Many small-cap companies–those with the lowest levels of market capitalization–are currently facing a Catch-22 situation that impacts members of their boards of directors.
They need to find ways to cut costs in these tough economic times and yet, when they cut back on or eliminate their directors and officers liability insurance policies, they risk not having a quality board of directors and they put their company's finances in jeopardy.
Since the implementation of Sarbanes-Oxley, holding a position on a company's board of directors has become an even more challenging task. Today, increased scrutiny from shareholders, the plaintiffs' bar and active regulatory oversight has resulted in increased exposure to liability and attracting qualified board members has become very difficult.
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