Page 57 - Profmark_2024_Directors Guide

■ A director against any liability or expenses for which the company is permitted to
indemnify a director
■ The company against any contingency including, but not limited to:
■ any expenses:
— that the company is permitted to advance in accordance with
sub-section (4)(a), or
— for which the company is permitted to indemnify a director in accordance
with sub-section (4)(b), or
■ any liability for which the company is permitted to indemnify a director in
accordance with sub-section (5).
In terms of Section 78 of the Act, there are two types of insurance available:
Insurance where the director is the insured: The director himself is covered should
he incur liability.
Insurance where the company is the insured: The company is covered in case of
loss resulting from a director’s breach of duty towards the company, or in case of the
company being sued by a third party for the acts of a director.

BUSINESS RESCUE

Directors are duty bound to constantly monitor the company’s financial position, to
determine whether voluntary business rescue proceedings need to be initiated.
Failure to implement business rescue proceedings could result in the director being
charged with reckless trading and be exposed to personal liability.
It is incumbent upon directors to ensure that they place their companies into either
business rescue or liquidation, or to cease trading, when the warning signs become
evident.
Directors should be aware of the practicalities of business rescue, and the duties and
powers of the business rescue practitioner.
Where the director has reasonable grounds to believe that:
■ The company is financially distressed, and
■ There is a reasonable prospect of rescuing the company business rescue
proceedings must be initiated by the directors by board resolution.

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