Company directors in Canada face increased threat of liability: ACE

The increasing duties of company directors, along with the growing ease of accessing legal redress for breaches of those duties, have created a more threatening liability environment than ever before, reports ACE.
In the ACE Progress Report: International Developments in Executive Liability, author Carol A.N. Zacharias says whether — and to what extent — directors can be indemnified by their companies is unclear, making the threat of personal liability exposure even more significant.
In a 2008 study, out of 121 countries surveyed, 56% do not address indemnification and seven per cent do not permit it, Zacharias says.
Thirty-five per cent of these countries permit only limited indemnification or merely exempt directors from certain liabilities.
“As such, a director cannot be assured of being indemnified for his or her executive acts,” Zacharias wrote. “This possibility is a grave one, when considered in the context of increasing duties, the increasing access of plaintiffs to the court systems and the number of cases.”
Zacharias noted litigation is filed against director and officers most frequently in Canada, Australia, England and Hong Kong.