Another way for a director or officer to be protected from liability is through liability insurance. The law authorizes corporations to purchase and maintain liability insurance on behalf of directors and officers against liability asserted against or incurred by them (CGS § 33-777). The law allows corporations to purchase insurance for conduct that might be beyond that which is covered by mandatory or permissive indemnification.

DEBTS NOT DISCHARGABLE IN BANKRUPTCY

The recently enacted federal law dealing with corporate fraud and other misconduct eliminated one potential shelter from liability. This act prohibits the discharge in bankruptcy of any order, fine, penalty, judgment, or settlement arising from (1) a claim that he violated any federal or state securities law or regulation, or (2) a claim of common law fraud, deceit, or manipulation in relation to the purchase of a security (PL 107-204, Section 803; 11 USCA Section 523(a)).

GC/JG: ro

October 4, 2002		2002-R-0704
CIVIL AND CRIMINAL LIABILITY OF CORPORATE OFFICERS AND DIRECTORS
By: George Coppolo, Chief Attorney Jennifer Gelb, Research Attorney