Have you ever heard the saying,”Every cloud has a silver lining?” Basically, it means you should not feel hopeless when confronted with difficult times as they always lead to brighter days ahead. Difficulties are like the dark clouds that fill the sky on a rainy day, seemingly blocking out the sun.

Just as the clouds block the sun’s rays, we feel that our joys or accomplishments are blocked by these difficulties. However, if you look very close at the edges of the cloud, you can see the sun shining as if to make a silver lining around the cloud. The splendor of that view is inspiring! It reminds us that an element of hope, or a consoling aspect, can be found in what appears to be an otherwise bad situation.

Each of us can recall a time in our life where we said, “if only…” For me, I used to have a mountain of them..

…if only I had gone to college, I would be a veterinarian..if only I had cared about myself, I wouldn’t have blossomed to 330 lbs….if only I didn’t have these stretch marks, I’d be so happy…only I had taken the other job, I wouldn’t be unemployed

The truth of the matter is this…

….if I had gone to college directly after high school, I may or may not have become a veterinarian… but I would have missed the opportunity to meet my husband

…if I hadn’t bloomed to 330 lbs,I may not have learned to have empathy and compassion for others. Additionally, I might not have had the opportunity to find my inner strength and determination

…if I had not had stretch marks, I may not have been blessed with the lovely young lady who I am proud to call my daughter, and my friend

…if I’d taken another job, I may or may not have been unemployed. I would, however, have missed meeting the kind gentleman that helped me learn my value

How did I learn to change my viewpoint? How did I learn to see the silver lining in every cloud? I’ll share what my grandfather lovingly shared with my mother…and she caringly taught to me…

My grandfather moved to Kansas with the entrepreneurial spirit of drilling for oil. Coming from the small town of Carlisle, and being a welder, he knew little of what he would encounter. However, with much courage and the spirit of a pioneer, he and his father moved to Kansas to live their dream. He read and studied about the use of nitroglycerine and what it meant to fracture a well. Later, during the struggling days of a new business, his son asked if he could join him and his grandfather to work in the oil business. Grandpa wanted to have Buddy join him but wasn’t sure if the young business would thrive enough to sufficiently support Buddy and his young family.

Buddy remained in Des Moines and secured employment driving a delivery truck for a donut shop. In a vehicle, similar to our UPS trucks of today, the driver’s door was a full panel that slid into the side panel of the truck. It was during the late 1950′s and seat belts were not in use. Drivers routinely drove their routes with the doors wide open to aid them in easily jumping in and out at each destination.

Grandpa received a call no parent wants to receive and was notified that his son had been killed. Someone hit the passenger side of the delivery van and Buddy had flown out the open doorway. The truck tipped over and his life ended.

Grandpa briefly allowed the words “..if only,…if only I had allowed Buddy to come to Kansas, he would still be alive” to occupy his thoughts. A while afterwards, Grandpa heard of an automobile accident on a country road in Kansas where the driver of a truck was killed. He came to the realization that he could never win the “what if” scenarios. For “if” he had told Buddy he could join him in Kansas, he “could” have been the driver that was killed on the road that day. Grandpa calmed his thoughts, threw out the “if only” language and focused on the positives of life.. the silver linings.

Grandpa chose to be happy in the fact that his son wanted to work with him and to be thankful for the years he had shared with Buddy. In addition, the lesson of the silver lining has now been passed on through four generations (soon to be five as I will be sending this to my grandchildren).

It is time to let go of the “what if’s” of our lives and focus on our blessings. In doing so, we free ourselves from the torment of “what if”. By developing an “attitude of gratitude” we allow our minds to embrace positive thoughts that, like a magnet, will be drawn to you. It prepares us for a mindset that Believes in the infinite possibilities of life!

Art Linkletter said, “Things turn out best for the people who make the best out of the way things turn out.” Brian Tracy shared, “Develop an attitude of gratitude and give thanks for everything that happens to you, knowing that every step forward is a step toward achieving something bigger and better than your current situation.”

Can we apply this lesson to our journey to a healthier lifestyle? You bet we can!

So, in the words of Mary Oliver,”Tell me, what is it you plan to do with your one wild and precious life?”


favor bags

About the Author:

ROSWELL, GA., Aug. 18, 2008 — ¿Qué pasa aquí?

 

An officer stops a car for speeding. As the officer approaches, the driver is frantic. The driver is waving his arms, shouting incessantly in Spanish and pointing to the passenger who appears to be in agony and his holding his side.

Is this:

a. the get away car and the two men who just robbed a store down the road, one of whom was shot, or

b. a man and his nephew who are rushing to the hospital because the nephew has appendicitis?

If the officer doesn’t know even basic Spanish this situation could easily turn tragic. With Workplace Spanish® a dangerous situation can be averted.

 

Workplace Spanish® offers both Spanish learning manuals accompanied by audio CDs, and an easy-to-use CD-ROM called “Click It™” which features clickable audio Spanish terms and expressions that help law enforcement professionals speak Spanish in a basic and effective manner without having to learn academic Spanish. It uses relevant “bite-size” terms and phrases to get a message, question or response across.

Workplace Spanish worked closely with the Las Vegas police department in creating the law enforcement program. Workplace Spanish president Tom Sutula says, “They told us what was critical to them on a day-to-day basis – what was most important to their officers. Like most law enforcement departments, they didn’t have the time or budget to have everyone become fluent in Spanish.”

Over the past year law enforcement agencies from across the country including Nashville, TN, Eagan, MN and the FBI’s Atlanta office have addressed language challenges by adding Workplace Spanish® . They all recognized that the lack of clear communication for their staffs could be frustrating, potentially dangerous and costly.

Sutula says that Workplace Spanish® has been used by thousands of officers. Many appreciate the flexibility of the new Click It™ CD-ROM. “It gives them the ability to look up an expression and “click on it” to hear the Spanish and phonetic pronunciations played aloud. They can either repeat the Spanish or play it loud enough for a Spanish-speaker to hear.”

Detailed information and sample excerpts from on the Law Enforcement program are available on the company’s website at the following link: www.WorkplaceSpanish.com/law_enforcement.htm


About the Author:

The idea of the atom

Models and mechanisms of how particles and other materials behave have been proposed for thousands of years. Especially in the last few centuries, however, these models have been constantly improved and specified. In the following chapters, a cross section of these developments will be presented, leading all the way to our present model of the atom, which will be explained along with all of the laws that govern its behaviour.

The first model of matter which included elements and atoms was proposed in ancient times. The Greek philosopher Leukippos (around 500-400 B.C.) and his student Democritus (around 460-370 B.C.) were the first to describe the matter present in our world as a collection of atoms (Greek: indivisible). Their theory was based on the idea that if any body is divided into its smallest constituent parts, at some point the parts are so small that they can no longer be divided. They used the word indivisible to describe this remaining matter. According to this theory, atoms are small bodies which are not able to be divided.

Atoms of different materials must differ in their composition and size. The characteristics of materials must therefore be determined by differences in their individual atoms: differences in their size, grouping and mutual arrangement. At the beginning of the 19th century, the Greek atomic model was expanded upon and specified by J. Dalton (1766-1844). According to his theory, elements are composed of small particles called atoms

Atoms of individual materials differ in their mass and size. During chemical reactions, atoms themselves remain unchanged. Of course, the number and position of individual atoms in the reactant compounds can and does change. They are combined in certain proportions, only to change those combinations and proportions during a reaction. In more advanced atomic models, atoms are composed of a nucleus and electrons.

The atom, of course, is composed of elementary particles. In an atom’s nucleus are neutrons (uncharged) and positively charged protons. Atoms of the same element always contain the same amount of protons. Only the number of neutrons can differ slightly (in isotopes). Isotopes are actually different atoms of the same element differing only in the number of neutrons they contain and their atomic weight. Otherwise, isotopes of one element generally have the same chemical and physical characteristics as the element itself.

The average atomic nucleus is relatively small compared to the atom itself, but it makes up the greatest part of an atom’s mass. The mass of protons and neutrons has been designated with the relative number 1. The number of protons in an atom determines its atomic number. This number is also used to symbolize the atom, or element, in the periodic table of the elements. (hydrogen (H)=1, Helium (He)=2, etc.). Electrons (negatively charged particles) revolve around the nucleus of an atom in electronic orbitals, designated areas where they can be found. Their mass is relatively small – 1/1836 the mass of protons and neutrons. There is the same amount of electrons as the number of protons in the nucleus. For this reason, every atom, in its natural state, is neutral.

Atoms can lose one or more of their electrons. When they do, they become positively charged. Or, atoms can gain electrons, which makes them negatively charged. When an atom gains or loses electrons, it is called an ion. The outer reaches of an atom, its shell, away from the inner nucleus and where electrons are found, makes up the greatest part of its size. This area is mostly empty space. Electrons move in certain designated areas around the atomic nucleus. Some electrons are closer to the nucleus than others (inner orbital, or shielded electrons). Others are further away from the nucleus (outer orbital electrons).

The nucleus of an atom does not change during a chemical reaction. For this reason, it does not appear to be very important. Of course, an atom’s electrons determine its chemical behaviour (mostly these are outer orbital electrons).

The energy of a specific electron is defined with the help of both letters and numbers, according to the orbital where the electron is found. Of great importance is an electron’s distance from the nucleus. The exact placement of an atom’s electrons at any one time is impossible to determine, because location and direction of an individual electron are not able to be calculated (The Heisenberg Uncertainty Principle).

