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Section 196 of The Companies Act No. 17 of 2015: Qualifying third party indemnity provision not affected

    

(1) Section 194(3) does not apply to a qualifying third party indemnity provision.
(2) In this section, "third party indemnity provision", in relation to a director, means provision for indemnity against liability incurred by the director to a person other than the company or an associated company.
(3) A third party indemnity provision is void to the extent that it provides an indemnity against—
(a) a liability of the director to pay—
(i) a fine imposed in criminal proceedings; or
(ii) an amount payable to a regulatory authority as a penalty in respect of non-compliance with a requirement of a regulatory nature; or
(b) a liability incurred by the director—
(i) in defending criminal proceedings in which the director is convicted; or
(ii) in defending civil proceedings brought by the company, or an associated company, in which judgment is given against the director.
(4) The reference in subsection (3)(b) to a conviction or judgment is a reference to the final decision in the proceedings.
(5) For purpose of subsection (4)—
(a) a conviction or judgment becomes final—
(i) if not appealed against—at the end of the period for bringing an appeal; or
(ii) if appealed against—at the time when the appeal, or any further appeal, is disposed of; and (b) an appeal is disposed of—
(i) if it is determined and the period for bringing any further appeal has ended; and
(ii) if it is abandoned or otherwise ceases to have effect.

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Disclaimer: This document is not to be taken as legal advise.

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