Commentary Chapter 7: Directors’ Liabilities Section 232: Provisions protecting directors from liability
426.This section prohibits a company from exempting a director from, or indemnifying him against, any liability in connection with any negligence, default, breach of duty or breach of trust by him in relation to the company. Subsection (2) prohibits indemnification by an associated company as well as by his own company. “Associated company” is defined in section 256 as, in effect, a company in the same group.
427.Any provision, whether in the company’s articles, in a contract or otherwise, attempting to exempt or indemnify a director in breach of this section is void. But this does not apply to lawful provisions in the articles for dealing with conflicts of interest.