DIRECTORS & OFFICERS LIABILITY
Constantly changing regulations, the increasing significance of shareholder value as well as an ever growing sensitivity of the public and the media; these are all factors that lead to the fact that managers are increasingly held responsible for alleged or actual mistakes. Decisions which seem correct today may, due to changing circumstances, be deemed as reproachable misconduct from an ex-post perspective. Whether in product development or in the selection of staff – it is a fact that: the line between entrepreneurial risk and neglect of duty is easily crossed. If the neglect of duty is committed culpably, the manager is liable without limitation also with private assets, and therefore a comprehensive insurance cover is indispensable.
TYPICAL EXAMPLES OF DAMAGE
By purchasing a new office building, a member of the board of directors makes a bad investment. The building needs to be reconstructed for an additional 2 million euros and the company claims the reconstructions costs from the board member.
The managing director of a small production company applies for subsidy and gives incorrect information due to a research mistake of an employee. The authority determines a misuse and files a suit for reclaim.
The acquisition of new parts of inventory violates internal regulations regarding the choice of suppliers. The responsible manager is held liable by the company’s board of directors.
Assumption of costs for a lawsuit
Costs for the defence against unjustified claims for damages
Assumption of financial loss
Internal and external liability (claims may be raised by third parties or by the decision maker’s own company)
Supervisory board
Board of directors
Senior executives
YOUR CONTACT:
ROLAND PEDAK
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