BusinessCompany NewsDirectors’ indemnity under consideration

Directors' indemnity under consideration

The government is to give 'careful consideration' to the Higgs' recommendation for directors to be indemnified against the cost of defending proceedings if the company they work for takes action against them.

Link: Read our Higgs’ report

Speaking to MPs in Commons, trade and industry secretary Patricia Hewitt said this would be undertaken in the context of a wider reform of company law.

Replying to a question in the Commons from Tory MP Mark Prisk, she said the report’s recommendations for new criminal sanctions on directors are also being actively studied.

Hewitt said listed companies would have to comply with Higgs’ recommendations when incorporated in a revised Combined Code due to take effect from July 1 – or explain to shareholders why not.

Hewitt said a group under the leadership of London Business School dean Laura Tyson would consider how to bring to greater prominence candidates for non-executive directorships who could make an effective contribution to the boards of listed companies and is to report to her in May.

And she said the City of London Law Society, the Institute of CharteredSecretaries and Administrators, the Association of British Insurers and the British Insurance Brokers’ Association would develop guidance on directors’ and officers’ insurance.

Prisk asked if the government intended to implement Higgs, whose recommendations Hewitt said ‘reflect a very thorough consultation process’.

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