidnapping, Extortion Threat or Cyber Extortion.
Whilst In Europe, the son of a company's CEO was specifically targeted for abduction. The CEO was contacted by the abductor demanding payment of money if he wanted his 'son returned unharmed'. The CEO employed the services of an independent strategic negotiator to advise him how to respond to the demand.
After more than a week of negotiating, a ransom of more than $200,000 was paid and the CEO's son was released unharmed. The company also paid more than $70,000 in negotiator fees and other expenses related to the incident.
Katherine (08) 7919 7019
2/46 Chardon St