The Companies (Guernsey) Law 2008 (the "2008 Law") introduced some significant changes to the provisions of the memorandum and articles of Guernsey companies from 1 July 2008. However, transitional provisions are in place to allow pre-1 July 2008 companies until 1 July 2011 to bring their constitutional documents into line with the 2008 Law.
The provisions enabling directors to receive indemnities from a company under the 2008 Law are significantly narrower than those previously in force under the Companies (Guernsey) Law 1994 (the "1994 Law").
In summary, the new law provides that:
- A company cannot exempt a director or indemnify him for any liability in connection with any negligence, default, breach of duty or breach of trust in relation to a company (whether arising from his own acts or the acts of others).
- A company or an associated company may purchase insurance to cover directors' and officers' liabilities for negligence, default, breach of duty or breach of trust.
There is a significant revision to the definition of the types of act for which a director may be indemnified. The 1994 Law did not deal with issues regarding general common law liabilities relating to negligence, default, breach of duty or breach of trust. Indemnities in respect of such acts are now clearly rendered void by the provisions of the 2008 Law.