A Property Managing Agent is often an ‘outside director’ or ‘company secretary’ or other officer of a Residents’ Management Company. This presents you with the same legal obligations as other directors and officers.
As a business, the directors and officers of a Residents’ Management Company face the same corporate risks that any business in the UK would.
Whilst the title “company secretary” is now no longer a legal requirement, the functions of a company secretary remain. A Property Managing Agent engaged by the Residents’ Management Company to fulfil those functions is exposed to the same potential personal liabilities as any officer of the Residents’ Management Company would. The title “officer” is defined under company law and relates to the actions of an individual rather than his/her job title or description.
Whilst the individual Residents’ Management Company may purchase Directors & Officers cover, it is possible that not every Residents’ Management Company that the property manager acts for does so. The level of cover also may well vary if the cover is not purchased from the same source and this may be especially true for the limit of indemnity chosen.
It is therefore prudent for the Property Managing Agent to purchase its own Directors & Officers insurance cover and ensure that the policy has been extended to include Outside Directorship cover for the benefit of the individual property manager.
A Directors & Officers insurance policy is complementary to a Professional Indemnity insurance arrangement. Where a Professional Indemnity policy covers negligences of the property manager in his professional capacity, in the event of an action brought against the board, because of another’s wrongful act, the Professional Indemnity policy would not respond the Director’s and Officers policy would apply.
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