An initial public offering, or IPO, is the first sale of securities by a company to the public. IPO involves the submission of a prospectus, which provides prospective shareholders with considerable information about the company and its future trajectory. A prospectus is the main source of information in an IPO based on which the prospective shareholders of the company make their investment decisions, it may become the basis for litigation if shareholders suffer losses due to wrong or misinformation given in the prospectus.

If due diligence is not exercised and adequate care is not taken in drafting the prospectus, it can lead to error, breach of trust and duty, misleading statement, act, omission or neglect resulting in significant liabilities and paving the way for multiple lawsuits against the company or the Directors.

Public Offerings of Security Insurance (POSI) or an IPO Insurance protects a company & its directors against liabilities arising out of the ‘going public’ exercise including prospectus and roadshows. Many organizations purchase a POSI alongside the D&O policy (which protects Directors from usual business risks only).

POSI / IPO Insurance policy also has a variety of extensions and exclusions which need to be clearly understood before opting for a cover so as to avoid maximum risk. Vitality Insurance has a dedicated team of professionals with in-depth knowledge and experience capable of offering you the right POSI solution at an optimal cost.

1. Legal Cost Cover: Covers all the litigation costs arising out of the claim made by an investor against the company or its Directors.
2. Long-term Cover: The cover can be extended for several years with no premium changes or cover cancellation.
3. Worldwide Coverage: Some insurance companies provide worldwide protection coverage including American Depository Receipts (ADRs) if required.