Directors at mercy of shareholder action.

(From Lloyds List)

Byline: Wake-up call for senior officers' cover policies, writes James Brewer

BUSINESS chiefs will need greater cover in their directors and officers' insurance if the UK's new Company Law Reform Bill is approved, according to a top insurer.

Experts at AIG Europe (UK), one of the biggest providers of such policies, said that boardrooms would need to respond to the bill's aim to allow a clear path for shareholders to pursue executives for negligence and breach of duty.

The bill paves the way for a big shake-up in corporate law.

Kelly Lyles, director of financial lines at the UK branch of major international group AIG, said that the latest development in corporate governance 'will mean directors both executive and non-executive are now even more exposed to shareholder action.'

She said: 'In the event of shareholder action, directors and officers need to be reassured they have a significant pot of money available to them to defend any claims against them.