As the number of COVID-19 cases continues to rise globally, there are a number of issues which companies should be considering, including any impact on corporate reporting and contractual obligations.
Corporate reporting
The Financial Reporting Council (FRC) has published advice to companies and auditors on the disclosure of risks and other reporting consequences arising from COVID-19. The FRC is advising companies to consider carefully what disclosures they might need to include in their year-end accounts, particularly those with global supply chains dependent on goods manufactured in, or extensive operations in, affected areas, and those in sectors significantly impacted by suppressed demand as a result of the outbreak. The FRC notes that, as well as disclosure in the principal risk and uncertainties section, the carrying value of assets and liabilities might also be affected.
Inside information
Companies should consider whether the impact of COVID-19 on their business constitutes inside information, and so requires an announcement to the market. Inside information is information which:
- is of a precise nature;
- relates directly or indirectly to the company or one or more of its financial instruments;
- has not been made public; and
- if it were made public, would be likely to have a significant effect on the price of those financial instruments or on the price of related derivative financial instruments.
Whilst information about COVID-19 is public, companies should consider whether the company’s own knowledge or understanding of the impact which it could have on the company constitutes inside information.
Contractual obligations
We have published a briefing which considers the scope for parties to rely on COVID-19 as a basis to delay and/or avoid their contractual obligations, or terminate their contracts, under English law.
Further information
For further information and publications on COVID-19, including on business continuity, see our hub page on navigating the COVID-19 outbreak.
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Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.