The more accurately we try to determine the location of a specific electron, the less accurate is our ability to determine its direction. Why? Because it is impossible to tell which direction that electron will move in the moment we have determined its location. Unfortunately, only the probability of where an electron might be found can be calculated. On the other hand, if we know the direction an electron is moving, its exact location becomes impossible to locate. The spacial limitation, more simply the area where an electron of a certain energy can be found with greatest probability, is called the atomic orbital.

Duality

Because atoms and their electrons cannot be directly investigated, reality at the atomic level is more or less unknown. From atomic characteristics which can be observed, however, atomic models can be made. The accuracy of these models is seen in their ability to explain certain phenomena. Often, these incredibly small particles show characteristics that are not usual in the macro world we live in. Electrons themselves are capable of a certain principle of duality – as is light: the duality of waves and particles. This means that on the one hand, an electron can behave as a sort of particle beam, a bit like a ray gun. On the other hand, electrons also show a purely wave-like character. Electrons are not, however, one or the other, because these two characteristics are contradictory. Yet we need both concepts to be able to describe an electron’s behaviour. The wave-like mechanical atomic model comes from the description of the outer shell of an atom and the wave-like characteristics of electrons.

Quantum numbers

In the atomic model of Niels Bohr (Danish physicist), an electron cloud swarms around the nucleus of an atom. Electrons are allowed to move only in certain orbitals around the nucleus. The individual orbitals represent a certain amount of energy. All of the electrons in one orbital are seen as containing the same amount of energy.

The energy of an electron is given by a quantum number n. The larger this number is, the more energy an electron contains, and the further away it is from the nucleus.

When an electron is excited to a more distant orbital from the nucleus, one with a higher energy, a certain energy must be added to the electron (a quantum). When an electron moves from a higher energy orbital to a lower energy orbital, closer to the nucleus, energy must be omitted in the form of radiation (heat, light or in the form of a different type of electromagnetic energy. With the help of the main quantum number, we are able to figure the maximum number of electrons in the outer shell of an atom.

The number of an atom’s electrons can be calculated using the formula 2n2, where n is the main quantum number. More recent atomic models use other quantum numbers to describe an atom and its electrons. A secondary quantum number, designated as l, represents the spin of an electron, or its angular momentum. That means its geometric spatial orientation. This quantity is decisively important in order to explain the arrangement of certain chemical bonds in the atoms of a compound.

The energy of a specific electron is defined mainly by the main quantum number n, and to a lesser degree by its secondary quantum number l. From the position of the energy level of an electron, from its orbital (where the electron moves) compared to the outer magnetic field, the magnetic quantum number m (also called the direction quantum number) can be determined. According to the value of m, orbitals can be divided on the basis of their energy.

There is one s orbital (spherical symmetrically placed around the nucleus), three p orbitals (which look like three dumb-bells protruding from the nucleus in their centers and and pointing out in three directions), five d orbitals (four-leaf structures lying between the p orbitals) and seven f orbitals. Within the individual types (s, p, d, f) are individual orbitals of the same energy. If we take the electron to be a small particle, we can imagine it to be spinning on its own axis, to the left or to the right. The direction of its rotation is termed its spin, and is determined by the quantum number s, for spin. With the help of these four quantum numbers, each and every electron can be exactly described.

Stable electron orbitals

The assignment of electrons to their individual orbitals is termed electron configuration. According to the Pauli principle (Swiss-American physicist), no more than two electrons can be found in one orbital at one specific time.

Orbitals are occupied by electrons from lowest energy orbital to highest energy orbital (in the order s, p, d, f). First of all, every orbital of a specific energy is occupied by one electron. Then, an orbital of opposite spin moves into an orbital to join the first electron. Once there are two electrons in one orbital, it is filled completely. The two electrons are called an electron pair. Individual electrons are called unpaired electrons. In each element of the main group, all s and p orbitals are filled gradually, as electrons are added. For the elements of other groups, the d orbitals are filled.

Ionisation energy

Electrons have a certain amount of energy associated with them, and this energy determines their distance from the nucleus. If energy is added to an electron, an electron can increase its distance from the nucleus, or can even escape from the nucleus. In the latter case, an atom becomes a positively charged ion. The amount of energy which is necessary for an electron to leave the atom is called its ionization energy. Therefore, the ionisation energy necessary to free an electron in an outer orbital from an atom is less than for an electron which is closer to the nucleus.

The density of an element is a relative number given by how the matter of an element is arranged around its atoms, on average. The density of different elements can only be compared given the same volume. Density is a function of both mass and volume.

Density units are often given as kg/m3 or g/cm3. The densities of a number of materials are included in tables.

At first glance, many elements share a number of characteristics. A closer comparison of those characteristics, including colour, state of matter (solid, liquid, gas), odour, flammability and density, allow substances to be distinguished one from another. When substances’ characteristics are compared and contrasted, they can be divided into groups. The most important groups that chemistry deals with are: acids, bases, oxides, salts, metals, hydrocarbons and polymers (materials with a great number of atoms which repeat their patterns in a periodic way.

Molecules and Moles

The smallest possible chemical unity is formed by the union of a number of atoms – a compound – also called a molecule. If we want to produce a certain amount of a material, we choose whether to produce that certain amount as a function of its mass, volume or even amount of individual particles.

In chemistry, we use the variable (n) very often as a measure of the amount of a certain substance. One unit of a material is called a mole. We can imagine this amount of a substance as a chemical dozen, an even unit, so to speak. And just like a dozen, or 12, one mole is always equal to a certain number of particles. Of course, this number is more than 12, because of the minute size of atoms and molecules. It would indeed be difficult to count in multiples of 12.

One mole is given as 6.022 x 10 23 particles. This seemingly arbitrary amount of particles is actually based on a chemical truth, using carbon (chemical symbol C), because this element plays one of, if not the, most important role in chemistry. Twelve grams (g) of the element carbon contains exactly 1 mole of atoms. Why is the number of smallest particles so important in chemistry? The answer to this question has to do with the nature and types of chemical reactions. During a chemical reaction, particles interact with one another, often combining to form a new substance. For example, water is actually the combination, or a compound, of two atoms, two atoms of hydrogen and one atom of oxygen. The mass of the two reacting elements would not be enough to ensure a sufficient amount of each element for combination, because oxygen atoms are significantly heavier than hydrogen atoms.

In the laboratory, a chemist cannot determine the amount of a substance by deduction, or by some type of instinct. The amount of a substance can, however, be determined by its mass, which directly relates to the amount of particles a certain amount of substance contains. The quotient of a certain amount of mass (m) and an amount of substance (n) is given by the molar mass (M), with the unit number of grams per one mole.

Molar mass is determined by the sum of the masses of the individual atoms in a molecule. Atomic masses are easily attainable, from the periodic table of the elements. (Hydrogen (H) 1g/mol, Helium (He) 4 g/mol, Lithium (Li) 7g/mol, Beryllium (Be) 9 g/mol, etc.). See the periodic table for more atomic masses.

The molar mass of water (H2O) is 18 grams per mole: 1g/mol for each hydrogen atom (H) and 16 g/mol for the one oxygen atom (O). The molecule is composed of three atoms (2H + 1 O), or more simply: three parts, or atoms, join to make one larger compound, or molecule. The amount of particles corresponding to 1 mole of water is 6.022 . 10 23 molecules of water.

Individual atoms of each element have the same mass. The variable masses of individual molecules is a function of the bonding capabilities of those molecules’ constituent atoms, and their atomic masses.

Matter, or mass, is neither created nor destroyed. If during a chemical reaction a compound, or other products of that reaction have less mass than the original reactant materials, most likely one of the products is not easily detectable – possibly an invisible, odourless gas, or some other byproduct of the reaction. If a scientist accurately compares the mass of all reactant materials with the mass of all products produced, the same amount is always present on both sides. Matter is neither created nor destroyed; it can only change form.

A mixture of a solid material dissolved in a liquid is called a solution. These mixtures can be measured by their volumes. The amount of a material dissolved in the same volume of a solution can vary from one mixture to another, however. To determine the amount of a dissolved substance in a solution, we use the chemical formula concentration (symbol: c), a measure of its variable “strength”. The units of concentration of a solution are amount of moles dissolved in one litre of solution. Substance concentration is indicated as the concentration of a substance in solution. It is the quotient equal to the amount of a material dissolved in a certain volume of a solution (12 g of carbon (C) in one liter of water has a concentration of 1 mol/l). We call this amount of solution a one molar solution of carbon, and abbreviate it as 1 M.

In order to determine the molar concentration of a solution, or in the case that a chemist might need to prepare a solution of a given molar concentration, it is necessary to calculate the mass of each material. The mass of the dissolved substance is calculated from the necessary material mass and mass of one mole of the material. The amount of a substance in a solution can be calculated from the concentration of a substance and the volume of the solution.

For example, for a 1 molar solution of table salt we need 58.5 g of table salt in 1 l of water. Table salt is made of one part sodium and one part chlorine. The chemical formula of this compound is NaCl. The mass of one mole of NaCl is 58.5 g, because sodium (Na) has a molar mass of 23 g and chlorine (Cl) an atomic mass of 35.5 g. Add the two together (23 + 35.5 = 58.5). The mass of one mole is easily attainable from the periodic table of the elements.

A certain molar concentration does not tell how much volume a certain solution contains. That is, a 1 molar solution does not guarantee that there is 1 liter of solution. Rather, a 1 M solution implies that the ratio of dissolved substance (solute) to volume of substance dissolved in (solvent). In our example with table salt, then, rather than use 58.5 g of NaCl with 1 l of water, we could have just as easily used 29.25 g of NaCl with 0.5 l of water, or 117 g of salt with 2 l of water.

Chemical symbols

Substances and chemical reactions can be denoted in a simple and straightforward way in chemistry. A system of symbols, abbreviations and chemical formulas is used, and these are all internationally recognised – thanks to a committee of international experts who have agreed upon these symbols. At first, however, somewhat abstract symbols were used. Eventually, circular symbols to denote compounds were used. Today’s system was introduced by J. J. Berzeliem (Swedish chemist 1779-1848). According to this system, each element was assigned a chemical symbol, usually taken from its Latin or Greek equivalent (for example Magnesium – Mg or oxygen = Oxygenium – O).

Elements are made up of small particles of one and only one kind. We call these particles atoms. In some elements, atoms combine in their natural state, in twos or even more, to form a compound of the given element. In this case, the atoms of one element are joined tightly together, thereby attaining an increased chemical stability. We call these combinations molecules and molecular substances. Molecules are often the smallest building blocks of

gaseous or fluid substances. For example, atoms of hydrogen, nitrogen and oxygen are always joined together, in pairs, two each. There are molecules, however, that are made of different elements. The compound ” water ” is made of one atom of oxygen and two atoms of hydrogen.

One important foundation of chemical terminology is the concept of using small numbers after a chemical element symbol to indicate number of atoms, called stoichiometry. In the language of chemical symbols, an element symbol is often combined with these numbers, and is called a chemical formula. A formula, then, is made up of the element symbols that a certain compound is composed of. And, after each element symbol, the number of atoms of that element contained in the compound is given. This number is smaller than the element symbol. Ones, as in one atom of an element, are understood, and therefore not written, as in the chemical formula of water, H2O, understood as two atoms of hydrogen, and one atom of oxygen. Water is therefore not written as H2O1.

The formula of a compound characterises the material it represents and denotes its constituent elements, the elements it is made of. At the level of individual particles, the formula symbolises the molecule and gives the amount of all atoms in the molecule, and their ratio to one another. The ratio of the number of individual atoms in a molecule can be calculated for example with the help of the mass ratio of the individual elements and their atomic masses.

Stoichiometry says that the atoms in a compound are mutually bonded in unchanging ratios.

1. Dalton’s law: The ratio of the masses of two elements which are bonded together in one molecule can be given as the ratio of one whole number to another.

2. The law of definite proportions: Every compound contains elements in a certain specific and constant mass ratio.

3 The law of consistent proportions: Elements combine together in certain specific ratios of masses or in whole number amounts.

How many atoms of one element join together with how many atoms of another element can be determined by experiment and calculation. The true chemical formula of a number of compounds can be determined rather simply, however, if we know the bonding possibilities of individual elements (their valence). This is the deciding factor for individual elements. For example, once we know the bonding possibilities of an element, we can figure out quickly how many hydrogen atoms could conceivably bond to it. The valence of an element when bonding with hydrogen is given by the amount of unpaired electrons in the outer shell of its electron cloud (the cloud made up of electrons moving at certain levels or in certain orbitals around the nucleus). For example: in water (H2O) one oxygen atom (O) bonds with two hydrogen atoms (H) and therefore has a valence of 2.

In chemical bonds, elements, or their atoms, are not only joined in whole numbers, but their mass ratios also remain constant. For example, in the chemical reaction of iron (Fe) se sulfur (S) iron sulfide (FeS) is formed. The ratio of the number of individual atoms is 1:1. The ratio of masses of the individual atoms is determined from the atomic masses of sulphur and iron, and is 1.45 (7:4).
premium wordpress templates

Leadership Coaching Program

In today’s fast-paced, unpredictable business environment, result-oriented leaders play a vital role in each and every organization. Leadership coaching programs have become extensively necessary these days. It is critical to cultivate leadership quality among the next generation youngsters. However, conflicting agendas, immature professional relationships and poor communication are major hurdles in finding potential leaders. In such situations, Leadership Coaching Program is an effective way to develop leadership qualities with vision and competence.

 

What is Leadership Coaching?

Leadership Coaching offers a professionally trained coach who helps out people in recognizing key professional objectives and priorities. Coach creates strategies to overcome obstacles people face during the coaching program. It’s a one-on-one relationship with coach which reveals hidden leadership qualities in a person.

What is Leadership Coaching Style?

Leadership Coaching Style makes it easier to develop leadership skills in existing and potential leaders. With the help of right kind of leadership coaching style and guidance leaders can be groomed internally to carry any the business to meet the demands.

CoachPrakash provides comprehensive, customized coaching aimed at developing your leadership style. If you want to become a better leader, grow your business, or create a highly-charged organization with the best employees, Leadership Coaching programs and style can be of great value to you.

Also, highly effective and operative Leadership Coaching programs like Leadership Coaching for Congruence, Leadership and Communication Training and Business Leadership Coaching lend a hand in reshaping your professional life with a fresh approach.

Dr. Prakash

Dr. Prakash provides the coaching which enhances your leadership qualities, streamline your priorities and put you on a path to professional success. Dr. Prakash understands the management needs of today and the future and offers extensive, on-target personal and organizational Leadership Coaching programs.

Everyone is a Leader – one only needs to identify and capitalize on it!


anniversary party favors

EMPLOYMENT LAW DISTINCTION BETWEEN ‘EMPLOYEES’ & ‘WORKERS’ AFFECT HOLIDAY & PAY RIGHTS

(Based on author’s site www.geocities.com/slfemp)

Affect who the employer is and who is responsible for one’s wage or salary, holiday pay, employer’s contribution to national insurance, pension rights, and employment protection, the legal distinction made between “employees” and “workers”, and between those and “contractors” ~one’s entitlements depend on whether in the eyes of the law one is an employee, or a worker, subcontractor, self employed contractor –or partly a freelancer.

Because of their different legal definitions an ‘employee’ or a ‘worker’ in the eyes of the law may be in fact a ‘contractor’ or a ‘subcontractor’, and vice-versa -and employment through an employment agency may or may not itself fall in different category. Definitions and categories affect entitlements.

Many employees lose out on entitlements, because their legal employment category, or because who the law regards as employer, is different than they think or have been told. When one is paid to do work for another it is important to know how the employment contract is formed, and one’s employment status.

Are you liable for your income tax or must the employer deduct it and attend to it at source, what are your holiday and pension entitlements and whose responsibility are they, are you entitled to employer’s part of your national insurance contribution –who is your employer at the workplace that you work, the business you work on the premises of, or an employment agency, or is it you whose responsibility those are, in the eyes of the law?

These affect liability, vicarious liability and the statutorily implied terms of any contract -as well as various other statutory requirements ~from equal treatment to employment protection under the employment laws -many have sued and lost because the employer was not in law the sued party but another.

Often these also affect ‘pay’ (in law defined as being what is received directly or indirectly in cash or kind for work done) ~an ‘employee’ gets full holiday pay, paid leave -a ‘worker’ does not.

In employment there is sometimes a company pension scheme; as the norm the employer must pay part of one’s national insurance contributions (covering, e.g., unemployment, health-care, state-pension) if one is an ‘employee’; but the entitlement is partial if one is a ‘worker’, and nil if one is in law a ‘contractor’ -one’s employment status matters.

The following helps ascertain one’s employment status in law, and who in law is one’s employer.

Is one an ‘employee’ or ‘self-employed contractor’? There are three tests that are applied to the question:-

The first is the ‘Control Test’ and is based on this that if the employer controls the job to be done but not how it is done than the person doing the job is an employee; but this test would not be satisfactory, because also to an employee with specialist knowledge, e.g. a company nurse, the employer would not tell how to do the job.

The second, ‘Organisational Integration Test’, seeks to ascertain whether the person paid is an integral part of the business: an anaesthetist was not a self-employed contractor in Cassidy -v- The Ministry of Pensions 1961 ~he was a resident of the hospital -an employee.

But this did not suffice: drivers who were paid for an agreed minimum number of jobs per year and had to wear company uniforms as well as to have the company colours on their lorries and who could not work for the competition without the employer’s permission, but who could choose to do extra work and decided their own routes and used their own lorries and could use at their pleasure substitute drivers, in Ready Mixed Concrete -v- The Ministry of Pensions 1968 were self-employed contractors, not employees.

There is a third, the ‘Multiple Test’ to be applied: ‘one is an employee if.. provides work or service for remuneration.. the business has some degree of control.. without any terms contrary to the employment relationship.’

This is the consideration in the case of those engaged or introduced by employment agencies:-

Who is the employer? Is one, as a specific individual, under the direct supervision and control of the business? If so, one is an employee of the client business -where one works…

Does the business where one works pay that agency and that agency itself pay one? If so, one is not an employee of the client business, but may be an employee or worker of that agency itself -agency staff.

Employees normally receive holiday pay, self employed contractors do not ~but what about the ‘worker’-the casual worker who is not in self employment and yet is also not a regular employee?

Is one an ‘employee’ or ‘worker’? There is a different ‘worker’ category for casual workers which was created under the Employment Rights Act 1996 s.230 (3) to deal with this question.

