is prospectus liability required

Is Prospectus Liability needed and what are the benefits over a standard Directors & Officers policy that is in place for the board of directors?

 

The Prospectus Liability is obviously specific to the risks associated with the Prospectus and is beneficial to the stakeholders for the following reasons—the Corporations Act imposes personal liability on directors & other parties for misstatements or omissions in a prospectus; it can be a multi-year policy to protect the stakeholders up to the statute of limitations; it is a way of ring fencing the exposure of the Prospectus and therefore will not erode the existing D&O policy in place to cover the standard Directors & Officers exposure; and it can add other interested parties such as the issuing underwriter, advisers to the transaction and the selling and/or controlling shareholder.There are other ways to cover the exposure of the Prospectus, but they typically have limitations. Many small junior public companies opt to cover the Prospectus Liability as part of the standard Directors’ & Officers’ policy, but the issue is the board is then sharing the limit of coverage with the prospectus liability exposure and it is also subject to being renewed each year. This option doesn’t guarantee that all parties will be covered for the 7-year period.

 

No matter what avenue the board of directors take in covering off the exposure, it is key to make sure all options are explored and presented so they can make an informed decision to properly cover the risk.

 

 

 

Secure Your Association’s Future with Tailored Insurance Solutions from KBI

Protect your association’s future by partnering with a specialised insurance broker, KBI. With KBI’s Association Insurance Program, you gain comprehensive coverage designed to address your association’s unique risks. Don’t leave your success to chance—contact us today to discuss your insurance needs.

 

Let KBI be your trusted partner in protecting your association’s interests and ensuring long-term resilience. Together, we can navigate the complexities of risk management and insurance and secure a brighter future for your association.

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We are a specialist insurance brokerage with an emphasis on adding value to our clients by helping them make an informed decision. Our approach combines that of an insurance broker and consultant, where we focus on providing expert advice to our clients while customising their insurance program and risk management solutions.

 

Since starting in 2013, KBI is constantly growing and becoming a leader in the Australian market. Our primary point of difference is that we don’t try to be all things to all people. We work in niche areas, where we can tailor an offering, advice and broker support to meet the specific area’s needs.

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