Covid-19: FRC consolidated guidance and extension of insolvency restrictions

The Financial Reporting Council (FRC) has published a consolidated and updated edition of its guidance for companies on corporate governance and reporting in light of Covid-19 and the Government has extended the temporary restrictions on winding up petitions.

FRC guidance

The new FRC guidance note incorporates and supersedes the guidance published by the FRC in March (see our earlier blog post) and May 2020 (see our earlier blog post).

Additional commentary contained in the new guidance note includes:

• Timing of publication of annual reports and accounts – The FRC encourages companies to make use of the extensions to the deadlines for the publication of the annual report and accounts. It notes that the FCA recently confirmed that listed companies with a year end up to and including 31 April 2021 will still have six (rather than four) months to publish their annual report and accounts (see our earlier blog post).
• Strategic report – The FRC notes that stakeholders are interested in how business models and strategies have evolved in response to the pandemic and, in particular, how companies intend to navigate the short and medium-term uncertainty posed as a result of Covid-19.
• Risk management and internal controls – The guidance notes that the risk of fraud may be elevated, given the changes to systems and procedures in light of Covid-19, and that boards should be alert to this risk.

The FRC has also published a consolidated and updated edition of its guidance for auditors in light of Covid-19.

Extension of insolvency restrictions

The temporary restrictions on winding up petitions that were introduced by the Corporate Insolvency and Governance Act 2020 (CIGA) have been extended until 31 March 2021.

The CIGA introduced restrictions on winding up petitions being presented if they were based on statutory demands dated between 1 March 2020 to 30 September 2020 (see our corporate update 2020/14). The restrictions were extended to 31 December 2020 in October (see our earlier blog post), and the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No.2) Regulations 2020 have now extended the restrictions again until 31 March 2021.