If a casual worker is genuinely on an ad hoc basis employed, that casual worker is, in law, an employee while he is employed, and for the period/s of such employment has employment rights -e.g., to receive wages and holiday pay.

A ‘subcontractor’ normally would be in the category either of employee or of worker on the same basis, but instead of the business where the sub contractor works, of the self employed contractor who engaged the sub contractor.

If there is a dispute about whether a contractor engaged a subcontractor as a self employed person, then the same three tests above are applied to ascertain the employment status of that subcontractor in relation to that contractor.

If that subcontractor receives a wage and is not self-employed in relation to that contractor, then if the subcontractor works regularly for that contractor he is an employee of that contractor, and if he works casually for that contractor he is a worker of that contractor.

Being a ‘freelance-worker’ is, to all intends and purposes, the same as being a self-employed contractor.

One can lawfully be both: an employee or worker, as well as a freelancer -self employed.

If one who is normally an employee or worker wants also to do some freelance work, then one officially is an employee or worker and one’s entitlements in relation to ones normal status are not affected -but those entitlements do not extend to one’s freelance work and employment.

If one normally self employed wants also to do some work as an employee or worker of a business, then one’s official status as self-employed does not change -but one’s entitlements for work done as an employee or worker are not affected to the extent of one’s such work.

If one is not paid for holidays.. if a pension scheme depends on whether one is a freelancer or not.. if the employer is responsible for one’s colleagues’ taxes or pension contributions but not one’s own.. if one is working for one business but is paid by another… one might need to ascertain one’s employment status -the above are the legal tests.

(Laws change –always ascertain current law.)

The author has a website at: http://www.geocities.com/eoa_uk


wedding speeches

Introduction:

In recent years, directors and officers liability insurance has become a core component of corporate insurance. As many as 95% of Fortune 500 companies maintain directors and officers (“D&O”) liability insurance today. Furthermore, it has become a commonplace of the financial world that disappointed investors will charge corporations and their officers and directors with securities fraud whenever a company’s stock drops significantly in price. Studies indicate that the average settlement of securities fraud litigation in 1999 was greater than $8 million, with average defense costs exceeding $1 million. In light of these numbers, it should not be surprising that such litigation has become almost routine, and D&O liability insurance plays a large role in handling it. At the same time, the D&O insurance industry has become highly specialized and new products are constantly emerging to meet the needs of specific markets. This article will discuss the historic and current trends in the industry. In addition, this article will address some of the primary legal and coverage concerns that must be considered by underwriters, claims handlers, corporations and their executives, and the attorneys who represent them.

History of D&O Insurance:

In the 1930s, in the wake of the depression, Lloyd’s of London introduced coverage for corporate directors and officers. At the time, corporations were not permitted to indemnify their directors and officers. Joseph P. Monteleone & Nicholas J. Conca, Directors and Officers Indemnification and Liability Insurance: An Overview of Legal and Practical Issues, 51 Bus. Law 573, 574 (1996). However, directors and officers did not perceive a great risk, and the insurance did not sell. Well into the 1960s, the market for D&O coverage was negligible. In the 1940s and 1950s, courts, corporations and directors and officers began to see benefits to corporate indemnification and prompted state legislatures to enact laws permitting it. Then, during the 1960s changes in the interpretation of the securities laws created the realistic possibility that directors and officers themselves, and not only corporations, could face significant liability. See Roberta Romano, What Went Wrong with Directors’ and Officers’ Liability Insurance, 14 Del. J. Corp. L. 1, 21 & nn. 74-77 (1989). Insurers responded to these changes by reviving specialty coverage for the “personal financial protection” of directors and officers.

The historic focus on “personal financial protection” distinguished D&O insurance from other kinds of commercial insurance that cover identified areas of corporate risk. Insurers had defined corporate risks they would insure. General liability insurance provided corporate insurance for bodily injury or property damage claims; fidelity bonds afforded specified first-party coverage for losses corporations incur due to certain acts of their officers, directors, or employees. D&O coverage, on the other hand, was not intended to be corporate insurance; much less an attempt at general corporate insurance for liability caused the corporation by virtue of the acts of its directors and officers. In recent years, however, D&O coverage has undergone a number of changes.

Current Importance of D&O Insurance:

The D&O industry matured and evolved during the 1970s through the 1990s, and continues to do so today. From its modest beginnings in the 1930s, D&O insurance has become a fixture in today’s corporate world. Starting with basic D&O coverage, the industry has spawned a large number of new and related products. The original focus on “personal financial protection” is no longer the single driving force behind the industry, and D&O insurance is often coupled with coverages designed to protect the corporation, in addition to its directors and officers, from various liabilities.

During the 1980s, the first litigated disputes between D&O insurers and federal regulators (or the former bank officials whom the regulators sued) brought D&O coverage into the forefront in many significant and often highly publicized matters. In recent years, corporations of all kinds and their directors and officers have seen an increasing number of claims and increasingly large settlements. Watson Wyatt Worldwide, D&O Liability Survey Report (1997). Thus, D&O insurance remains an important protection for directors and officers. In addition to the traditional protections, the industry has set a trend toward expanding D&O coverage – both in terms of who is protected and against what they are protected. Many underwriters now write coverages that offer protection to the company for its own liability and for specific corporate concerns.

Claims against Directors and Officers:

As noted above, claims against directors and officers generally have been increasing over time. As of the most recent Wyatt survey, 31% of all companies – an all time high – could expect to have at least one claim made against its directors or officers, and each company averaged 0.87 claims – also an all time high. Watson Wyatt Worldwide, D&O Liability Survey Report, at pp. 42-44 (1997) (the “1997 Wyatt Report”). The frequency of claims against directors and officers, and the susceptibility of officers and directors to claims corresponds to a number of factors, including the size of the company, the company’s type of business, whether the company is publicly or privately owned, and its number of shareholders. For example, companies with greater assets are more likely to have claims made against their directors and officers and on average experience more claims per company than smaller companies. Publicly held companies have two to three times as many claims made against their directors and officers than privately or closely held companies. However, companies with greater than 500 shareholders have a higher claim frequency than smaller companies, regardless of private or public status. Id.

Specifically, according to the 1997 Wyatt Report, companies with assets less than $100 million had a 12% susceptibility to claims, but companies with assets greater than $10 billion had a 63% chance of having a claim made against its directors or officers, and companies with assets greater than $1 billion averaged 1.64 claims per company in 1997. Large banking companies are the most likely type of business to have claims made against their directors and officers and average the most claims per company. Forty-two percent of large banks will have at least one claim made, while the large banking industry as a whole can expect an average of 6.69 claims per company. With the explosion of technology companies in the last ten years, and the corresponding fluctuations in their stock prices, claims against technology companies have also increased dramatically.

Basic Coverages:

At its most basic, D&O insurance protects directors and officers from liability arising from actions connected to their corporate positions. Due to general expansion in the industry, market pressures and the industry’s responses to the development of case law, D&O insurance has expanded beyond its original and basic coverage. Thus, a single policy now may provide multiple and varied options by standard form or endorsement. The individual coverages discussed below typically are subject to distinct terms, conditions and deductibles, and even may be subject to distinct policy limits or sublimits. However, some common threads run through each coverage offered in a D&O policy. For example, D&O insuring agreements generally specify that coverage is limited to claims first made during the policy period. In addition, the insurer typically does not have a duty to defend but is required to cover the costs of the insured’s defense.

Insuring Agreement [A] (D&O):

Although each policy will employ its own language, Insuring Agreement A, often referred to as “A-Side Coverage,” typically provides coverage directly to the directors and officers for loss – including defense costs – resulting from claims made against them for their wrongful acts. A-Side Coverage applies where the corporation does not indemnify its directors and officers. A corporation may not indemnify its directors or officers because it either (1) is prohibited by law from doing so, (2) is permitted to do so by law and the company’s bylaws but chooses not to do so, or (3) is financially incapable of doing so, due to bankruptcy, liquidation, or lack of funds. The laws regarding indemnification differ from jurisdiction to jurisdiction. Insuring Agreement A additionally may specify that coverage is limited to those claims connected to an insured’s capacity as an insured director or officer of the company. This issue of capacity recurs throughout D&O coverage analysis. The limiting language may appear in the insuring clause, in the definitions of “wrongful act” or “insured” found elsewhere in the policy, or in all three clauses. Although a claim sometimes implicates an insured in a single and clear capacity, a claim may well arise out of an individual’s multiple capacities. For example, an individual may be sued as a director and a shareholder of a company (perhaps as a purchaser or seller of company stock), or an officer of a homeowner’s association may also be a homeowner and it may not be clear whether his or her actions were taken as one or the other – or both. Similarly, a corporations’ lawyer may also sit on the board of directors.

Insuring Agreement [B] (Corporate Reimbursement):

A typical Insuring Agreement B, or “B-side coverage,” reimburses a corporation for its loss where the corporation indemnifies its directors and officers for claims against them. B-side coverage does not provide coverage for the corporation for its own liability. The language and conditions of Insuring Clause B typically mirror Insuring Clause A.

Entity Securities Coverage:

Many D&O policies offer an optional coverage to protect the corporation against securities claims. Such coverage provides protection for the corporation for its own liability. Many policies today provide such coverage to the corporation whether or not its directors and officers are also sued; other policies, however, provide such coverage only where the corporation is a co-defendant with its directors and officers. Entity coverage may be part of the policy form as “Insuring Agreement C” or may be added as an endorsement. The addition of entity coverage for securities claims is a relatively new development, and addresses concerns and confusion raised by court rulings regarding allocation. See e.g. Nordstrom, Inc. v. Chubb & Son, Inc., 54 F.3d 1425 (9th Cir. 1995).

