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Directors' and Officers' Liability and Insurance Coverage - Chapter 56 - Advising Minnesota Corporations and Other Business Organizations - 2nd Edition
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Originally from: Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
Preview Page CHAPTER 56
DIRECTORS' AND OFFICERS' LIABILITY
AND INSURANCE COVERAGE
Section
§ 56.01 Legal Liability Exposure for Directors and Officers
§ 56.02 Directors' and Officers' (D & O) Liability Insurance
§ 56.03 --Components of D & O Coverage
§ 56.04 --Premiums
§ 56.01 Legal Liability Exposure for Directors and Officers
Corporate directors and officers are subject to ever increasing
responsibilities and liabilities. To attract competent persons to these
positions, companies must offer their directors and officers the
opportunity to obtain financial protection against lawsuits and other
expenses attributable to their service as director or officer. The most
common way to provide this financial protection is for the corporation
to purchase director and officer (D & O) liability insurance coverage.1
This Chapter discusses director and officer actions and responsibilities
that expose them to liability and then discusses D & O insurance.
Corporate indemnification for directors and officers is discussed in
Chapter 89. Directors and officers have legal obligations to the corporation to
exercise the duty of care and the duty of loyalty.2 The duty of care
requires both directors and officers to act in good faith and on the basis
of adequate information when making business decisions. The “business
judgment” rule gives directors and officers some latitude and protection
from liability. This rule is a court-recognized presumption that directors
or officers making a business decision, which does not involve self-
interest, will act in good faith and with due care.3 See Part IV of this
treatise for further discussion of director and officer duties and the
business judgment rule.
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
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