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.

Companies should prepare and implement contingency plans geared at continuing their business and the safety of their employees, shareholders, customers, suppliers and other stakeholders.

Whenever possible, companies should create taskforces to monitor, on one hand, the evolution of contagion and contention of the COVID-19 in close liaison with the health and other relevant 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 in a timely manner 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 we reconsider in-person meetings of the corporate bodies?

Current circumstances may serve to justify the postponement of meetings already convened or even to revoke notices of meetings in order to minimize the risks associated with holding face-to-face shareholder meetings. This issue is particularly relevant in the context of public companies and/or companies with dispersed capital, for which a large turnout at annual general meetings is expected. For instance, in accordance with Decree 102/2020 in person meetings may not gather more than 40 (forty) people in the same room. It is also important to ensure timely and adequate communication of the relevant decisions to the shareholders and other members of the corporate bodies involved.

In any case, and whenever it proves necessary to approve resolutions to be taken by general meetings, companies should consider promoting the use of telematic means or unanimous resolutions in writing, making the necessary adjustments.

In addition, in relation to meetings of the 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 for this purpose may be approved.

 

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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.