On 24 May 2017, SUSEP published Circular no. 553/2017 containing the general regulation applicable to Civil Liability Insurances of Legal Entity Officers and Directors (D&O Insurance) in order to replace the previous Circular no. 541/2016, which was suspended for a period of 90 days and has now been revoked. Insurance companies will have until 20 November 2017 to adapt the plans in effect.

One of the main modifications provided by the new Circular in comparison with the revoked one is the express acknowledgment of the coverage for Defence Costs as basic, according with the market's practice. In our view, such modification permits that non-profit companies who offer pension plans to specific groups (Entidades Fechadas de Previdencia Complementar), which are prohibited from obtaining coverage for indemnities by the regulatory rules, continue to retain D&O insurance policies providing only defence costs as basic coverage.

Moreover, the new version of the Circular expressly mentions the possibility of offering an additional coverage for the company's liability regarding administrative acts of its managers, as provided by the Side C coverage.

Furthermore, the new regulation states that administrative and civil penalties may be covered by the policy. The use of the term "civil" instead of "contractual", as provided by the revoked Circular, evidences the intention to make this coverage more comprehensive. In our view, fines of non-criminal or punitive nature may be covered, such as the fines imposed by bodies such as the Prosecution Office in civil investigations, market regulating authorities, regulatory agencies and other tax administrative bodies.

The changes made by the regulatory agency in the previous Circular are positive and, in many points, meet the market’s aspirations and consolidated practice.