COVID-19 - latest developments for corporate practitioners

Further additional guidance for companies has been published in light of the impact of the COVID-19 pandemic.

Company meetings and other corporate actions

• Shareholder meetings – The Department for Business, Energy and Industrial Strategy (BEIS) and the Financial Reporting Council (FRC) have published a Q&A document on AGMs and other general meetings. The government announced in March that it would put forward legislation to make it easier for companies to hold shareholder meetings while COVID-19 restrictions are in place and the Q&A discusses the measures that the legislation might cover. Options could include providing companies with the ability to hold “closed” meetings or giving companies the ability to override their articles of association for a short period.
• Withdrawal or amendment of dividend resolution – ICSA: The Chartered Governance Institute has published guidance on withdrawing or amending a dividend resolution at an AGM. It considers how a company can withdraw or amend its dividend resolution, how proxy votes should be treated if the resolution is being amended to reduce the dividend after proxy votes have been submitted and whether an announcement is required.
• Executive remuneration – The Investment Association (IA) has published guidance which sets out its expectations on how UK listed companies should reflect the impact of COVID-19 on executive pay. It says that boards must justify levels of executive pay and ensure that executives’ experiences reflect those of shareholders, employees and other stakeholders, especially if a company has sought to raise additional capital from shareholders or has made use of Government support such as the Coronavirus Job Retention Scheme. Where dividend payments have been suspended or cancelled, the IA considers that this should be reflected in executive pay. Our remuneration and incentives team has published an e-bulletin on the guidance, which is available here.
• FCA letter on fair treatment of corporate customers preparing to raise equity finance – The Financial Conduct Authority (FCA) has published a "Dear CEO" letter commenting on reports of banks failing to treat their corporate clients fairly when negotiating new or existing debt facilities. It says that it has had reports that banks may have used their lending relationship with corporate clients to secure roles on equity mandates. In some cases, these roles may be 'in name only', with few or no additional services being provided in exchange for a share of the fee pool. The FCA says that it will be looking into this further and notes that such conduct could be a breach of FCA rules and Principles.
• Companies House – Companies House has updated its guidance on filing documents while Covid-19 restrictions are in place. It has introduced an emergency filing service for a selection of paper documents that do not have an online option, such as applications to remove material about a director.

Corporate reporting

• Modern slavery reporting – The government has launched a new web page to provide guidance for businesses reporting under the Modern Slavery Act during the COVID-19 pandemic. In light of the COVID-19 pandemic, the guidance says that, as well as focusing on the health and safety of their workers, businesses will need to consider how fluctuations in demand and changes in their operating model may lead to new or increased risks of labour exploitation.  It also recognises that businesses may need to delay the publication of their modern slavery statement by up to 6 months and will not penalise those that do so.
• Alternative Performance Measures (APMs) – The European Securities and Markets Authority (ESMA) has published an updated version of its Q&A on APMs to provide guidance to issuers on the application of its APM Guidelines in the context of the COVID-19 pandemic (an APM is a financial measure of historical/future financial performance, financial position or cash flows which is presented voluntarily by a company to aid understanding of its performance). The new Q&A on COVID-19 encourages issuers to use caution when adjusting APMs and including new APMs to address the impact of COVID-19, and invites issuers to provide information regarding any modifications and assumptions and on measures to address the impact that the outbreak may have on it.

Other relevant materials

We have published two further guides on the impact of COVID-19 on businesses:

• One focuses on People and explores the measures available to employers, and approaches they may wish to take, during the crisis and in its aftermath to safeguard the health and safety of employees, to preserve jobs, skills and the future viability of businesses, and to protect individual personal data.
• The other focuses on Supply chain and looks at various ways of managing supply chain difficulties, such as how to maintain the links in the supply chain, competition law issues, product-related issues and the suspension and termination of contracts.

For further information on this and other COVID-19 related issues, see our COVID-19 Hub.