Why take a POSI policy?
- POSI gives companies the opportunity to ring-fence the significant and long-term exposure presented by securities offerings.
- POSI being a transaction specific product ensures suitable coverage to the insureds and protects the existing D&O contracts.
- Accounting rules may allow for the POSI premium to be capitalized against the offer proceeds, without being considered as a bottom line deduction from the company's profit and loss account.
- POSI is a transaction specific product and the policy period can be customized to provide protection for upto nine years
Who can buy a POSI policy?
POSI is designed for any company that is raising capital through the publication of a prospectus. It can provide cover for introductory offerings (IPO), secondary offerings and can also cover private placements.
The POSI policy covers to the company and its directors, officers and employees for securities claims brought against them in connection with the offering.
- Prospectus Liability
- Underwriter exposure from the Actual or alleged untrue or misleading statement or information from the Prospectus
- Defence Cost
- Controlling and Selling Shareholder Liability from the Actual or alleged untrue or misleading statement or information from the Prospectus
- Prior Claims and Known Circumstances
- Bodily Injury/Property damage
- Dishonest/Fraudulent Act
- Major shareholder exclusion.
Raising capital in a risky world
Investors and analysts have always scrutinized the prospectuses of companies raising capital for Stock exchange listings, mergers, expansions, etc. The scrutiny does not stop once the transaction has been completed. Shareholders and investors want to know how well their money has been invested and that also in an unforgiving environment.
The need for specialist insurance protection for issuers of securities has never been greater, and yet an alarming number of public offerings go ahead without suitable protection for the issuing company and its directors, officers and employees.
What does POSI cover?
- POSI protects the insureds against securities claims arising from an offering of a company's securities.
- POSI can also cover liabilities arising from negotiations, discussions and decisions in connection with the offering.
- Cover includes punitive and exemplary damages.