EPL Coverage:

Employment Practices Liability (“EPL”) coverage also has become a common addition to corporate coverage – often by endorsement to the D&O policy or as a stand-alone policy issued to the company. This coverage typically protects directors, officers, employees and/or the company against employment-related claims brought by employees and, in certain circumstances, specified third-parties. For example, it provides coverage for wrongful dismissals or failures to promote, sexual harassment, and other violations of federal, state or local employment and discrimination laws brought by the company’s employees. EPL claims have also seen a dramatic increase in frequency and severity over the past decade.

Defence Issues:

Most D&O policies do not impose a duty to defend on the insurer. They do, however, provide coverage for defense costs and give the insurer the right to associate with the defense and approve defense strategies, expenditures, and settlements.

Right to Select Counsel:

(A) The D&O insurer cannot impose its choice of counsel on an insured – the insured generally has the right to select counsel, subject to the insurer’s consent. D&O policies typically provide that an insurer may not unreasonably withhold approval of an insured’s choice of counsel. This feature is important to the insured corporation, which typically has developed ongoing relations with corporate and litigation counsel that it would want to use in high-stakes litigation against the company.

(B) Reimbursement and Advancement of Defense Costs Although D&O insurers generally do not have a duty to defend, D&O policies do cover defense costs. The primary questions that arise in connection with the payment of defense costs regard (1) control over the costs incurred and (2) when the insurer must make defense payments. In connection with the first question, although insurers do not control an insured’s defense, under D&O policies they are required to reimburse only reasonable defense costs arising out of covered claims. Thus, an insured or his chosen counsel does not get a blank check.

Whether a D&O insurer must, or should, advance defense costs – that is, pay them as they are incurred – is a common question. Many of the issues affecting coverage cannot be resolved until the claim has been resolved. Specifically, certain exclusions only apply after a finding of fact has been made. For example, as discussed below, policies generally exclude coverage for losses arising out of fraud. The exclusion only applies, however, where there is a final judgment finding fraud. Thus, where fraud is alleged, coverage is uncertain until the completion of the claim. In such situations, insurers may have an interest in not advancing defense costs until coverage is certain. However, insurers have an interest in seeing their insured vigorously defend claims against them. A vigorous defense can be a costly endeavor that may be well beyond the means of an insured. Thus, many policies provide that insurers advance defense costs under the condition that, should the facts ultimately demonstrate a lack of coverage, the insured will reimburse the advanced monies.

Key Provisions and Exclusions:

Twenty years ago, underwriters offered D&O policies based on two basic forms, and courts had seen very few cases in which they were asked to interpret those policies. Today, the number of D&O policy forms and cases interpreting them has multiplied. Although there are trends and standards within the industry, the specific language found in these policies differs from insurer to insurer and from policy to policy. Any coverage analysis must take into account the specific language found in the policy at issue. As a general matter, clear policy language will govern the application of coverage to a particular claim.

Definition of Claim:

Common to all coverages in a D&O policy is that each insuring clause generally provides coverage on a “claims-made” basis. In other words, it provides the coverage described for claims made during the period for which the coverage is purchased. Additionally, the insured typically must report the claim to the insurer during the policy period or within a reasonable time.

D&O policies generally define claim as any (1) civil, criminal or administrative proceeding, or (2) written demand for damages against an insured. Who is included as an insured will depend on which coverages are implicated and how the term is defined in the policy. That is, if it is a securities claim, and the policy so provides, a claim may be made against the company or against a director or officer. If it is an employment claim, and the policy so provides, a claim may be made against the company, a director or officer, or an employee.

Some policies offer more detailed definitions of claim. For example, a policy may state that a civil proceeding includes arbitration, mediation or other alternative dispute resolution. A policy may also explain that an administrative proceeding includes a formal investigation.

Many policies also include limiting a claim to those proceedings or demands made against an insured in his or her capacity as an insured. The capacity issue may be stated directly in the definition of claim, or may be stated in the definitions of “insured” or “wrongful act,” either of which may be part of the definition of claim.

Definition of Loss:

Loss generally includes damages, judgments, awards, settlements and defense costs. Loss usually excludes fines or penalties, taxes, treble (or other multiplied) damages, and matters uninsurable under law. Where treble or multiplied damages are assessed, a D&O policy generally will cover the base amount, but not the multiplied portion of the loss. Some policies include punitive and exemplary damages in the definition of loss. Where included, coverage of punitive and exemplary damages explicitly is effective only where permitted by applicable law.

Punitive or exemplary damages:

Some states do not permit punitive or exemplary damages to be assessed at all. See e.g. Distinctive Printing and Packaging Co. v. Cox, 443 N.W.2d 566 (Neb. 1989). Those states that do permit punitive damages to be assessed may not permit insurance against them. See e.g. City Products Corp. v. Globe Indem. Co., 151 Cal. Rptr. 494 (Cal. Ct. App. 1979). Those states prohibiting coverage of punitive damages generally base the prohibition on public policy concerns. The longstanding reasoning is that the assessment of punitive damages is intended to set an example or punish the wrongdoer, and permitting insurance against such punishment would render such punishment ineffective. Id.

Matters uninsurable under applicable law:

Matters deemed uninsurable under law also may be the basis of explicit exclusions elsewhere in a policy. For example, coverage for liability for fraud may be barred by law, as well as by a dishonesty exclusion. As discussed above, coverage for punitive damages also may be barred by law.

Exclusions-

1. ? Dishonesty Exclusion:

Dishonesty exclusions bar coverage for claims made in connection with an insured’s dishonesty, fraud, or willful violation of laws or statutes. The dishonesty exclusion also may be coupled with personal profit exclusion, barring coverage in connection with an insured’s illicit gain. These exclusions typically are followed by a severability clause – that is, a caveat providing that the acts or knowledge of one insured will not be imputed to any other insured for the purposes of applying the exclusion. In other words, the exclusion only bars coverage for the insured(s) whose acts or knowledge are the basis of the claim at issue.

In the securities context, the Private Securities Litigation Reform Act of 1995 permits a defendant to request a special verdict from the jury, identifying its judgment of each defendant’s state of mind. PSLRA, 15 U.S.C. 77z-1(d). Although a special verdict would assist in the proper application of the dishonesty exclusion, most securities lawsuits do not reach a verdict at all – they are either settled or decided on motions.

As mentioned above, many dishonesty exclusions include an adjudication clause, which provides that the exclusion only applies if the fraud or dishonesty is established by a judgment or other final adjudication. In connection with this clause, the question arises whether the judgment or other final adjudication must be in the underlying litigation. For the most part, the case law on this subject supports the position that most adjudication clauses, as they currently are written, require a final adjudication in the underlying litigation, rather than in a parallel coverage action or other lawsuit. Courts have held either that (1) the adjudication clause is ambiguous, so must be interpreted in favor of coverage, see e.g., Atlantic Permanent Fed. Sav. & Loan Ass’n v. American Cas. Co., 839 F.2d 212, 216-17 (4th Cir. 1988) (finding the phrase “a judgment or other final adjudication thereof” to be ambiguous, and therefore upholding the district court’s decision against the insurer that the provision requires a finding of deliberate dishonesty “in the underlying action itself, rather than a subsequent coverage suit”), or (2) the clause explicitly requires a finding of fraud or dishonesty in the underlying litigation. See National Union Fire Ins. Co. v. Continental Illinois Corp., 666 F. Supp. 1180, 1197 (N.D. Ill. 1987) (finding that where an adjudication clause requires “a judgment or other final adjudication thereof,” that “[t]he word ‘thereof’ refers to the suit against the directors and officers and unless there is a judgment adverse to them in the underlying suit, then the exclusion does not apply”). This issue has a significant impact on the effect of settlements. Essentially, if an underlying lawsuit is settled without a specific admission of liability, a dishonesty exclusion is unlikely to apply.

2. ? Insured v. Insured Exclusion:

As the name implies, an insured versus insured (“IvI”) exclusion bars coverage for claims made by an insured (e.g., a director, officer or corporate insured) against another insured. In addition, the exclusion may bar coverage for claims brought (1) by anyone directly or indirectly affiliated with an insured, (2) by a shareholder unless the shareholder is acting independently and without input from any insured, or (3) at the behest of an insured. The exclusion essentially prevents a company from suing or orchestrating a suit against its directors and officers in order to collect insurance proceeds. Questions regarding the application of the exclusion arise in the context of derivative lawsuits, bankruptcies and receiverships.

Specifically, it is clear that where a lawsuit is brought with the “active assistance” of an insured, the exclusion bars coverage. See e.g. Voluntary Hospitals of America, Inc. v. National Union Fire Ins. Co., 859 F. Supp. 260 (N.D. Tex. 1993), aff’d 24 F.3d 239 (5th Cir. 1994). It is not always clear, however, when a lawsuit is brought with the indirect involvement of, or at the behest of the insured, and there is very little case law expounding on the issue.

