Directors and Officers Insurance for Mauritius Companies

D&O insurance in Mauritius is a policy that responds when someone alleges that a director or officer made a wrong decision, breached a duty or failed to act. It is a contract between the company, its directors and an insurer. It is not a legal requirement under the Companies Act 2001, and it is not a substitute for good governance.

This page explains the cover itself: what it pays for, where it stops and how to decide whether it suits your company. It does not describe the liability regime that creates the risk in the first place; that is covered in liability of a resident director.

What directors and officers liability insurance does

A D&O policy pays defence costs and, within its terms, damages or settlements arising from a claim against an insured person for a "wrongful act". That term is defined by each policy, but it generally covers breach of duty, error, omission, misstatement and neglect in the capacity of director or officer.

Policies are usually built from distinct parts, often called "sides":

• Individual cover. Pays the insured person directly when the company cannot or may not indemnify them.
• Company reimbursement cover. Reimburses the company when it does indemnify its directors, within what its constitution and the law allow.
• Entity cover. Some policies extend to claims made against the company itself, often limited to specific types of claim.

Cover is normally written on a "claims-made" basis. The policy responds to claims first notified during the policy period, not to decisions taken during it. That detail matters when a company changes insurer or lets cover lapse.

Who is insured

The insured persons usually include:

• directors, whether executive or non-executive (see executive vs non-executive directors);
• the company secretary and certain senior employees acting in a managerial role;
• a resident director appointed to satisfy local residence requirements;
• former directors, and sometimes the estates of deceased directors, for past acts.

A resident director who is appointed only to meet the residency rule has the same exposure as any other director, but often has no say in day-to-day decisions. If you rely on one, check that the policy names them and that the insurer knows the arrangement. The role is explained in resident director in Mauritius.

Typical exclusions

Exclusions decide whether a policy is useful. The wording differs between insurers, but these are the common ones.

Deliberate and dishonest conduct

Cover generally falls away once fraud, dishonesty or a deliberate breach is established by a final decision. Defence costs may be advanced until then, then recovered if the finding goes against the director.

Fines and penalties

Many policies exclude fines, penalties and regulatory sanctions, or cover them only where the law permits insurance of that kind. A director should not assume that a statutory penalty is insured. For the penalties themselves, see penalties for non-compliance and penalties for failing anti-money laundering duties.

Bodily injury, property damage and professional services

These are usually left to other policies. A D&O policy is not a general liability, professional indemnity or employment practices policy, although some insurers offer add-ons.

Insured-versus-insured claims

Claims brought by one insured person against another, or by the company against its own directors, are often excluded or restricted. Check the carve-outs, especially for claims brought by a liquidator.

Prior and pending matters

Anything known before the policy starts, or already under investigation, is normally excluded. Disclose it rather than hope it will not be noticed.

Personal profit and unlawful remuneration

Benefits a director was not entitled to receive are generally not covered. Related questions arise with loans between a company and its directors and declaring a conflict of interest.

At a glance: what is usually in and out

Is D&O insurance worth it for your company?

The answer depends on facts that a general article cannot know. The following factors usually push towards buying cover.

• Outside directors or investors. Non-executives and investors often ask for cover before accepting a seat.
• Regulated or sensitive activity. Companies handling client money, or subject to anti-money laundering obligations, carry a higher regulatory profile.
• Employees and creditors. A trading company with staff, suppliers and lenders has more potential claimants than a dormant one.
• A director who does not control the business. Nominee and resident directors are exposed to decisions they did not take.
• Cross-border management. Directors resident abroad may face claims under more than one legal system.

By contrast, a dormant company or a very small company with one owner-director and no outside creditors may find that the cost outweighs the benefit. For the compliance side of such a company, see keeping a dormant company compliant and compliance for a small private company.

Whether your structure justifies cover is a question for an adviser who has seen your facts. You can use the contact form to be put in touch with an FSC-licensed corporate service provider (Management Licence).

How a policy interacts with indemnities and company law

Insurance sits alongside, not instead of, the director's other protections:

1. Duties. Insurance does not change what directors' duties require. A policy that pays for a claim does not mean the conduct was acceptable.
2. Constitution. The company's constitution may allow it to indemnify directors or to buy insurance for them. Read it before assuming the policy can be paid for by the company.
3. Disqualification. Cover does not prevent a director from being disqualified; see director disqualification.
4. Registers. Changes in the board must be reflected in the company's records; see statutory registers.

Tell the insurer when the board changes. Under the Companies Act 2001, a change of director or secretary, or of their details, must be notified to the Registrar within 28 days. A policy that still lists a former director, or omits a new one, can leave a gap exactly when a claim arises.

What insurers ask before quoting

A proposal form typically asks about:

• the company's activities, jurisdictions and ownership;
• the identity and track record of each director;
• the latest financial statements and any going-concern concerns;
• whether the company is up to date with its filings and tax returns;
• any claims, complaints or investigations in the past;
• the controls in place for anti-money laundering and conflicts.

A company that keeps a clean file is easier to insure. The yearly rhythm in the compliance calendar is a good base for the evidence an insurer will want to see.

Checklist before you buy or renew

• Confirm who must be insured, including resident, nominee and former directors
• Read the definition of "wrongful act" and the claims-made trigger
• Check the exclusions for fines, insured-versus-insured claims and prior matters
• Ask whether defence costs sit inside or outside the limit
• Verify the retroactive date and any run-off option for departing directors
• Check what the company's constitution allows regarding indemnity and premium
• Disclose known matters in full on the proposal form
• Notify the insurer of any change of board, ownership or activity
• Diarise the renewal date and keep the policy wording with the company records