COVID-19: company law changes announced
The Government is proposing amendments to the Companies Act 1993 as another lifeline in the wake of the COVID-19 outbreak.
The proposals are intended to keep affected companies afloat by:
- Encouraging directors to keep trading through creating a “safe harbour” from insolvency breaches if directors consider, in good faith, that any debts could probably still be paid within 18 months.
- Initiating a flexible “Business Debt Hibernation” regime by which creditors other than licensed insurers, registered banks and non-bank deposit holders can agree to freeze debts for six months while companies continue to trade on terms,
- Limiting claims to voidable transactions between arms-length parties.
- Relaxing statutory deadlines for filing and holding AGMS, as well as relieving entities from their obligations to comply with their constitutions if affected by COVID-19. This could include:
- permitting e-meetings where otherwise disallowed, and
- permitting the use of electronic signatures where necessary.
The proposals are not intended as a means for directors to avoid their general duties to act honestly and in good faith
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