Section 162 — Companies Act 1993: Indemnity and insurance

162 Indemnity and insurance (1) Except as provided in this section, a company must 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 or her capacity as a director or employee; or (b) Costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability. (2) An indemnity given in breach of this section is void. (3) A company may, if expressly authorised by its constitution, indemnify a director or employee of the company or a related company for any costs incurred by him or her in any proceeding— (a) That relates to liability for any act or omission in his or her capacity as a director or employee; and (b) In which judgment is given in his or her favour, or in which he or she is acquitted, or which is discontinued. (4) A company may, if expressly authorised by its constitution, 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 or her capacity as a director or employee; or (b) Costs incurred by that director or employee in defending or settling any claim or proceeding relating to any such liability,— not being criminal liability or liability in respect of a breach, in the case of a director, of the duty specified in section 131 of this Act or, in the case of an employee, of any fiduciary duty owed to the company or related company. (5) A company may, if expressly authorised by its constitution and 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 or her capacity as a director or employee; or (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 his or her capacity as a director or employee; and (ii) In which he or she is acquitted. (6) The directors who vote in favour of authorising the effecting of insurance under subsection (5) of this section must sign a certificate stating that, in their opinion, the cost of effecting the insurance is fair to the company. (7) The board of a company must ensure that particulars of any indemnity given to, or insurance effected for, any director or employee of the company or a related company are forthwith entered in the interests register. (8) Where insurance is effected for a director or employee of a company or a related company and— (a) The provisions of either subsection (5) or subsection (6) of this section have not been complied with; or (b) Reasonable grounds did not exist for the opinion set out in the certificate given under subsection (6) of this section,— the director or employee is personally liable to the company for the cost of effecting the insurance except to the extent that he or she proves that it was fair to the company at the time the insurance was effected. (9) In this section,— Director includes a former director 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. Subsection (5)(c) was substituted, as from 3 June 1998, by section 5 Companies Amendment Act 1998 (1998 No 31).