Corporate Governance - ️️The system by which corporations are directed and
controlled, and the relationship between the participants, including the shareholders,
directors, officers, and employees
Business Judgment Rule - ️️A defense used in D&O claims so that others may not
second-gues...
RPLU 8 - Directors & Officers Intro
Corporate Governance - ✔️✔️The system by which corporations are directed and
controlled, and the relationship between the participants, including the shareholders,
directors, officers, and employees
Business Judgment Rule - ✔️✔️A defense used in D&O claims so that others may not
second-guess business decisions. The rule assumes that the directors and officers
acted on an informed basis, in good faith, and in the honest belief that the action taken
was in the company's best interest
Directors & Officers Liability Insurance - ✔️✔️A specialty line of professional liability
that protects directors and officers of corporations and sometimes the entity against
legal judgments, settlements and related expenses resulting from allegations of
wrongful acts of directors and officers committed in their individual capacities as such
10-K - ✔️✔️An annual report that a publicly-traded company files with the SEC
10-Q - ✔️✔️A quarterly report that a publicly-traded company files with the SEC
Adjudicated - ✔️✔️The act of giving a judicial ruling such as a judgment or decree
Advancement - ✔️✔️The practice of providing defense costs to directors and officers
before determining whether the directors and offices will be indemnified and the
organization will pay the costs
Allocation - ✔️✔️The determination of the portion of the loss that the D&O policy
covers when less than 100% of the loss is covered or when some defendants are
covered by the policy and others are not
Breach of Duty - ✔️✔️A gap, infraction or violation of the duties of care, loyalty,
obedience and disclosure by the directors or officers
Claimant - ✔️✔️The party who initiates a lawsuit by filing a complaint against the
defendant(s) demanding damages or performance. Also called the Plaintiff
Claims-Made - ✔️✔️A form of liability coverage that is triggered if (1) an event takes
place after the retroactive date but before the termination of coverage and (2) the claim
is made against the insured while the policy is in effect
Commercial General Liability Insurance (CGL) - ✔️✔️A type of insurance that provides
coverage for commercial risks for losses arising out of business operations involving
bodily injury and property damage, except those specifically excluded or limited within
,the coverage form or by endorsement. May include advertising injury/personal injury
coverage
Codified - ✔️✔️An arranged and labeled system of laws
Common Law - ✔️✔️The body of law established by the courts in earlier cases
(precedents) rather that statutory law written by a legislature. Also called Case Law
Corporate Indemnity - ✔️✔️An exemption from incurred penalties or liabilities on behalf
of the entire corporation
Corporate Indemnity Reimbursement Coverage - ✔️✔️The part of a D&O policy that
reimburses an organization for indemnification costs
Derivative Claim - ✔️✔️A claim brought by one or more shareholders on the
corporation's behalf that seeks to enforce a corporation's right and whose damages are
paid to the corporation, not to the shareholders
Director - ✔️✔️A member of the governing Board of a corporation or associates
elected by the shareholders or members
Duty to Defend - ✔️✔️The insurer's obligation to appoint counsel and defend against a
claim
Duty to Pay - ✔️✔️The insurer's obligation to pay the cost of the insured's defense but
not to control the defense
Endorsement - ✔️✔️A written document attached to the original policy that may add to,
delete or modify the provisions of the original insurance policy. Also called a rider
Entity Coverage or Side C Coverage - ✔️✔️The coverage in a D&O policy that pays for
defense costs, settlements and judgments for securities claims (and possibly other
claims) filed against the organization even if the directors and officers are not named in
the action or lawsuit
Excess Insurance - ✔️✔️A type of insurance that protects against catastrophic losses,
that provides higher liability limits over an underlying primary policy or self-insured
retention, and that covers losses in excess of the primary policy's liability limits or the
self-insured retention
Extended Reporting Period - ✔️✔️An extension of the claims reporting provisions for a
specific time period beyond the policy expiration date for any claims arising from
incidents that occurred after the retroactive date and before the expiration of a claims-
made policy. Also called Tail Coverage
, Fiduciary - ✔️✔️A person or institution who manages money or property for another
and who must exercise the standard of care imposed by the law
Form 8-K - ✔️✔️A report filed with the SEC during a fiscal year that presents a change
of some significance
Fraud - ✔️✔️The intentional use of deceit, a trick or dishonest means to deprive
another of money, property or a legal right
Indemnification - ✔️✔️The compensation for a loss. Organizations indemnify directors
and officers for defense cost, settlements and judgments based on state statutes and
the organization's articles of incorporation
Jurisdiction - ✔️✔️The legal authority given to a court to try cases and rule on legal
matters within a particular geographic area and/or over certain types of legal cases
Material Information - ✔️✔️Information that is relevant and significant; distinguished
from the information that is irrelevant or of minor importance
Monitoring/Coverage Counsel - ✔️✔️The insurer's counsel who monitors the litigation,
who advises the insurer on policy coverage and obligations and who may work with the
insured's counsel to achieve more cost-effective litigation and settlement
Nonprofit Organization - ✔️✔️An organization (1) that is incorporated under state laws
and approved by both the state's Secretary of State and the state's taxing authority and
(2) that operates for education, charitable, social, religious, civic or humanitarian
purposes
Notice of Circumstances - ✔️✔️The notice the insured gives to the insurer of facts or
circumstances that may give rise to a future claim. Any future claim that results will be
treated as a claim made during the current policy period
Occurrence - ✔️✔️An accident, including continuous or repeated exposure to
substantially the general harmful condition
Officer - ✔️✔️A high-level management official of a corporation or an unincorporated
business, hired by the corporation's Board of Directors or the business' owner, such as
a president, vice president, secretary, financial officer, or chief executive officer
Presumptive Indemnification - ✔️✔️A clause in a D&O policy confirming that the
insurer presumes that if there is a claim, the insured will indemnify the director and
officers to the fullest extent allowed by law.
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