During the COVID-19 crisis, many companies are facing unexpected financial distress, and taking steps to stabilise their business and bolster their finances.
Many directors will not have experienced these issues before, and should be aware of how their duties are impacted when the company is in financial distress.
This guide has been prepared on the basis of Hong Kong law principles. Many of the principles will also be applicable to other common law jurisdictions.
How are companies responding to the current crisis?
The outbreak of the novel coronavirus pandemic (COVID-19 or Coronavirus) has had and will continue to have wide-ranging implications for businesses, governments and institutions across markets and industries. Shearman & Sterling (Shearman) has created a dedicated resource hub containing information on the potential impact this pandemic may have on businesses, and what businesses can do to prepare and succeed in this rapidly evolving space going forward. The sections that follow cover select key topics that may be of particular interest at the time of writing.
Concerns regarding the strength of UK supply chains and the consequences which arise when links in the chain fail, are not new and were recently subject to significant scrutiny in the context of Brexit negotiations. But with COVID-19 causing a host of new problems for already stressed supply chains, what can businesses do to protect themselves?
On April 20, 2020, the Swiss (only German) came into force, after an emergency legal freeze ended on April 19, 2020 (see our blog post "Federal Council orders a nationwide stay of debt enforcement proceedings"). However, no end of the corona pandemic is in sight.
Due to the global crisis caused by the COVID-19 pandemic, the Thai Government has implemented a number of important initiatives aimed at supporting the Thai economy and affected industries.
As part of these initiatives, the Ministry of Finance of Thailand has enacted several important short terms and medium terms tax relief measures to support individual and corporate entities in Thailand to ease the hardships faced by many during these uncertain times. Set out below is a summary of these measures.
Defer tax filings and payments
The High Court has ruled that directors breached their duties by taking up the company’s business opportunity for their own benefit, even if the company was unable to take up that opportunity by reason of its financial position: Davies v Ford & Ors [2020] EWHC 686.
Wegen der bundesrtlich angeordneten Massnahmen im Zusammenhang mit der Corona- Pandemie wird eine Konkurswelle befrchtet. Um vormals gesunde Unternehmungen, die nur auf Grund der Pandemie in finanzielle Schieflage geraten sind, vor dem Konkurs zu bewahren, hat der Bundesrat gezielte Massnahmen im Sanierungsrecht erlassen. Auch soll so der Verlust von Arbeitspltzen verhindert werden.
A demerger is the process through which a single business entity is divided into separate companies or groups of companies. There are a number of motivations behind a demerger, such as resolving shareholder disputes, separating different elements of a business and improving the value of an element of a single business that has previously been eclipsed within the current corporate structure. On account of the rigid legislation governing companies within the UK, it is vital that the correct methodology for carrying out a demerger is used.
As South African businesses are left reeling in the wake of the escalating coronavirus crisis and the imposition of a 35-day lockdown , we look at the implications for South African companies and how those in financial difficulty may find some relief under the Companies Act 71 of 2008 (Companies Act).
A variety of steps have been taken to accommodate managers working during the lockdown. As at 20 April 2020, these measures are as follows:
1. More flexibility for the governance of funds
The increased flexibility for the governance of funds during lockdown orders enacted under the emergency legislation of 20 March 2020 can be found here.