Among the basic principles of corporate law is the proposition that corporate directors are responsible for the stewardship of their companies – making strategic business decisions, establishing management policies, and protecting shareholders' interests. It is also a basic principle of corporate law, in India as elsewhere, that corporate directors and officers have legal duties to their companies and to shareholders, and that the officials can be held liable when they fail to fulfill those duties.
Well-advised corporate executives understand their potential liabilities and implement risk management practices to try to reduce their potential exposure. These practices include, among other things, the implementation of effective internal controls and the adoption of appropriate corporate governance structures. However, even the best-designed controls and structures cannot guarantee that corporate executives will not face legal challenges.
For that reason, corporate executives will want to ensure that appropriate indemnification provisions are in place.
And, more importantly in the context of this book, the executives will want to ensure that they have a robust program of directors' and officers' (D&O) liability insurance in place to ensure that they are protected against liability claims filed against them in their capacities as directors and officers of their companies.
D&O insurance is not new; it has been available, in India and elsewhere, for years. Indeed, I have been involved in D&O insurance in the United States, one way or the other, for over 40 years. But as Umesh puts it in this book, “D&O Liability Insurance is finally getting the attention it deserves in India.” As Umesh reports, it is increasingly common in India, as well as in other jurisdictions, for prospective director candidates to insist that the company soliciting them carriers appropriate D&O insurance, before they agree to join a corporate board.But while corporate officials and their advisers may be familiar with what D&O Insurance is and why companies need it, the officials and advisers may know less about how D&O insurance works, how it is structured – and most importantly, how it will respond in the event of a claim. Umesh has written an important and useful book in order to address these concerns, with a particular focus on India.
As a U.S-based D&O insurance practitioner with a global perspective, I am all too aware of how much U.S.-centered considerations (especially U.S.-based legal issues) tend to dominate the conversation outside the U.S. about D&O insurance. For that reason, Umesh's book, with its particular focus on India, is particularly important for Indian executives, their advisers, and for Indian insurance practitioners.
Whether in India, the U.S., or elsewhere, the details of the D&O insurance policy are critically important. Umesh's book provides a useful and informative overview of the D&O insurance policy, its coverage provisions, the standard definitions and exclusions, and the other important policy terms, with particular focus on Indian law regarding director and officer liability.
One of the reasons I have found my many years as a D&O insurance practitioner so rewarding is that the field is always changing. It is always something new. This book addresses this point with important sections on timely topics such as ESG and Cyber liability.
This book will be a useful resource for anyone concerned with the potential liabilities of directors and officers in India, particularly anyone concerned with managing those liability risks.