Director duties under Companies Act, personal liability mapping, disqualification risk management, independent director protection and officer in default compliance.
Short, direct, on the record.
Section 149(12) provides that an independent director shall be held liable only for acts of omission or commission by a company which had occurred with their knowledge (attributable through board processes) and with their consent or connivance or where they had not acted diligently. The burden of proof lies on the party alleging liability.
Key triggers include: company not filing financial statements or annual returns for 3 continuous financial years, company failing to repay deposits or debentures or pay dividend and the failure continues for one year or more, conviction of an offence and sentenced to imprisonment for 6 months or more, and an order of disqualification by the Tribunal.
Yes. The Companies Act does not create a separate category of reduced liability for nominee directors. However, the nominee director is expected to act in the best interest of the company (not solely the nominating entity) and can rely on the independent director safe harbour where applicable.
Directors and Officers liability insurance covers personal liability of directors and officers for wrongful acts in their capacity. It is not legally mandatory under the Companies Act, but SEBI LODR Regulations require listed companies to have adequate D&O insurance. Most professionally managed companies maintain D&O cover as governance best practice.
Share the company type, board composition and the governance or liability concern for a confidential assessment.