IOD seminar raises awareness for directors job security

Monday 29 January 2018

The Institute of Directors January seminar brought attention to the expected standards of company directors, and how claims against them were on the rise.

It focused on the implications of the recent Carlyle case, where liquidators brought more than 150 charges against a company's directors for making negligent decisions.

While the case was dismissed by Guernsey's court, Ian Swan, a partner at Babbe and member of the IOD, said it had shone a spotlight on issues surrounding how directors were being treated.

"In recent times directors have found themselves in a more hostile environment, because with the increased availability of commercial funding, many company liquidators have been issuing claims against them at any chance they can get - and even sometimes when there is no basis, just to go out on a limb," Mr Swan said.

"There is the possibility of a claim now being brought against any director, and a lot of the time the cost of defence can be devastating, so we emphasised the importance of having the adequate D and O (directors and officers) insurance. The discussion we had certainly centred on the Carlyle Case as an experience, and we looked at the lessons that can be learned from it - essentially directors need to be aware of the risks they face, and the steps they need to take and that they are diligent in their actions, recording their decisions as they go. This allows them to be able to safely defend themselves if claims are made - though claims still can be made which is another matter".

Mr Swan worked on the defence in the Carlyle Case. In an interview with Express, he summed the situation up in brief: "The Carlyle Case was when a billion dollar Guernsey based investment fund collapsed in 2008, and its liquidators alleged the directors could and should have avoided its demise by selling off its portfolio. But it resulted in the court rejecting all 185 allegations and held that they had acted reasonably and diligently in the very difficult circumstances of an unforeseen global financial crisis".

Overall, the IOD seminar was oversubscribed and had a good attendance - Mr Swan saw there had been lively debate following the panel's presentations.