11.10 Insurance for GOCs
Section 139 of the GOC Act provides that a statutory GOC must not pay, or agree to pay, a premium in relation to a contract insuring a person who is or has been an officer of the GOC:
- against a liability incurred by the person as an officer and arising out of conduct involving a wilful breach of duty in relation to the GOC; or
- if the officer has made an improper use of information acquired because of his/her position.
This prohibition does not apply in relation to a liability for costs and expenses incurred by a person in defending proceedings, whether criminal or civil, whatever their outcome.
In respect of company GOCs, the Corporations Act 2001 (external link) permits a company to pay the premiums for insurance policies to cover liability of directors and officers. However, section 199B of the Corporations Act 2001 (external link) prohibits a company GOC paying indemnity insurance premiums arising out of conduct involving:
- wilful breach of duty in relation to the company; or
- a breach of section 182 or 183 which deals with improper use of information and improper use of position (see section 199B(b)).
A company is not prevented from paying insurance premiums covering the costs of defending civil or criminal proceedings whether successful or not (section 199B of the Corporations Act 2001 (external link) ).
Last reviewed: 17 July, 2009
Last updated: 22 July, 2009
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