What does the insurance cover?
Claims filed against directors and officers (Insured Persons) for wrongful acts committed in the exercise of their duties, which result in a financial loss for a third party.
Basic guarantees:
- Compensation to the insured director or officer
- Compensation to the company
- Defence or research expenses and fees in civil and criminal proceedings
Why take it out?
Because the personal assets of directors and officers are at risk in the event of a claim against the company.
Managing a Company is a risky activity. Decision-making in a Company is not easy, and it is almost impossible to ensure we never cause harm to any third party.
Managers have to make complex decisions every day : making people redundant, complying with the company’s by-laws, investments and divestments, ensuring all health and safety measures are in place, opening and closing plants, expanding internationally, managing debt, etc.
It does not matter what sector they operate in or whether the claim is justified. A claim can wipe out years of hard work and the reputation of the company or its directors.
Under what legislation are these responsibilities regulated?
Administrators are obliged to act with the diligence of a responsible entrepreneur and a loyal representative, making every effort to be fully informed about the progress of the company. Their duties include those of good faith, loyalty and secrecy. This is reflected in legislation such as the following:
- Capital Companies Act (the 12/2014 amendment extends the responsibility of directors)
- The Civil Code
- Insolvency Law
- General Tax Law – Art.43 on the subsidiary responsibility of administrators
- Criminal Code – 2010 amendment and subsequent versions
Who is protected under the RibeSalat policy? (Past, present and future)
- Administrators or Directors
- Members of the Board of Directors
- Members of internal committees
- Directors and executives in investee companies (appointed by the Insured Company)
- De facto administrators
- Employees acting as risk managers
- Employees responsible for the legal department
- Employees (cover for employment practices: claims for discrimination, mobbing, etc.)
- The founder of the insured company
- The individual appointed as liquidator or administrator in the event of the voluntary dissolution of the insured company
- The Company Secretary and Deputy Secretary who are not Board members
- Administrators or directors acting as Compliance Officers
- Data Protection Officer (DPO)
- Internal legal officer
Who can claim? (Who is a third party?)
- Shareholders
- The Company (in certain cases)
- Employees
- Creditors and suppliers
- Customers
- Competitors
- Public bodies (Bank of Spain, Tax Agency, etc.)
- Other third parties
Other considerations
As a company’s administrator, director or officer, there are many circumstances that can jeopardize your personal assets.
The RibeSalat Directors and Officers civil liability insurance offers the best cover in all such situations.
Compensation: If you are covered by the policy and are sued for negligence in your duties as a director, the insurer will pay compensation to third-party claimants, if you are found guilty.
Bonds: Any bonds required by the court for possible civil or criminal responsibility will be posted.
Defence and legal representation costs: All costs, legal expenses and fees necessary for the director to exercise his or her defence will be paid. RibéSalat’s policy allows the director a free choice of legal representative.
Subsidiary tax liability: If the director is obliged to assume subsidiary tax liability under the law, payment to the tax authorities will be covered.
Employment practice: If an employee sues a manager for harassment, slander, discrimination or even breach of contract, both the manager and the company will have the cost of their defence covered, plus any possible compensation.
Subsidiaries and investees: The D&O policy covers all directors and officers of subsidiaries and those of investees designated by the contracting company. In the event of assets being seized, the policy covers the payment of mortgages, children’s school fees, electricity, water and gas bills, as well as life and family accident insurance premiums, and any other fixed family expenses you may have.
