D&O Claim affecting Joint Stock Company in Saudi Arabia
The Directors of the policyholder were each fined SAR 70,000 by the Capital Market Authority (“CMA”) for their failure to file the company’s annual financial results and hold an ordinary general assembly meeting within six months of the end of financial year. The total sum claimed was SAR 560,000 (about USD 150,000).
Whilst fines are in principle insurable under the laws of Saudi Arabia, our investigations and discussions with the Directors revealed an issue with notification. In this regard, it became apparent that neither the policyholder nor the Directors had been aware of the cases brought by the CMA until the fine letters had been issued, which was a month after the policy had expired. Therefore, discovery for policy purposes occurred during a later policy period.
Following confirmation that Reinsurers did not write the policy for the following year, we considered the application of the Extended Reporting Period Clause in the policy. Reinsurers agreed that did not apply and local parties were advised the claim should be reported to the new policy period.
