PII requirements for liquidator appointments in Ireland
Find out what the new Professional Indemnity Insurance (PII) requirements are for those wishing to act as a liquidator in Ireland.
The Irish Auditing and Accounting Supervisory Authority (IAASA) has recently published the Companies Act 2014 (Professional Indemnity Insurance) (Liquidators) Regulations 2016 ('the Regulations') setting out the Professional Indemnity cover requirements for liquidators in Ireland.
The Regulations are proposed to come into effect on 11th March 2016.
From this date, a person shall not be qualified to act as a liquidator of a company unless that person has in place an indemnity providing a minimum amount of indemnity and its terms meet the requirements of the Regulations.
Those acting, or seeking to act, as a liquidator to a company in Ireland should therefore check that their existing PII provides the required cover and arrange for any necessary endorsements to satisfy the requirements of the Regulations or make alternative arrangements to obtain PII which meets the requirements of the Regulations
PII policy requirements:
- Limit of Indemnity is at least €1,500,000 for each and every claim with defence costs in addition. Where the estimated realisable value of assets of the company being wound up (as estimated by the liquidator) is in excess of €1,500,000 then the Limit of Indemnity must be at least equal to the estimated realisable value of the company assets.
- The policy provides cover in respect of any act or omission by the liquidator, any servant or agent of the liquidator or both of them.
- The policy is on a Civil Liability basis. Civil liability policy wording is broader than cover based on negligence or errors & omissions only.
- The policy is permitted to have a self-insured excess. The excess on the policy may not apply to defence costs. All payments due to claimants must be paid within no longer than 30 days of becoming due to the claimant.
- Run off cover must be available for a period of at least 6 years following the end of the insureds last period of cover. During the run off period the limit of cover must be at least €1,500,000 for each and every claim with defence costs in addition.
The full text of the draft Regulations is available to download.
Update: 15 March 2016
The Companies Act 2014 (Professional Indemnity Insurance) (Liquidators) Regulations 2016 ('the Regulations') setting out the Professional Indemnity cover requirements for liquidators in the Republic of Ireland will now come into effect on 1 June 2016 and not as previously advised.
The Statutory Instrument can be accessed here.