I'm sure we've all heard of the directors and officers policy or insurance (in our sector, we call it D&O). Today we will explain why you subscribe and how we can prevent complaints.
Managerial liability under current legislation
In Spain, it is marketed because of the Article 236 of the Capital Companies Act, The new law, which we will analyse later, essentially exposes those in positions of responsibility in companies to indemnities that would be paid out of their own money, not that of the company. We can see that.
As noted, Art. 236 reads, verbatim:
The directors shall be liable to the company, to the shareholders and to the company's creditors for any damage caused by acts or omissions contrary to the law or to the articles of association or for those carried out in breach of the duties inherent in the performance of the office....
This article has a will to compensate. It seeks compensation to the company for the loss or damage caused by a director who has taken a negligent decision.
What decisions expose managers to these claims?
- Business decisionsnegligent“ determination that may trigger potential claims from customers, suppliers or employees who believe that it has caused them harm.
- One employee can sue us because he considers that he has been wronged by us. discriminated or even harassment.
- In the face of a insolvency proceedings, because it is understood that the decisions of those responsible have been inadequate and to blame for the situation in which the company finds itself.
- etc., etc.
As we can see, the casuistry is infinite. For this very reason, it is essential to take out a policy whose terms and conditions are as simple as possible, and include as many assumptions and guarantees as possible.
The importance of being well defended in commercial matters
At the same time, it is important that in this type of situation in which an administrator may find himself/herself, it be defended by experienced lawyers in this type of claims. The companies provide experienced law firms that know how to deal with these claims and whose fees are very high, so that if we did not have this policy we would also have to meet these expenses from our own resources.
Here is a «decalogue» of the good administrator, courtesy of the insurance company HISCOX (specialising in this type of D&O policy), which perfectly summarises the obligations of any good businessman:
Recently, in this type of claim, the company is often sued in the same proceedings in which an administrator is sued; therefore, it is important that the company is contemplated in the proceedings. legal person as insured of this policy.
If this is an issue you are concerned about, you are already in an SME or a large company, and you want to be protected, don't hesitate, and call us or click HERE.
If you still want to find out more about this topic, another specialist insurer, Berkley, tells us about the D&O insurance The following link provides an in-depth analysis of the legislation applicable to the manager, the risks involved and advice on how to take out insurance.
