Liabilities may be incurred if the prospectus contains errors or omissions which are relied upon by investors in making their decision to purchase the company’s securities. These liabilities can be insured through the purchase of a POSI, a policy that addresses claims arising directly from a misleading statement in the specific prospectus.
Shareholder litigation against ASX listed companies and its directors is ever increasing due to strict disclosure obligations under ASX listing principles, as well as an increased number of plaintiff law firms and litigations funders chasing settlements on behalf of investors.
POSI addresses these exposures by providing cover for shareholder actions following an IPO, legal expenses in respect of regulatory investigations, claims from statements made in roadshows and crisis management expenses.
The policy covers directors and the company, with cover also available for prospectus underwriters, controlling shareholders and vendors.