Recent headlines show that company managers and directors are increasingly subject to greater regulation and pressures: “Claims against administrators keep growing”; “N. sentenced to two years in prison for a crime of fraud”; “Ex partners of N. accuse him of not paying 43 million VAT”, “Board of the cooperative denounced for fraud and misappropriation” …
Managers and directors are considered legally responsible both for the mistakes and omissions in the management of their company. These risks are assumed in a “personal, joint and unlimited” way, according to the law (*). Therefore, a manager and his/her family could see his/her assets at risk, in addition to suffering other economic or reputational damage that will require expert advice.
To avoid these risks the best solution is a professional indemnity insurance policy designed specifically for directors and officers. It provides coverage for:
- legal expenses,
- crisis management costs,
- coverage for employment claims,
- claims for pollution,
- subsidiary tax liability,
- fines and administrative penalties,
- compensation and financial damage to third parties,
- cost of restoring image,
- coverage for the family,
- coverage as a representative in subsidiaries and affiliates,
- and other guarantees…
In addition, the policy protects the Company from claims in employment, infidelity of employees, responsibility for data protection, claims for pollution …
Who could sue a director or officer? The company, shareholders, creditors, liquidators, competitors, government agencies, or the employees themselves. For example, a company may sue its directors for failing to conduct a market research prior to opening a new market and therefore having caused important losses. Or the company may be sued by regulator entities as a result of administrative violations, for mobbing or harassment to an employee …
The Company is the policy holder of this type of insurance, and it ensures any administrator, officer, employee, founder …
From € 400 per year it is possible to run a company with peace of mind.
More information here.
(*) Ley de Sociedades Anónimas de 1989, Art. 133-135 y 262; Ley Concursal, Art. 48.3 y 172.3; Código Civil, Art. 1902; Código Penal, Art. 31.