Is a D&O policy is necessary if the company will bail the director out?

Yes.  The D&O policy is still necessary. There are several problems with assuming that the company will come to the director’s rescue:

  • The company might not be in a financial position to do so
  • The errant director may no longer be in a position to influence the company’s decisions
  • In many cases it is illegal for the company to assist in paying the director’s liabilities (s 78 Companies Act, 71 of 2008).
Directors and Officers Liability