Whether your organization is a public or private concern, your directors and officers may be the target of a lawsuit by investors, employees and others. Both the individual and the company may be held liable for actions or decisions made in managing the organization.
Every type of organization has its own unique exposures, with widely varying requirements for coverages and policy limits needed to protect individual and company assets.
Lawsuits by minority shareholders are on the rise in privately held concerns. Legal action may also be brought by others, including creditors, vendors, customers and others.
The effects of a lawsuit can be particularly severe for a private company and its owners or partners, since a large percentage of their personal net worth is almost always invested in the company.
Plaintiff's attorneys specializing in lawsuits against public companies may look at any sharp movement in the company's stock price as a potential opportunity for a suit. The company and its officers and directors may be charged with violating legal disclosure requirements, fraud, mismanagement, inaccurate financial projections and other acts or omissions.
Following and Initial Public Offering (IPO), a company is under particular scrutiny. It may be wise to extend coverage to attorneys, accountants, prior investors, bankers and others that were involved with the company prior to or during the IPO. Financially distressed and bankrupt companies are also particularly vulnerable to lawsuits.