Even in good economic times raising capital can be a risky business. The recent spate of corporate collapses around the world has made it even harder. Now, more than ever, companies and their directors and officers face the risk of litigation from investors and regulators, who are keen to hold them liable for financial losses and breaches of the law.
Prospectus Liability Insurance is a specialist insurance solution that can respond to claims alleging a breach of securities law - in connection with the issue of defective disclosure documents. For example, a prospectus or information memorandum in relation to a particular transaction such as an initial or secondary public offering, private equity placements, debt raisings, etc. Claims may allege the related documents (or presentations) contain errors, omissions, untrue or misleading statements, or that wrongful acts were committed in conjunction with the sale or offer process.
Typically a policy will pay damages, settlements and defence costs. Most policies extend cover to the company and its directors and officers for claims made against them.
Marsh can tailor Prospectus Liability Insurance cover to form part of a comprehensive risk management programme. This is designed to provide protection against the exposures the company and its directors and officers face when engaged in capital raising activities.