Directors’ & Officers’ Liability Insurance & Disclosure of Information
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Directors’ & Officers’ Liability Insurance & Disclosure of Information Moscow, November 19th, 2010 Karolina Vogelpohl, Regional Manager Financial Lines CEE. Agenda. Effects of Information Disclosure What is Directors’ & Officers’ (D&O) Liability Insurance? Main Aspects of D&O Insurance

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Directors’ & Officers’ Liability Insurance & Disclosure of Information Moscow, November 19th, 2010

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Directors officers liability insurance disclosure of information moscow november 19th 2010

Directors’ & Officers’ Liability Insurance & Disclosure of Information

Moscow, November 19th, 2010

Karolina Vogelpohl, Regional Manager Financial Lines CEE


Directors officers liability insurance disclosure of information moscow november 19th 2010

Agenda

  • Effects of Information Disclosure

  • What is Directors’ & Officers’ (D&O) Liability Insurance?

  • Main Aspects of D&O Insurance

  • Latest Tendencies

    • More claims against Directors’ & Officers’ from shareholders

    • Proposed legislative changes


Directors officers liability insurance disclosure of information moscow november 19th 2010

Effects of Information Disclosure

  • Disclosure of information – as a source of potential errors => misrepresentation

  • Annual Report = best source of information disclosure

  • increase of risk in misrepresentation to the stake holders

  • immediate impact on the stock dynamics (if publicly listed company)

  • May potentially lead to claims against the directors (in Russia Chief Accountant & General Director in particular)

Directors’ & Officers’ Liability Insurance could be viewed as a key risk management tool


What is directors officers d o liability insurance

What is Directors’ & Officers’ (D&O) Liability Insurance?

  • Directors’ & Officers’ Liability Insurance covers claims brought against Directors and Officers of a company, for wrongful acts committed in the discharge of their duties as company managers causing financial loss to the shareholders.

  • Claimants could be:

  • -shareholders,

  • -bondholders,

  • -company itself,

  • -employees,

  • -customers,

  • -suppliers,

  • -competitors,

  • -regulatory bodies and others.

Directors’ & Officers’ Liability Insurance = “Sleep well at night” policy


Directors officers liability insurance disclosure of information moscow november 19th 2010

Main Aspects of D&O Insurance

  • Personal liability of companyD’s and O’s as individuals (Side A cover),

  • Reimbursement of the insured company in case it has paid theclaim of a third party on behalf of its managers in order toprotect them (Side B or Company Reimbursement Cover).

  • Listed stock companies can also obtain cover for claims againstthe company itself for a wrongful act in connection with thetrading of its securities (Side C or Securities Entity Cover).


Directors officers liability insurance disclosure of information moscow november 19th 2010

Latest Tendencies


Directors officers liability insurance disclosure of information moscow november 19th 2010

Latest Tendencies

  • More claims against Directors’ & Officers’ from shareholders

Increased claims against Ds & Os  claimants looking for “scapegoats”


Directors officers liability insurance disclosure of information moscow november 19th 2010

Latest Tendencies

  • Proposed legislative changes including:

  • changes to Section 71 of the Federal Law on Joint-Stock Companies № 208-FZ of December 26, 1995 proposing possible indemnification of Ds’ & O’s liability (including defense costs) for unintentional wrongful acts to be made available by the company

  • legislative recognition of companies’ rights to purchase D&O Liability Insurance

More & More attention being devoted to D&O Liability including legislators


Directors officers liability insurance disclosure of information moscow november 19th 2010

Latest Tendencies

  • Proposed legislative changes including:

  • changes to the Federal Law on the Securities Market №39-FZof April 22, 1996 prescribing liability to the issuer of securities for losses caused to investors or/and shareholders for wrongful information reported within the prospectus OR any other wrongful information disclosure elsewhere (including annual report)

More & More attention being devoted to D&O Liability including legislators


Questions or comments

Questions or Comments

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Directors officers liability insurance disclosure of information moscow november 19th 2010

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