govenor liability
| Changes to Company Law Legislation Governors who are also company directors may be aware of recent changes to company law legislation which had the effect that companies may now indemnify directors in respect of most third party claims (including the payment of directors' legal costs upfront) in advance of the proceedings in question being initiated. The position of directors does of course differ from that of Governors, who generally rely upon the protection of Governors' liability insurance maintained by Corporations. Alternatively, Governors may, by virtue of section 145 of The Learning and Skills Act 2000, apply to the Court for orders determining their liability, which may be extinguished, reduced or varied provided that the particular Governor has acted honestly and reasonably. In view of the reduced comfort which these options provide when compared to those available to directors, it would seem likely that Corporations may face requests for a similar form of indemnification from their Governors. Whilst the amendments to the company law legislation do not extend to Corporations, in view of the fact that there appears to be no legislation prohibiting Corporations from indemnifying Governors in advance of proceedings being initiated, this is an option which Corporations may wish to explore as an alternative to Governors' liability insurance. In deciding whether to offer Governors insurance or an indemnity, Corporations should conduct a balancing exercise of the availability and scope of insurance cover and the premiums payable against the potential exposure to which the Corporation may be exposed by virtue of providing an indemnity. Those Corporations with student Governors under the age of eighteen years should ensure that the insurance or indemnity provided extends to cover the student's 'litigation friend' (through whom any proceedings must be conducted) and the student's parents or guardians in order to maintain sufficient protection for the student Governors and their relatives. You can download a guide to Indemnities and their application in the further education sector by clicking here |
