Do the governing bodies have any special duties and responsibilities within the context of COVID-19 events?

Companies’ governing bodies are subject to special duties of care in the management of the risks inherent to the COVID-19 threat.

In particular, companies are obliged to comply, with special diligence, with the rules established in the statute regulating the state of emergency, in the general legislation on the safety and health of workers at work, as well as to comply with the prevention, surveillance and control procedures disclosed by the National Health Directorate, available at https://www.minsaude.gov.cv/index.php/documentosite/coronavirus-covid-19.

To this end, companies should prepare and implement contingency plans geared towards the continuation of their activities and the safety of their workers, partners, clients, suppliers and other stakeholders.

Whenever possible, companies should create taskforces to monitor, on the one hand, the evolution of contagion and contention of the COVID-19 in close liaison with the health and local authorities and, on the other hand, the economic, financial and commercial impacts that materialize or that could foreseeably impact their business or that of third parties, adjusting their commercial strategies in order to minimize and overcome any issues that may arise.

It is particularly important that such plans be communicated on time to all structures of the companies, implemented, monitored and reviewed, if required. It is equally important that the process of setting up and approving such plans by the company’s decision-making bodies is guided by rational business criteria and duly documented. Members of the governing bodies may be held liable for the absence of such plans or losses arising from the failure to communicate them on time.

 

Should face-to-face meeting of the governing bodies be reconsidered?

Law no. 83/IX/2020, of April 4th, 2020, ("Law no. 83/IX/2020"), approving the exceptional and temporary measures adopted in response to the epidemiological situation caused by COVID-19, establishes an exceptional regime allowing the deadline for holding annual general meetings, particularly for commercial companies that are required to do so by law or bylaws to be held during the months of April to May, to be extended until June 30, 2020.

Although not directly deriving from the law, the current circumstances may further justify the postponement of meetings already called or even to revoke calls in order to minimize the risks associated with the holding of face-to-face meetings of shareholders. It is also important to ensure timely and adequate communication of the decisions in question to the shareholders and other members of the corporate bodies involved. This issue is particularly relevant in the context of public companies and/or companies with dispersed capital, for which it may generate a significant turnout at annual general meetings.

In any case, and whenever it proves necessary to approve resolutions to be taken by general meetings, companies should consider the use of telematic means, the exercise of voting rights by correspondence or, alternatively, the holding of unanimous resolutions in writing. The possibility of resorting to these means should be evaluated on a case-by-case basis, as it depends on the bylaws and on the existence of internal regulations, means and resources that ensure the reliability of communications.

In addition, in relation to meetings of other corporate bodies, contingency plans may be considered to avoid the physical presence at meetings of at least part of the members or other measures to ensure the existence of a sufficient quorum at such meetings, namely the use of telematic means, and the regulations that prove to be necessary or appropriate that may be approved for this purpose. 

 

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This information is being updated on a regular basis.

All information contained herein  and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.