Where the policy only provides coverage for insureds when acting in their capacities as insureds – such as through a restrictive insuring agreement or definition of insured – the IvI exclusion likewise may be interpreted so as to apply only where the insured is bringing suit in an insured capacity. See Howard Savings Bank v. Northland Ins. Co., 1997 U.S. Dist. LEXIS 11857 (N.D. Ill. 1997). Where coverage does not depend explicitly on whether an insured was acting in an insured capacity, however, the IvI exclusion does not turn on the capacity issue either. See Kiewit Diversified Group Inc. v. Federal Ins. Co., 999 F. Supp. 1169 (N.D. Ill 1998).

Courts have held that where suit is brought by the receiver of a failed bank, an IvI exclusion bars coverage. Mount Hawley Ins. Co. v. FSLIC, 695 F. Supp. 469 (C.D. Cal. 1987); but see FDIC v. American Casualty Co., 814 F. Supp. 1021 (D. Wyo. 1991). Depending on the particular wording of the exclusion, some courts have held that an IvI exclusion does not bar coverage for a suit brought by a bankruptcy trustee. In re Pintlar, 205 B.R. 945 (Bankr. D. Idaho 1997); but see Reliance Ins. Co. v. Weiss, 148 B.R. 575 (E.D. Mo. 1992).

3. ? Professional Liability Exclusion:

As a general matter, D&O policies do not provide coverage for liability associated with the provision of professional services. Thus, where a bank officer is liable for acts as a banker rather than an officer of the bank, a D&O policy with a professional liability exclusion would not provide coverage. Similarly, where a doctor is the president of a professional corporation, the D&O policy would only protect him or her against liability from acts as president of the corporation, and would not provide coverage for professional malpractice claims. The line between professional services and acts outside the scope of this exclusion can be a fine one. Courts often draw a distinction between those acts that require special training or are at the heart of the profession and those acts that are administrative in nature. See e.g. Harad v. Aetna Cas. and Sur. Co., 839 F.2d 979 (3d Cir. 1988).

4. ? Prior Acts Exclusion:

Prior acts exclusions bar coverage for claims arising out of an insured’s wrongful acts prior to a specified date. The date may coincide with the termination of coverage under a previous policy. The date may also coincide with a change in corporate status – such as a merger or acquisition. For example, where a subsidiary is acquired, the prior acts exclusion may exclude coverage for the subsidiary prior to the time it became a subsidiary. In such situations, the subsidiary may have run-off coverage from a previous policy to protect against liability arising from those excluded acts.

5. ? Prior and Pending Litigation Exclusion:

Prior and pending litigation exclusions generally exclude coverage for (1) claims pending prior to the inception of the policy, or another agreed upon date, and (2) subsequent claims based on the same facts or circumstances. Conflicts primarily arise regarding the second component of this exclusion. Specifically, the question arises as to when a subsequent claim is based on sufficiently overlapping facts and circumstances to fall within the scope of the exclusion. Courts have held that the two claims need not be brought by the same plaintiffs to trigger the exclusion. See e.g., Unified School Dist. No. 501 v. Continental Cas. Co., 723 F. Supp. 564 (D. Kansas 1989) (finding exclusion applied where new plaintiffs brought new claims). Furthermore, the claims can allege different harms, and still be excluded from coverage by this provision. See, e.g., Ameriwood Indus. Int’l Corp. v. Am. Cas. Co. of Reading, Pennsylvania, 840 F. Supp. 1143 (W.D. Mich. 1993) (rejecting argument that allegation of different legal claims prevented operation of exclusion). The exclusion additionally may apply even if the two claims allege different legal violations, or are brought in different courts and pursuant to the authority of different jurisdictions. See, e.g., Bensalem Township v. Int’l Surplus Lines Ins. Co., 91-5315, 1992 U.S. Dist. LEXIS 8243 (E.D. Pa. June 15, 1992) (applying exclusion where prior claims sought relief for violations of Pennsylvania law and later claims sought relief for violations of federal law), rev’d on other grounds, 38 F.3d 1303 (3d Cir. 1994).

Meaning of Director as per the Companies Act, 1956:

A company is a legal entity and does not have any physical existence. It can act only through natural persons to run its affairs. The person, acting on its behalf, is called Director.

Section 2(13) of the Companies Act, 1956, defines a Director as any person, occupying the position of Director, by whatever name called. They are professional men, hired by the company to direct its affairs. But, they are not the servants of the company. They are rather the officers of the company.

The definition of Director given in this clause is an inclusive definition. It includes any person who occupies the position of a director is known as Director whether or not designated as Director. It is not the name by which a person is called but the position he occupies and the functions and duties which he discharges that determine whether in fact he is a Director or not. The function is everything; name matters nothing. So long as a person is duly, appointed by the company to control the company”s business and, authorized by the Articles to contract in the company”s name and, on its behalf, he functions as a Director.

The Articles of a company may, therefore, designate its Directors as governors, members of the governing council or, the board of management, or give them any other title, but so far as the law is concerned, they are simple Directors.

Meaning of Liability:

The word liability has two general connotations. In business law, liability refers to the responsibility for a company’s debt or other obligations. Some forms of business organization, such as a sole proprietorship, have unlimited liability, meaning that the owner is personally responsible for the debts and obligations of the business, and lenders or courts may look to the owner’s personal assets for payment of these obligations. Limited liability organizations, such as corporations, allow lenders and courts to only seize the assets of the business rather than the assets of the owners.

?

However, liability is more frequently used in an accounting sense, where the word refers to a claim on a company’s assets. Technically, a liability is a required transfer of assets or services that must occur on or by a specified date as a result of some other event that has already occurred.

Why liability matters?

Information about a company’s liabilities is a key component of accurate financial reporting and a crucial part of thorough financial analysis. Although the Financial Accounting Standards Board, the Securities and Exchange Commission, and other regulatory bodies define how and when a company’s liabilities are reported, and although liabilities make up a significant portion of the balance sheet, not all liabilities are required to appear on the balance sheet. Therefore, analysts must also carefully study the notes to a company’s financial statements.

?

Excessive liabilities can ruin a company, but they are not always detrimental. Liabilities often represent the company’s ability to defer cash outlays, allowing it to use that cash for other, possibly more profitable purposes until the obligation is due. The use of debt financing can magnify profits that would have otherwise gone unrealized.

Liability of directors under the Companies Act, 1956

?Position of director:

The directors are the custodian of the interests of the shareholders. Their position is fiduciary vis-?-vis the Company. The directors must exercise their power for the benefit of the Company. There exists a relationship of a trustee and trust between the directors and the shareholders of the Company. The directors have been held trustees of the assets of the Company and in many cases the courts have directed them to reimburse the loss to the Company, where it was found that directors have applied the Company’s money in payment of an improper commission.? Each section also specifies the penalty to be paid in case of default, imprisonment or both.

The strictness with which the courts view the responsibility and the sacredness of the trust reposed in the directors had been? emphasized in many cases. Their position has further changed in the era of Corporate Governance to the extent that the directors have to protect the interests of not only the shareholders but also other stakeholders.

In this article an attempt is made to define the extent and scope of liabilities of Directors viz. Managing Director, Working Director and an ordinary Director under the Companies Act, 1956.

Liabilities of Directors:

The liabilities of the directors vary according to the status of the Company i.e. whether the Company is private or public. But in all cases in discharging the duties of his position, he must act honestly, carefully and without any negligence. The various liabilities of directors under the companies Act, 1956 may be summarized as under:

1. Filing of various documents with Registrar of Companies:

a) Annual Return within 60 days of the annual general meeting.

b) Balance Sheet within 30 days of laying the accounts at the annual general meeting.

c) Return of Allotment of Shares in Form No. 2 within 30 days of Allotment of shares.

d) Change in Directors / Secretary (Appointment / Re-appointment /Cessation/ Resignation etc.) in Form No. 32 within 30 days of such change.

e) Registration of certain resolutions and agreements u/s 192 in Form No. 23 within 30 days of passing of such resolutions etc.

f) Creation & modification of charges in Form No. 8 & 13 and Satisfaction of charges in Form No. 17 & 13, within 30 days of creation, modification and satisfaction respectively.

2. Holding of various Meetings under Companies Act, 1956:

a) Board Meeting:

b) Annual General Meeting

c) Extra-ordinary General Meeting

3. Maintenance of Statutory Books under Companies Act, 1956:

a) Minutes Book: for Board meeting and General meetings separately u/s 193.

b) Register of Members : showing name, address and occupation of each member,?the? share held including the distinctive numbers, the amount paid on the shares etc.u/s 150/151

c) Register of interested Directors etc. : showing the required particulars u/s 301

d) Register of Directors, Managing Directors and Secretary : showing the required particulars about them etc. u/s 303

e) Register of Directors, Managing Directors and Secretary shareholding: showing the required details about shareholding etc. u/s 307.

f) Register of Charges: showing the particulars of charges on the assets of the company u/s 143.

g) Register of Investments showing particulars of investment u/s 49/ 372A.

h) Register of Transfer of Shares: along with details relating to the transferor and the transferee and the No. of shares transfer etc.

4. Liability for negligence

5. Standard and degree of care and skill

6. Special Statutory Protection against Liability [S.633]

7. Fiduciary Duties

1.Directors as Officers in Default:

a) . Acceptance of public deposit

Directors and Officers Liability Insurance

(often called D&O) is insurance payable to the directors and officers of a company, or to the corporation itself, to cover damages or defense costs in the event they are sued for wrongful acts while they were with that company.

Typical sources of claims include shareholders, shareholder-derivative actions, customers, regulators, and competitors (for anti-trust or unfair trade practice allegations).

