[Who] may claims against Directors and Officers?
Directors and Officers can now be personally sued by:
Ø Regulatory Authorities
Ø Members of the Public
Ø Liquidator / Receivers
Ø Business partners
[What] sort of claims are made?
Surrounded by a climate of accountability, Directors and Officers may be subject of inquiries or prosecutions by government regulatory bodies set up to monitor industry, For example, competition, company and tax authorities are vigilant and may investigate such problem as alleged price fixing by a number of companies, or may prosecute if they suspect that account have been signed which are not a true and fair record
Directors and Officers may be personally liable to creditors for continuing to trade or distributing dividends whilst the company is insolvent.
Shareholders may bring proceedings in the name of the company against Directors and Officers personally alleging……….
Ø Mismanagement of company assets or imprudent loans and investments
Ø Failure to arrange adequate insurance
Ø Negligent recommendations or incorrect public statements concerning acquisitions, mergers or capital restructuring
Members of the Public
Claims could be brought by members of the public alleging misrepresentation in the prospectus to entice debenture holders or shareholders to invest in the company
Disgruntled competitors could bring proceedings against Directors and Officers alleging misleading advertising, for example, advertising that unfairly compares the company’s product to that of the competitor’s
………..price fixing;……..dumping of product in the market…, competitors who allege that their business has been adversely affected would be likely to claim against them
Liquidator / Receivers
A liquidator / receiver could sue the Directors and Officers on behalf of the company for alleged breaches of duties owed to the company
Employees may bring proceedings against Directors and Officers alleging unfair dismissal, discrimination or sexual harassment.
Customers may bring actions against Directors and Officers alleging breaches of the consumer laws, for example misrepresentations made in advertising material or deceptive trade practices.
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