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UK Bill to create stricter reign over acquisitions involving D&O insurance



From event-driven disputes to government investigations, 2020 has led to a number of different exposures from board members and officers as a result of the COVID-19 pandemic. Given the new year, we expect robust D&O insurance programs to remain crucial for companies and their executives and board members in 2021 and beyond. , which was introduced in November but is still awaiting approval until 2021. If approved, the bill will change the current framework governing the government's scrutiny of and intervention in hostile takeovers and other transactions. As it stands now, the bill would increase the UK Government's ability to intervene in any "triggering event" (defined broadly) that could give rise to national security problems. The bill also prescribes prior notification for certain transactions. Failure to provide a mandatory notice can lead to both criminal and civil liability, including imprisonment, fines of up to £ 1

0 million and mandatory division of companies. present additional D&O exposures for investigation, enforcement and resolution of reporting events, which are expected to amount to between 1,000 and 1,800 per year (70-95 would require detailed assessments and eight to ten of them would require enforcement action). Against this background, policyholders, in particular multinational companies or other US companies operating in the United Kingdom, should reconsider and evaluate the suitability of the insurance they have to respond to these potential exposures. Many D&O policies can, for example, respond to investigations and enforcement actions by regulators (both in connection with reporting events according to the bill or parallel investigations from other authorities) and cover defense costs in all civil disputes that arise due to the underlying transaction. Experienced coverage advice can help review all potentially applicable policies and assess coverage gaps due to the UK's expected new law.


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