Directors and Officers Liability insurance is commonly purchased with a companion product “Corporate Reimbursement Insurance” (or “Company Reimbursement Insurance”). When purchased together, a single insurance policy is normally issued which is entitled “Directors and Officers Liability and Company Reimbursement Insurance”. Modern Directors? & Officers policies now frequently include cover for the Company Entity itself as well as Employment Practice Liability.

D&O insurance is usually purchased by the company itself, even when it is for the sole benefit of directors and officers. Reasons for doing so are many, but commonly would assist a company in attracting and retaining directors. Where a country’s legislation prevents the company from purchasing the insurance, a premium split between the directors and the company is often done, so as to demonstrate that the directors have paid a portion of the premium.

A common misperception of D&O insurance is that it makes directors or officers able to engage in acts they know to be wrong; this is not the case. Intentional acts are not covered in D&O insurance. Only negligence by directors or officers would be covered.

In a recent spate of litigation, a number of adverse court verdicts regarding the liability of directors and officers of companies to a third party were passed where the directors and officers were held personally liable for payment of compensation to the third party. Ordinarily, the directors and officers are bound by duty towards the company itself, shareholders, employees, creditors, customers, competitors, members of the public, government and other regulatory bodies. Any breach or non-performance in the duties can result in claims against the companies and/or its directors of the company by reason of any wrongful act in their respective capacity. The Directors’ and Officers’ Liability Insurance policy has been designed specifically to meet any financial liabilities imposed upon them.

This policy is necessary for directors and officers of every company if they wish to avoid potential litigation owing to-

Failure of supervision. Inaccuracy in statements of financial accounts. Lack of judgement and good faith. Mismanagement of funds. Mis-statements in prospectuses. Allotment of shares. Unauthorised loans or investments. Failure to obtain competitive bids. Imprudent expansion resulting in a loss. Using inside information. Unwarranted dividend payment, salaries or compensation. Misleading statements filed with the stock exchange. Misrepresentation in acquisition agreement for the purchase of another company. Wrongful dismissal of an employee.

Risks covered:

This policy covers all claims made in event of-

Mergers, takeovers and divestment. Liquidation. Changes in control of shareholding. Share issues. Shareholder claims. Misdeeds of co-directors. Trustee accountability and responsibility. Customs and excise allegations. Administrative liabilities. Termination of employment. Disposal of old firm/ entry of new owners. Miscellaneous litigation.

Compensation Offered:

The extent of indemnity being severely restricted by the Companies’ Act will reimburse the extent of legal costs expended only if the Director/ Officer successfully defend the act taken against him.

Also, coverage is available on a ‘claims made’ basis and applies only to claims made against the Board of Directors during the policy period, irrespective of when the wrongful act occurred.

The cover applies to-

Liabilities arising from any claim made against Directors and/ or Officers of the company by reason of any wrongful act in their respective capacity. Liabilities against the company where it is required to indemnify the Directors/ Officers pursuant to common or statutory law provisions or Memorandum and Articles of Association. The company and its subsidiaries that are under the common control of the Directors/ Officers.

Exclusions:

The policy will not pay for the losses arising from any claim. Prior and pending litigation and claims submitted under previous policies. Bodily injury, sickness, disease, emotional distress, death, damage or destruction of tangible property including loss.? Insured v/s Insured. viz. Directors suing each other. Illegal personal profit and remuneration. Deliberate, dishonest or fraudulent acts. Pollution and/ or contamination. Insider trading. Outside directorship (can be covered with specific information).

This policy is offered by:

National Insurance Company Ltd. (NIC) The Oriental Insurance Company Ltd. (OIC) United India Insurance Company Ltd. (UIIC) The New India Assurance Company Ltd. (NIAC) Directors & Officers Liability is the liability (or exposure to litigation) of corporate board members and officers arising out of their actions pertaining to their management duties of the corporation. Directors & Officers Liability Insurance insures the personal assets of corporate board members and officers [as well as the company's corporate assets] from lawsuits arising out of their capacity as directors or officers of the cooperation.

What are the responsibilities of Corporate Boards?

Review & authorize major corporate actions. Advice & counsel management on corporate decisions. Review & oversee proper audit procedures. Review the Cooperation’s investments. Stay informed about the Corporation’s financial status and legal developments.

Assist management in decision-making Verify the Corporation is in compliance with all applicable statutes, regulations & laws. Monitor management’s performance.

Directors & Officers of corporations are responsible for the affairs of their companies. They must use good faith and prudent judgment in their service to the corporation. Directors & Officers have certain duties and responsibilities when acting in the service of the corporation. These duties are, as follows:

General Duties – Directors & Officers must act in good faith and prudent judgment in their service to the cooperation.

Common Law Duties – The following are the common law duties-

Duty of Loyalty – Directors? & Officers must avoid conflicts of interest, self-dealing, and misuse of corporate assets.

Duty of Obedience -Directors? & Officers must act within the boundaries established by statute, corporate charter or by-laws, and written policies and procedures.

Duty of Diligence and Care - Directors? & Officers must conduct themselves with the care that an ordinary person would exercise under similar circumstances and in similar capacities.

Statutory Duties - There are several laws and statutes that regulate the actions and decisions of Directors? & Officers.

Securities Laws Anti-Trust Laws Employment Laws ERISA Violations Racketeering Laws Tax Laws Environmental Laws Intellectual Property & Patent Laws State Corporation Laws

Business Judgment Rule – Directors & Officers have historically been protected from personal liability against them by a legal principal known as the Business Judgment Rule. This legal principal shields corporate directors & officers by applying the rule for mistakes in judgment (i.e. second-guessing). As long as the director or officers has acted according to the duties of loyalty, obedience and diligence, then the director or officer may be protected by the Business Judgment Rule.

Directors & Officers Liability Claims:

Directors & Officers of both Public and Private Companies face legal liabilities in their service to the corporation. The claims experience between the two varies. Public Companies experience more frequency and severity of claims related to shareholder issues, while both Public and Private Companies face similar experience for Employment Related Claims. Below is a partial list of typical claimants:

Shareholders Employees Creditors Customers/Clients Competitors Government Regulatory Agencies

There are three categories of protection against personal liability of Directors & Officers of corporations:

Indemnification:

The corporation may indemnify their directors & officers for litigation. This is usually accomplished by incorporating an indemnification clause in the corporate by-laws or by a separate written indemnification agreement. Indemnification is also often available and governed through state law. Some conduct by the directors & officers is not indefinable, such as dishonest/illegal acts or intentional misconduct. Indemnification may not be available to directors & officers in cases of financial insolvency or bankruptcy.

Common Law and Statute:

Business Judgment Rule – Courts may apply the Business Judgment Rule to protect directors & officers from personal liability.

Liability-Limiting Statutes – some state and federal laws provide limitation of liability in certain cases.

Insurance Coverage:

Insurance provides protection for individual directors & officers when the corporation is not permitted to indemnify or financially unable to indemnify the directors & officers.

When the corporation does indemnify, D&O insurance will Pay On Behalf Of or indemnify the corporation for payments made to the directors & officers.

In some cases, coverage may be provided for the corporate entity, in cases where the corporation is being held liable. D&O insurance provides Balance Sheet Protection for the corporation. Insurance allows the corporation to transfer risk from its own balance sheet to that of the insurer.

D&O insurance helps the corporation attracts and retain quality board members.

Bhopal disaster Case, AIR 1990 SC 273:

The Bhopal disaster was an industrial disaster that occurred in the city of Bhopal, Madhya Pradesh, India, resulting in the immediate deaths of more than 3,000 people, according to the Indian Supreme Court. A more probable figure is that 8,000 died within two weeks, and it is estimated that an additional 8,000 have since died from gas related diseases.

The incident took place in the early hours of the morning of December 3, 1984, in the heart of the city of Bhopal in the Indian state of Madhya Pradesh. A Union Carbide subsidiary pesticide plant released 42 tones of methyl isocyanate (MIC) gas, exposing at least 520,000 people to toxic gases. The Bhopal disaster is frequently cited as the world’s worst industrial disaster The International Medical Commission on Bhopal was established in 1993 to respond to the disasters.

Background and causes:

The Union Carbide India, Limited (UCIL) plant was established in 1969 near Bhopal. 51% was owned by Union Carbide Corporation (UCC) and 49% by Indian authorities. It produced the pesticide carbary (trademark Sevin). Methyl isocyanate (MIC), an intermediate in carbary manufacture, was also used. In 1979 a plant for producing MIC was added to the site. MIC was used instead of less toxic (but more expensive) materials, and UCC was aware of the substance’s properties and how it had to be handled.

During the night of December 2-3, 1984, large amounts of water entered tank 610, containing 42 tones of methyl isocyanate. The resulting reaction generated a major increase in the temperature inside the tank to over 200?C (400?F), raising the pressure to a level the tank was not designed to withstand. This forced the emergency venting of pressure from the MIC holding tank, releasing a large volume of toxic gases. The reaction was sped up by the presence of iron from corroding non-stainless steel pipelines. A mixture of poisonous gases flooded the city of Bhopal. Massive panic resulted as people woke up in a cloud of gas that burned their lungs. Thousands died from the gases and many were trampled in the panic.

