Directors and Officers Insurance
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Directors and officers insurance cover may be low down on the "to-do" list when you are considering a flotation or initial public offering (IPO). With long-form, short-form reporting from the accountants and a final draft of your prospectus, UK listing authorities, meetings with the London Stock Exchange to discuss listing and admission to trade etc etc; however, consideration to various forms of insurance for the company and its directors should not be overlooked and full consideration to the following insurances should be allocated time both to protect its current and / or new directors.
As a director, your potential liability could come from a regulatory authority (which could have a significant on a company's trading prospects). For instance, if somewhere within the company an employer/director knows about any potential problems, the directors may have a possible liability, say if the admission document didn't state the fact. It follows if the share prices reduce as a result of this, the investors (possibly an institution) may have rise to a claim.
Directors and officers insurance is there to protect a company's directors from claims for negligence, although it is not necessarily geared to cover flotations and initial public offerings, as sums insured may not be anywhere near sufficient, based on the level of funds raised on flotations.
Some directors and officers policy wordings can extend to cover both the directors and the company, however, with directors and officers insurances, please bear in mind these are renewable each year and an underwriter may not choose to offer cover the following year if a company is performing badly.