(1)Any provision that purports to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.
(2)Any provision by which a company directly or indirectly provides an indemnity (to any extent) for a director of the company, or of an associated company, against any liability attaching to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company of which he is a director is void, except as permitted by—
(a)section 233 (provision of insurance),
(b)section 234 (qualifying third party indemnity provision), or
(c)section 235 (qualifying pension scheme indemnity provision).
(3)This section applies to any provision, whether contained in a company's articles or in any contract with the company or otherwise.
(4)Nothing in this section prevents a company's articles from making such provision as has previously been lawful for dealing with conflicts of interest.
Cases considering section 232 (9)
[2026] EWHC 1135 (Ch) · 13 May 2026Disapplies
Disapplies any provision purporting to exempt a director from liability for negligence, default, breach of duty or breach of trust in relation to the company. (see paras [150]-[151])
Disapplies the company’s purported indemnity for the directors’ liability, subject to the statutory exceptions for insurance and qualifying indemnities. The counterclaim could not succeed. (see paras [150]-[151])
[2024] EWHC 531 (KB) · 8 March 2024Limits
The court held that the proposed indemnity for the director was arguably void insofar as it indemnified liability connected with negligence, default, breach of duty or breach of trust to the company. The court left severability undecided because the Tomlin order was set aside on other grounds. (see paras [75]-[79])
[2012] EWCA Civ 841 · 27 June 2012Limits
Limits exclusion of directors’ duties by providing that they cannot be excluded by the company’s articles. This supports the contrast between directors’ statutory duties and employees’ contract-based obligations. (see para [20])
What each judgment says about section 232 is in the case-law panel in the full Act.
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.