OFFSHORE ASSET PROTECTION -
FOR OFFICERS AND DIRECTORS
Offshore Asset Protection for Officers and Directors
Being an officer or director of a corporation used to be an honour.
Now it is also a heavy responsibility fraught with risk - unless
you have an Offshore Asset Protection plan. The duties of
an officer and a director have expanded considerably from a legal
standpoint, so that the risk of personal liability is much greater.
Originally, the duties of an officer or director included the duties
of diligence, loyalty, governance, and obedience toward the corporation.
These traditional duties have now expanded to include responsibility
for securities law compliance; responsibility for the environmental
liabilities of the company; handling of grievances with employees
over a number of matters such as pension or benefit rights, discrimination,
or wrongful termination; responsibility for potential creditor
claims from company bankruptcy filings or transfers of assets;
and liability for fraud!
Many corporations carry officers' and directors' liability insurance,
but sometimes the price is very high and sometimes the insurance
simply may not be available.1
Sometimes officers and directors are sued for a company's actions,
as is the case with Bre-X Minerals, the Canadian company known
around the world for its fraudulent gold deposit claims. Its shareholders
have sued the company directors and officers for insider trading.
In the lawsuit, all payments made to directors and officers will
be subject to tough scrutiny by the court. It is not even a question
of whether the officers and directors took part in tampering with
the samples, but rather whether they knew about it or should have
known about it. Also named in the lawsuit are the investment advisors
to Bre-X such as J. P. Morgan and the US Investment Bank (a warning
to professional advisors again).2
If there has been fraud, the avoidance of statutory requirements
(such as environmental requirements), the evasion of an obligation,
some form of protection of criminal activity, or justification
of wrongdoing, courts will "pierce the corporate veil" and find
personal liability for the officers, directors, managers, or other
principals involved in a company.
Closely held corporations are the most likely target for an attack
based on piercing the corporate veil.3 Anyone accepting a position
as an officer or director of a company should have a strong personal
asset protection plan in place. In addition to protecting the individual,
this may enable the company to reduce its insurance coverage (if
it has any at all) on the officers and directors and save money!
The company could then reward the officer or director with a bonus
for establishing the personal offshore asset protection plan-or
better yet, pay for the cost of establishing the plan-and still
come out ahead!
1 Jon F. Elliott and E. Edward Siemens,
Directors' and Officers' Liability. (North Vancouver, B.C. Canada,
STP Inc., 1995): Introduction.
2 "US Bre-X Shareholders Set To Sue J. P. Morgan," Financial Times.
(October 17, 1997). 3 Elliott and Siemens, Directors' and Officers' Liability,
I-1.B2.
Part 1: Offshore Asset Protection - ASSET PROTECTION MAIN PAGE
Part 2: Offshore Asset Protection - for Environmental Liability
Part 3: Offshore Asset Protection - for High Profile and Celebrity Individuals
Part 4: Offshore Asset Protection - for Officers and Directors
Part 5: Offshore Asset Protection - for Professionals
Part 6: Offshore Asset Protection - for Property Owners