Theories for how the water entered the tank differ. At the time, workers were cleaning out pipes with water, and some claim that because of bad maintenance and leaking valves, it was possible for the water to leak into tank 610. UCC maintains that this was not possible, and that it was an act of sabotage by a “disgruntled worker” who introduced water directly into the tank However, the company’s investigation team found no evidence of the necessary connection.

The 1985 reports give a quite clear picture of what led to the disaster and how it developed, although they differ in details.

Factors leading to this huge gas leak include:

The use of hazardous chemicals (MIC) instead of less dangerous ones Storing these chemicals in large tanks instead of several smaller ones Possible corroding material in pipelines Poor maintenance after the plant ceased production in the early 1980s Failure of several safety systems (due to poor maintenance and regulations)

Plant design and economic pressures to reduce expenses contributed most to the actual leak. The problem was then made worse by the plant’s location near a densely populated area, non-existent catastrophe plans, shortcomings in health care and socio-economic rehabilitation, etc. Analysis shows that the parties responsible for the magnitude of the disaster are the two owners, Union Carbide Corporation and the Government of India, and to some extent, the Government of Madhya Pradesh.

Compensation from Union Carbide:

The Government of India passed the Bhopal Gas Leak Disaster Act that gave the government rights to represent all victims in or outside India. UCC offered US$ 350 million, the insurance sum. The Government of India claimed US$ 350 billion from UCC. In 1989, a settlement was reached where UCC agreed to pay US$ 470 million (the insurance sum, plus interest) in a full and final settlement of its civil and criminal liability. When UCC wanted to sell its shares in UCIL, it was directed by the Supreme Court to finance a 500-bed hospital for the medical care of the survivors. Bhopal Memorial Hospital and Research Centre (BMHRC) was inaugurated in 1998. It was obliged to give free care for survivors for eight years.

Legal proceedings leading to the settlement

On 14th December 1984, the Chairman and CEO of Union Carbide, Warren Anderson, addressed the US Congress, stressing the company’s “commitment to safety” and promising to ensure that a similar accident “cannot happen again”. However, the Indian Government passed the Bhopal Gas Leak Act in March 1985, allowing the Government of India to act as the legal representative for victims of the disaster, leading to the beginning of legal wrangling.

March 1986 saw Union Carbide propose a settlement figure, endorsed by plaintiffs’ US attorneys, of $350 million that would, according to the company, “generate a fund for Bhopal victims of between $500-600 million over 20 years”. In May, litigation was transferred from the US to Indian courts by US District Court Judge. Following an appeal of this decision, the US Court of Appeals affirmed the transfer, judging, in January 1987, that UCIL was a “separate entity, owned, managed and operated exclusively by Indian citizens in India”. The judge in the US granted Carbide’s forum request, thus moving the case to India. This meant that, under US federal law, the company had to submit to Indian jurisdiction.

Litigation continued in India during 1988. The Government of India claimed US$ 350 billion from UCC. The Indian Supreme Court told both sides to come to an agreement and “start with a clean slate” in November 1988.[Eventually, in an out-of-court settlement reached in 1989 , Union Carbide agreed to pay US$ 470 million for damages caused in the Bhopal disaster, 15% of the original $3 billion claimed in the lawsuit. By the end of October 2003, according to the Bhopal Gas Tragedy Relief and Rehabilitation Department, compensation had been awarded to 554,895 people for injuries received and 15,310 survivors of those killed. The average amount to families of the dead was $2,200.

Throughout 1990, the Indian Supreme Court heard appeals against the settlement from “activist petitions”. Nonetheless, in October 1991, the Supreme Court upheld the original $470 million, dismissing any other outstanding petitions that challenged the original decision. The decision set aside a “portion of settlement that quashed criminal prosecutions that were pending at the time of settlement”. The Court ordered the Indian government “to purchase, out of settlement fund, a group medical insurance policy to cover 100,000 persons who may later develop symptoms” and cover any shortfall in the settlement fund. It also “requests” that Carbide and its subsidiary “voluntarily” fund a hospital in Bhopal, at an estimated $17 million, to specifically treat victims of the Bhopal disaster. The company agreed to this. However, the International Campaign for Justice in Bhopal notes that the Court also reinstated criminal charges.

M.C. Mehta v. Union of India, AIR 1987 SC 965 (Oleum Gas Leak Case):

The case of M.C. Mehta v. Union of India originated in the aftermath of oleum gas leak from Shriram Food and Fertilizers Ltd. complex at Delhi. This gas leak occurred soon after the infamous Bhopal gas leak and created a lot of panic in Delhi. One person died in the incident and few were hospitalised. The case lays down the principle of absolute liability and the concept of deep pockets.

Directors Liability Insurance in Canada:

Directors & Officers liability Insurance is a claims made policy which covers the Directors, Officers, and Employees for their exposure as D’s & O’s for the manner in which they conduct the affairs of the Association. The policy covers defense costs, wrongful acts, and administrative errors and omissions.

Coverage’s:

Insured’s Liability Insurance- pay on behalf of the Insured all loss for which the insured is not indemnified by the Entity (even by reason of the Entities Insolvency) and for which the Insured shall become legally obligated to pay because of a wrongful act committed in the discharge of Administrative Duties. Directors & Officers Indemnification Insurance – The Insurer agrees to pay on behalf of the Entity all loss for which the Entity shall be required by law, it’s articles of incorporation or its by-laws to indemnify the Directors & Officers. Penal Defense Costs – will reimburse a D & O, if found innocent, of criminal charges which result from his/her administrative activities within the Entity.

Limits of Insurance:

Coverage A & B- $1,000,000 per loss $10,000,000 per year The annual aggregate is split among 6 provinces

Conclusion:

In the contemporary liberalization global business environment, the role of the director and officer of a company is becoming more significant. The new dimension of the corporate governance is warrant more transparency in the corporate transaction. In the process, the director and officer of the board to shoulder specific duties and responsibilities. Any lopes in their performance may be fatal to the company and shareholder of the company. The company have to pay for it. The alternative available to companies to protect form such liability is insurance. The director and officer insurance provide protection to the company, the director and officer to come out of the tangle litigation . The director and officer are getting and more exposed to variety of legal liability in the increasingly litigious corporate world. Their duties and responsibilities have further multiplied due to specific requirement for good corporate governance. But there are lot of litigations and constraints on the part of the directors to be always vigilant so that they can always take right decision to ensure the best performance of the company. The major constraints come form macro factors like market risk, technology risk, political risk or financial risk where they do not have any control.

So they are porn to make mistakes and commit wrongful act in some case. For wrongful act they are liable to stakeholders under the best practice of the corporate governance. The director and officer liability insurance policy help the directors and the to company transfer such the risk and legal liability to professional fund mangers.

??????????????????????????

Most of the companies not aware of the availabilities insurance protection against the risk of corporate liability. the promoter director and officers are not aware of the extent of the coverage available to them. The gaps in the awareness about the availability of legal protection are causing damages to the companies. With the lack of knowledge of indemnification and protection of the director and officer of the company, the Memorandum and Article are silent on the issue the protection of the directors and officer of and their indemnification. because of this, the director and officer face various litigation and fixed with the personal liabilities. As such its essential, which preparing the memorandum and article of Association, to incorporate the clause relating to protection of their director and officer form their liability.

The people governing the companies should also know the extent of the coverage available under the director and officer polices. They do not protect the liabilities arising out of fiduciary relationship and the personal liabilities. to protect the directors and officer form their personal liabilities. To protected directors and officer form their personal liabilities arising due to discharging of statutory duties of companies, the company should either incorporated the clause in the Memorandum and Article, or purchase separate polices to cover personal liabilities. The company should have awareness about their fact excluding and inclusion clause in the director and officer polices. The company should understand the required extent of legal protection to director and officer, and purchase the director and officer polices to that extent. If they fail in understanding the policy they purchase of fail the required policy, the protection may not be available to the companies for which they planned and the court may impose penalties or order payment of damages either by the companies or the director and officer of the companies, in the personal capacities, thus the understanding the director and officer policy and their coverage is an important element

In Indian aware relating director and officer insurance [polices are and their coverage is very low. The concept of the good governance and social responsibility of the companies are exposing the director and officer to various risk. The director and officer made accountable to the inrnal and external people and to society and government. in the complex business environment , the director and officer require protection at every phase. As such the company should come forward to help them out of the problem. If the no people will be afraid of taking the position of the director and officers. The investors, creditors, supplier who are dependent of the company also suffer losses.

In the present corporate environment the role of the director more crucial. If the independent director ask to compensate stake holder and companies for the failure of a business taken by the board of the director, no one come forward to involve in the management of the company . As the are not spared form the liabilities claim, the company have to forego the expertise of independent director, and they should exclude form the liability or should have strong protection form available liabilities.

The director and officer polices liabilities are more costly. There is different product designed by different insurance companies in India and abroad. The Indian multinational companies operating across the global have to inevitable purchase director and officer insurance and other professional indemnity polices to save the interest of the stakeholders. While purchasing the polices company should the right insurance polices to cover the required liabilities. While selecting the polices of every company and its directors should understand the nature of their business, excepted possible litigation and liabilities. Probable claimant extent of the cost and expenditure either to file or defend the suit , the applicable existing local and national law, the hierarchy of the court, the mood and attitude of the court to such issue, to possible fraud and moral hazard in the area. After? understanding the requirement?? director and officer polices can be purchased to that affect. Once the police purchased the company and CEOs should read the policy cautiously and understand the term and condition of the policy.


About the Author: