The opdu Report - Issue 18, May 2005

Bulletin Board
Directors Indemnities

As readers may be aware, from the 6th April 2005 the Companies (Audit, Investigations and Community Enterprise) Act 2004 introduced changes to the law relating to the indemnification of company directors. In general, the intention of the new law is to relax various of the previous prohibitions on the giving of indemnities by companies.

However, some commentators have focussed on the new, and potentially more restrictive provisions, in relation to "associated companies" and suggested these may restrict the current ability of a sponsoring employer to indemnify the directors of a subsidiary pension trustee company.

Having looked into the issue, it is opdu's opinion at this time, that in the vast majority of cases pension scheme indemnities would continue to be effective post-6th April 2005. Nevertheless, opdu is continuing to closely monitor this position and will provide a more definitive update shortly.