Indemnification of Directors Under Section 289 of the Companies Act 2016

Background

Section 289 of the Companies Act 2016 (Act 777) provides that a company may indemnify a director against liability to any third party. This provision is intended to protect directors from personal liability for actions taken in the course of their duties.

Key Points

* Section 289 expressly allows companies to indemnify directors for third-party liability. * The indemnification can cover both existing and former directors. * There is no restriction on the type of indemnity that can be provided.

Implications

The enactment of Section 289 provides greater clarity and flexibility in relation to the indemnification of directors. It allows companies to tailor indemnity arrangements to meet their specific needs and circumstances. This provision also provides directors with greater peace of mind, knowing that they are protected from personal liability for actions taken in good faith.