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blog RC D&O
August 24, 2015

Directors and officers’ wealth, at risk

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.

Professional Indemnity, Uncategorised
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