The following cases were litigated in the last 6 years and relate to claims against directors of private companies. All the claimants alleged breaches of sections of the Companies Act. and some could well have given rise to claims under the directors and officers section of a LegalEdge policy.

Indemnity for directors is available for:

• Amounts which directors become legally liable to pay as a result of wrongful acts.
• Defence costs.
• Plaintiffs costs if director found liable.

• Director applied funds received to himself personally when these should have been applied to the company (operated a rest home) – company subsequently went into liquidation. Claim brought mainly under Section 301 Companies Act (power of court to require persons to repay money or return property.
  Judgement: $69,000 plus costs. If the court found that the director was "deliberately dishonest" then there would be no indemnity.
  
• It was alleged directors allowed business of company (print broker) to be carried on in a manner likely to create loss to its creditors and that company was trading whilst insolvent and that debts incurred ($1.2m) should be paid by directors as they were personally liable. Person responsible (G) was not a director but ran the company under a managing director title. His wife was major shareholder. Company went into liquidation after loss of contract. G had committed fraud and was jailed. No directors meetings held. Accountant and G had maintained company was under control and that directors took action when G could no longer be believed. Held that directors had acted as reasonable directors in the circumstances they found themselves in.
  Claim failed. Defence costs would have been covered under the policy.