The Companies Act, 2014 requires a liquidator of a company to hold suitable Professional Indemnity Insurance ("PII"), but it did not specify what amount it deemed suitable. As of 1 June, 2016 the minimum level of PII cover has been set at €1,500,000 together with defence costs for each and every claim. I attach the relevant Regulations here, for further information.
However, liquidators should note that there is a caveat in relation to that minimum level of cover. The insurance held must also be at a level "which is commensurate with the value and nature of the work undertaken" by the liquidator, which depending on the liquidation could be far in excess of €1,500,000.
A number of positive steps are required by you as a liquidator, in light of the Regulations:
- If you have an existing PII Policy, you must check if it meets the minimum standards as set out in the Regulations. If it is compliant, you must have that policy endorsed to the effect that it meets the requirements of the Regulations.
- Do you act in liquidations where the value and nature of the work undertaken exceeds €1.5million? If so, consider what level your insurance should be set at.
- Consider whether you need to top up any existing PII Policy.
- Check whether your current run-off cover is for 6 years from the date of expiration of your policy as required by the Regulations.
- If you are taking out a PII policy for the first time, make sure you are fully aware of the renewal date and the period of cover. It is imperative that circumstances giving rise to a potential claim are notified to your insurer as soon as possible within the relevant period of cover. If not, you may not be covered for a particular claim, should one arise.
This publication is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Leman Solicitors for any action taken or not taken in reliance on the information set out in this publication. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. Any and all information is subject to change.