Directors of foreign subsidiaries take personal legal risk under local law, and D&O insurance is the main protection. UK law voids exemptions and most company indemnities for directors but expressly allows the company to buy insurance for them. Germany requires a minimum deductible in D&O policies for AG management board members, and GmbH managing directors face joint and several liability.
United Kingdom: insurance permitted, indemnities limited
A UK company cannot exempt its directors from liability for negligence or breach of duty, and any indemnity is void unless it is a permitted insurance, a qualifying third party indemnity or a qualifying pension scheme indemnity. The company may buy and maintain D&O insurance for its directors and those of associated companies.
A qualifying third party indemnity cannot cover criminal fines, regulatory penalties, or costs of proceedings the director loses, so D&O insurance remains important for defence costs and claims by the company itself.1234
Germany: deductibles and personal liability
An AG that insures its management board must include a deductible of at least 10% of each loss, up to at least one and a half times the member's fixed annual pay. GmbH managing directors must act with the care of a prudent businessman and are jointly and severally liable for loss caused by breach, including personal liability for payments made in breach of capital maintenance.567
| Market | Rule | Effect | Source |
|---|---|---|---|
| United Kingdom | Companies Act 2006 ss232 to 234 | Exemptions void; insurance allowed; indemnities limited | legislation.gov.uk |
| Germany (AG) | AktG § 93(2) | Mandatory D&O deductible of at least 10% up to 1.5x fixed pay | gesetze-im-internet.de |
| Germany (GmbH) | GmbHG § 43 | Joint and several liability; liability for capital maintenance breaches | gesetze-im-internet.de |
Decisions to make
- Does the group D&O policy cover directors of every subsidiary, including local nominee directors?3UK law lets the company insure directors of associated companies, but local coverage still has to be checked.
- Is the German entity an AG or a GmbH?5The statutory D&O deductible applies to AG management board members.
- What will the company indemnify that insurance does not cover?24UK indemnities cannot cover fines, penalties or costs in lost proceedings.
Documents usually needed
- Group D&O policy with local policies or certificates where required
- Deeds of indemnity for directors
- Board minutes approving insurance and indemnities
- Schedule of directors of each subsidiary and their roles
Common mistakes
- Assuming the parent's D&O policy responds in every country without local policies
- Granting UK directors broad indemnities that are void
- Leaving out the statutory deductible in a German AG policy
- Appointing local directors without explaining their personal liability
Questions businesses ask
Can a UK company pay for its directors' D&O insurance?
Yes. Section 233 of the Companies Act 2006 expressly permits it.3
Must German D&O policies include a deductible?
For AG management board members, yes: at least 10% of the loss, up to at least one and a half times fixed annual pay.5
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- India (Companies Act section 197(13) and SEBI listing rules on D&O insurance), Singapore (Companies Act section 172B), US state law (for example Delaware section 145) and the UAE and Saudi Arabia could not yet be checked.
- Whether D&O policies must be placed locally in each country was not confirmed beyond the UAE rule on local placement.
- France was not researched.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
In the UK, any provision that purports to exempt a director from liability for negligence, default, breach of duty or breach of trust in relation to the company is void. Companies Act 2006 s232(1).
A UK company may not indemnify its directors against such liability except as permitted for insurance, qualifying third party indemnities and qualifying pension scheme indemnities. Companies Act 2006 s232(2), referring to ss233 to 235; covers directors of the company and of associated companies.
The UK ban on indemnifying directors does not prevent a company from purchasing and maintaining insurance for a director of the company or an associated company against such liability. Companies Act 2006 s233.
A UK qualifying third party indemnity cannot cover criminal fines, regulatory penalties, the costs of criminal proceedings ending in conviction, the costs of civil proceedings brought by the company or an associated company that it wins, or costs of failed applications for relief. Companies Act 2006 s234(3); the indemnity covers liability to persons other than the company or an associated company.
If a German stock corporation insures its management board members against liability arising from their work, the policy must include a deductible of at least 10% of the loss, up to at least one and a half times the member's fixed annual remuneration. Section 93(2) sentence 3 AktG; applies to AG management board members. No equivalent statutory deductible was found for GmbH managing directors.
German GmbH managing directors must apply the care of a prudent businessman and, if they breach their duties, are jointly and severally liable to the company for the resulting loss. Section 43(1) and (2) GmbHG.
German GmbH managing directors are personally liable for payments made from assets needed to maintain share capital in breach of the capital maintenance rule, even if shareholders resolved to make them where the amount is needed to satisfy creditors. Section 43(3) GmbHG.
Questions on this topic
7 statements on directors' and officers' cover
