COVID-19 - latest developments for corporate practitioners

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

Corporate reporting

• Interim reports – The Financial Reporting Council (FRC) has updated its guidance for companies on corporate reporting during the COVID-19 pandemic by adding a section on interim results. It says that directors will need to exercise judgment about the nature and extent of the procedures that they apply to assess the going concern assumption at the half-yearly date. If going concern has become a significant issue, the FRC recommends that directors undertake procedures similar to those for annual financial statements and consider whether to engage their auditors to perform an interim review (although there is no legal requirement to do so).

Company meetings

• AGMs and other general meetings – The Department for Business, Energy and Industrial Strategy (BEIS) and the FRC have published an updated Q&A on the legislation that will be introduced to assist companies where COVID-19 restrictions make it difficult to hold meetings. The Q&A confirms that the legislation will apply retrospectively from 26 March 2020 until 30 September 2020, and that it will apply to general meetings as well as annual general meetings. There is no indication of when the legislation will be published.

Contract issues

• Execution of documents – The Law Society has published guidance on virtual execution and e-signatures during the COVID-19 pandemic. It draws attention to its existing practice notes on Executing documents by virtual means (referred to as the Mercury Note) and Executing documents using an electronic signature. It also provides an update on recent relevant advances in the use and acceptability of electronic execution. The Land Registry has confirmed that it will, until further notice, accept email PDFs of deeds signed in accordance with "Option 1" in the Mercury Note.
• Force majeure – The COVID-19 pandemic has led many commercial parties to review their contractual arrangements and consider whether there are any grounds on which they may seek to delay or avoid performance (or liability for non-performance), or suspend or terminate their contracts. Our new publication, COVID-19: Force majeure: A global perspective, provides a high-level overview of the approach taken to force majeure clauses in key jurisdictions including Australia, China, France, England & Wales, Germany, Japan and the United States.
• Insurance – The Financial Conduct Authority (FCA) has announced that it intends to obtain a court declaration to resolve contractual uncertainty in business interruption insurance cover. It says that it is not intended to encompass all possible disputes, but to resolve some key contractual uncertainties, in order to assist both insurers and insureds.

Other relevant materials

We have published a guide on Governance of companies in the current environment. Business-as-usual decision making, disclosures and corporate reporting have all been, and are likely to continue to be, disrupted at least in the short term. Companies will need to ensure that robust and effective decision-making processes remain in place and that they fulfil their legal and regulatory obligations to investors and other stakeholders. In the guide, we suggest practical steps that companies should consider, both in the short term and in the months ahead.

For our other guides (on Managing Liquidity, People and Supply Chains) and further COVID-19 related publications, see our COVID-19 Hub.