Section 161: Indemnity and insurance

161. Indemnity and insurance (1) Except as provided in this section, a company shall not indemnify, or directly or indirectly effect insurance for, a director or employee of the company or a related company in respect of— (a) liability for any act or omission in his capacity as a director or employee; or (b) costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability. (2) An indemnity given in breach of this section shall be void. (3) Subject to its constitution, a company may indemnify a director or employee of the company or a related company for any costs incurred by him or the company in respect of any proceedings— (a) that relate to liability for any act or omission in his capacity as a director or employee; and (b) in which judgment is given in his favour, or in which he is acquitted, or which is discontinued or in which he is granted relief under section 350 or where proceedings are threatened and such threatened action is abandoned or not pursued. (4) Subject to its constitution, a company may indemnify a director or employee of the company or a related company in respect of— (a) liability to any person, other than the company or a related company, for any act or omission in his capacity as a director or employee; or (b) costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability. (5) Subsection (4) shall not apply to criminal liability or liability in respect of breach, in the case of a director, of the duty specified in section 143 (1) (c). (6) Subject to its constitution, a company may with the prior approval of the Board, effect insurance for a director or employee of the company or a related company in respect of— (a) liability, not being criminal liability, for any act or omission in his capacity as a director or employee; C35 – 105 [Issue 1] Companies Act (b) costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability; or (c) costs incurred by that director or employee in defending any criminal proceedings— (i) that have been brought against the director or employee in relation to any act or omission in that person’s capacity as a director or employee; (ii) in which that person is acquitted; or (iii) in relation to which a nolle prosequi is entered. (7) The Board shall— (a) enter or cause to be entered in the interests register where the company has one; (b) record or cause to be recorded in the minutes of directors; (c) disclose or cause to be disclosed in the annual report, the particulars of any indemnity given to, or insurance effected for, any director or employee of the company or a related company. (8) Where an insurance is effected for a director or employee of a company or a related company and the provisions of subsection (6) or (7) have not been complied with, the director or employee shall be personally liable to the company for the cost of effecting the insurance unless the director or employee proves that it was fair to the company at the time the insurance was effected. (9) In this section— “director”— (a) means an officer of a company, a management company or registered agent; and (b) includes a person formerly holding anyone of these offices; “effect insurance” includes pay, whether directly or indirectly, the costs of the insurance; “employee” includes a former employee; “indemnify” includes relieve or excuse from the cost of effecting the insurance unless the director or employee proves that it was fair to the company at the time the insurance was effected. (9) In this section— “director”— (a) means an officer of a company, a management company or registered agent; and (b) includes a person formerly holding anyone of these offices; “effect insurance” includes pay, whether directly or indirectly, the costs of the insurance; “employee” includes a former employee; “indemnify” includes relieve or excuse from liability, whether before or after the liability arises, and “indemnity” has a corresponding meaning.