There is no doubt that everyone’s first priority at the moment must be to follow Government guidelines to protect the health and safety of all. However, for company directors, it is also important to follow good practice to protect, so far as possible, the health of your companies during the coronavirus pandemic.
To help minimise the effect upon your company, and to reduce the risk of personal liability, it is essential that directors rigorously exercise good corporate governance and demonstrate that they are doing so.
Our top tips for directors
Here are our key recommendations to assist you in navigating your company through these challenging times:
- Hold board meetings regularly and familiarise yourself with your company’s Articles of Association: If not already in place, establish procedures as soon as possible to ensure that you are able to call meetings quickly and to hold them via electronic means. Things can change rapidly in crisis situations and sometimes key decisions need to be taken within minutes.
- Keep directors fully and regularly apprised of the company’s position: . Provide directors with updated and accurate information on the company’s trading and finances at regular intervals. This information will help to inform the board in its decision-making process and will also help to highlight potential problems at an early stage.
- Be alert to the risk of insolvency: Although directors are sometimes reluctant to do so, take specialist legal and insolvency advice as soon as possible if you believe that your company may be at risk of insolvency.
- Deal with conflicts: To ensure that there can be no allegation of bias, all director conflicts of interest should be clearly declared, minuted and authorised in line with the company’s Articles, and the Companies Act 2006. You may need to create committees to deal with any conflict situations that arise.
- Keep clear minutes of each board meeting: Ensure that meetings are carefully minuted, recording the strategy that is being followed, the decisions that are being taken and the reasons behind them.
- Understand the support that may be available: The Government is providing financial assistance to certain companies including the Government’s Coronavirus Business Interruption Loan Scheme, the Coronavirus Job Retention Scheme and rights arising under the new Coronavirus Act 2020. It is important to ensure that any resources that you consult in this regard are reliable and current. When in doubt seek professional legal advice.
- Be aware of your company’s obligations: It is important that you are aware of, and understand, the company’s legal obligations and ensure that it is complying with them. If you have any doubt as to what these are, seek professional legal advice.
- Protect your confidential information: The directors, and any other party receiving information about the company’s financial position must keep this information confidential (unless, for example, required to disclose it for regulatory purposes or to obtain professional advice). Commercially sensitive information can cause great damage to a company’s reputation and business if it is leaked.
- Keep agile and adaptable: When we emerge from the pandemic, the business environment is likely to look very different. It is, therefore, imperative to plan, possibly with thought to reconfiguring and restructuring your company, to ensure that it is the best shape to survive and thrive in the new arena.
For more information please speak to your usual Druces contact or: