Section 289. Indemnity and insurance for officers and auditors

(1) Unless provided otherwise in this section, a company shall not indemnify or directly or indirectly effect insurance for an officer or auditor of the company in respect of—

(a) the liability for any act or omission in his capacity as an officer or auditor; or

(b) the costs incurred by that officer or auditor 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) A company may indemnify an officer or auditor of the company for any costs incurred by him or the company in respect of any proceedings—

(a) that relates to the liability for any act or omission in his capacity as an officer or auditor; and

(b) in which judgment is given in favour of the officer or auditor or in which the officer or auditor is acquitted or in which the officer or auditor is granted relief under this Act, or where proceedings are discontinued or not pursued.

(4) A company may indemnify an officer or auditor of the company in respect of—

(a) any liability to any person, other than the company, for any act or omission in his capacity as an officer or auditor; and

(b) costs incurred by that director or officer or auditor in defending or settling any claim or proceedings relating to any such liability except—

(i) any liability of the director to pay—

(A) a fine imposed in criminal proceedings; or

(B) a sum payable to a regulatory authority by way of a penalty in respect of noncompliance with any requirement of a regulatory nature, however arising; or

(ii) any liability incurred by the director—

(A) in defending criminal proceedings in which he is convicted; or

(B) in defending civil proceedings brought by the company, or an associated company, in which judgment is given against him; or

(c) in connection with an application for relief under this Act.

(5) A company may, with the prior approval of the Board, effect insurance for an officer or auditor of the company in respect of—

(a) civil liability, for any act or omission in his capacity as a director or officer or auditor; and

(b) costs incurred by that officer or auditor in defending or settling any claim or proceeding relating to any such liability; or

(c) costs incurred by that officer or auditor in defending any proceedings that have been brought against that person in relation to any act or omission in that person’s capacity as an officer or auditor—

(i) in which that person is acquitted;

(ii) in which that person is granted relief under this Act; or

(iii) where proceedings are discontinued or not pursued.

(6) In the case of a director, subsection (4) and paragraphs (5)(a) and (b) shall not apply to any civil or criminal liability in respect of a breach of the duty as specified in section 213.

(7) The directors shall—

(a) record or cause to be recorded in the minutes of the board of directors; and

(b) disclose or cause to be disclosed in the directors’ report referred to in section 253,

the particulars of any indemnity given to, or insurance effected for, any officer or auditor of the company.

(8) Where insurance is effected for an officer or auditor of a company and subsection (6) or (7) has not been complied with, the officer or auditor shall be personally liable to the company for the cost of effecting the insurance unless the officer or auditor satisfies the Court that he is not liable.

(9) In this section—

“officer”, in relation to a corporation, includes—

(a) any director, manager, secretary or employee of the corporation;

(b) a former officer;

(c) a receiver or receiver and manager of any part of the undertaking of the corporation appointed under a power contained in any instrument; and

(d) any liquidator of a company appointed in a voluntary winding up,

but does not include—

(A) any receiver who is not also a manager;

(B) any receiver and manager appointed by the Court; or

(C) any liquidator appointed by the Court or by the creditors;

“effect insurance” includes pay, whether directly or indirectly, the costs of the insurance;

“indemnify” includes relief or excuse from liability, whether before or after the liability arises, and “indemnity” has a corresponding meaning.