D&O and PI policies will have to account for the increased level of liabilities, which the new Consolidated Insolvency Act – entering into force on 15 August 2020 – will create for company directors and for statutory auditors. Taking into account the creation of new liabilities upon the directors and the role and duties of statutory auditors under the law, including ensuring compliance by managers with the law and the company’s article of association, it stems that the new Consolidated Insolvency Act will also entail a material increase of statutory auditors’ liability.
By way of example, section 375 of the Consolidated Insolvency Act provides that company directors have to establish and implement, within the company, all administrative, accounting, and reporting measures which are necessary to identify promptly a financial crisis and to adopt in due course the remedies set forth by the Consolidated Insolvency Act. Additional areas of increased risk are linked to the new action (under section 378) which the creditors of limited liability companies can bring against the directors, should the creditors have been damaged as a result of the directors’ non-compliance with their duties to preserve and protect the company’s business.
