OG100 C5 TRUSTEE INDEMNITY INSURANCE

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OPERATIONAL GUIDANCE

TRUSTEE INDEMNITY INSURANCE

CHARITABLE COMPANY: MODEL FORM OF POWER AND ADDITION TO RANGE OF DIRECTOR EXCEPTIONS TO PROVIDE TRUSTEE INDEMNITY INSURANCE

OG 100 C5 – 27 February 2007

Functional responsibility

For action

Charity Services Division:

Advice and Orders Unit
Large Charities Unit
Welsh Office

For information

All other units of Charity Services Division

Legal Division


The Law	Refer to a lawyer	Refer to an accountant

1. Model power

	(1)	To provide indemnity insurance to cover the liability of the directors:
		(a)	which by virtue of any rule of law would otherwise attach to them in respect of any negligence, default, breach of trust, or breach of duty of which they may be guilty in relation to the company;
		(b)	to make contributions to the assets of the company in accordance with the provisions of section 214 of the Insolvency Act 1986.
	(2)	Any such insurance in the case of (1)(a) shall not extend to:
		(a)	any liability resulting from conduct which the directors knew, or must reasonably be assumed to have known, was not in the best interests of the company, or where the directors did not care whether such conduct was in the best interests of the company or not;
		(b)	any liability to pay the costs of unsuccessfully defending criminal prosecutions for offences arising out of the fraud or dishonesty or wilful or reckless misconduct of the directors;
		(c)	any liability to pay a fine or regulatory penalty.
	(3)	Any insurance in the case of (1)(b) shall not extend to any liability to make such a contribution where the basis of the director's liability is his knowledge prior to the insolvent liquidation of that company (or reckless failure to acquire that knowledge) that there was no reasonable prospect that the company would avoid going into insolvent liquidation.

2. Addition to range of director exceptions

	[Provided that nothing in this document shall prevent any payment in good faith by the company:]

	Insert after other exceptions -

	( )	of any premium in respect of any indemnity insurance to cover the liability of the directors which, by virtue of any rule of law would otherwise attach to them in respect of any negligence, default, breach of trust or breach of duty of which they may be guilty in relation to the company: Provided that any such insurance shall not extend to any claim arising from liability resulting from conduct which the directors knew, or must reasonably be assumed to have known, was not in the best interests of the company, or where the directors did not care whether such conduct was in the best interests of the company or not, and provided also that any such insurance shall not extend to any claim arising from liability for the costs of unsuccessfully defending criminal prosecutions for offences arising out of the fraud or dishonesty or wilful or reckless misconduct of the directors.