In volatile market conditions, when the consequences of actions and decisions in business can have far-reaching consequences, the responsibility allotted to managers can feel especially heavy. In many environments, this isn’t a mere feeling, but a challenging reality that can translate into significant losses if left unmitigated. As trends turn increasingly towards holding directors and officers responsible for any unwanted fallout that occurs under their leadership, many managers look for adequate solutions.
In some cases, liability may extend to a professional’s personal wealth without a defined limit and communal property along with marriage inheritance may be subject to confiscation. Managers can also face criminal charges for damages, or be assessed a tax lien drawing from their private assets. Clearly, the potential consequences of fulfilling a modern management role are daunting. However, this shouldn’t limit a professional’s ability to make choices that could eventually support and sustain a business. MDS has been providing quality coverage for managers for years and has a range of Directors & Officers (D & O) solutions to help meet the needs of individuals and corporate teams.
A tailored D & O policy provides protection for property and for legal defense. Such policies are not only useful for individual managers, but are also sought out by companies to ensure that their officers are able to make the right decisions for company growth without shying away from opportunities from fear of personal losses. MDS extends a variety of coverage options, including company reimbursement, crisis management, civil and penal bail bond, and publicity costs. We invite you to contact us to find out how MDS can craft a D & O solution for you or your team that’s relevant for your risk exposure and preferences.
Note: Clients are advised that under the Portuguese Commercial Company Act, Directors and Supervisors are required by Article 396 to account for professional liability, and to include third party beneficiaries. Companies must secure a minimum of 250,000 Euro if they issue securities tradable on the regulated market, or which fulfill line (a) of No. 2 of Article 413: “Companies which are not fully controlled by a securities-issuing company, and which in two consecutive years, exceed two of the following limits:
• A total balance sheet of EUR 100,000,000;
• Total net sales and other gains amounting to EUR 150,000,000; or
• An average of 150 staff members employed over the course of a year.
A minimum value of 50,000 Euro is required for companies not meeting the criteria above. This guarantee deposit can be waived by the Annual General Meeting or the Constitutive Meeting charged with electing the board or a specific director, or when this has been specified in the company contract.
Costs incurred by the guarantee are not assessed to the company beyond any excess of indemnity above the minimum fixed value. This guarantee is mandatory for assumption of the role, and failure to comply is punishable by termination of duties. The insured party is responsible for underwriting a guarantee for each role undertaken.
The D & O insurance policy directly addresses the Portuguese Commercial Act’s stipulation that liability arising from leadership of the administrative or supervisory body within the company shall be duly insured.
The civil liability guarantee assures payment by the insurer of claims legally attributable to the policy holder, along with damages resulting from illicit activity practiced during the execution of the insured’s role. The insured’s defense costs, with specific capital, are also guaranteed.