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Insurance solutions for issuers and executive bodiesProspectus liability insurance (POSI)

The placement of shares, bonds or other securities for corporate financing is associated with considerable liability risks. A particular focus is on prospectus liability – i.e. responsibility for incorrect or incomplete information in the securities prospectus. These may relate, for example, to inaccurate statements on the earnings situation or financial development of the company.

Protection against prospectus liability: insurance for IPOs & capital increases

In Germany, the regulations of the Securities Prospectus Act apply here in particular. Liability primarily applies to the issuing company, but may – depending on the individual case – also include executive bodies and employees.

A potential claim for damages usually includes the redemption of the securities at the purchase price (up to a maximum of the issue price) and the reimbursement of incidental acquisition costs.

Note: Taking out prospectus liability insurance is an elementary component of risk provisioning, particularly for IPOs, capital increases and bond issues – both nationally and internationally.

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Why is D&O insurance not enough?

Traditional D&O insurance does not offer sufficient protection for liability cases relating to securities issues:

  • As a rule, the insurer must be notified of a planned issue – insurance cover is often explicitly excluded for this.
  • The D&O policy only covers board members and senior executives – but not the issuing company itself.

POSI cover (Public Offering of Securities Insurance) closes this gap and offers targeted protection for:

  • the issuing company
  • its bodies, employees and, if applicable, external consultants
Insured risks & hazards

The cover includes a large number of unforeseen risks, including:

  • Incorrect information in the prospectus as laid down in the German Securities Prospectus Act and other national or international regulations
  • Liability risks for issues on international stock exchanges
  • Misstatements prior to the issue – e.g. in roadshows, analyst events or press releases
  • Indemnification obligations of the issuer towards syndicate banks (e.g. under the underwriting agreement)
  • Liability risks of selling shareholders who sell their shares as part of the issue
Insured Persons
  • Issuing company
  • Executive bodies and senior executives
  • Employees of the issuer
  • Other persons according to contractual agreement (e.g. consultants or syndicate banks)

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