The following content relates to advice on updates in relation to commercial, corporate and data protection law via our firm network connection, Bird & Bird for the United Kingdom.
20 April 2020
Companies House additional measures
Companies House have announced additional measures to assist Companies with their legal obligations. These measures will see a pause in the strike off process to prevent companies from being dissolved and struck off the register. Companies issued with a late filing penalty due to COVID-19 will also have their appeals treated 'sympathetically'. This measure is in addition to the 3-month extension for filing deadlines, although it should be made clear that companies seeking an extension must still apply through the Companies House website, following which the extension is granted automatically.
Q&A resources available
The Financial Reporting Council (FRC), in collaboration with the Department for Business, Energy and Industrial Strategy (BEIS), has released a Q&A to answer key questions on companies' statutory obligations. There are no new measures included in this announcement but it is made apparent that legislation is likely to be forthcoming in the near future.
Topics covered include:
- how to hold quorate general meetings;
- the reasons the Government does not promote virtual meetings;
- how to safeguard shareholder engagement when physical general meetings are not being held;
- a proposed temporary relaxation of the rules so that companies may restrict the communication of notices and other meeting documentation to emails, websites and other electronic media;
- a proposed optional extension of the deadlines within which companies must hold their AGMs; and
- whether or not a company should change its accounting reference period to meet filing and accounting requirements during the pandemic.
The Q&A can be found here.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
The Coronavirus Large Business Interruption Loans Scheme (CLBILS) has been extended to cover firms with turnover of more than £500 million. All firms with a turnover of more than £45 million will now be able to apply for up to £25 million of finance, and up to £50 million for firms with a turnover of more than £250 million.
Future Fund Announcement
The Government has announced the 'Future Fund' to support innovative businesses that normally rely on equity investment. The scheme, launching in May, will use convertible loan notes worth between £125,000 to £5 million but must be at least matched by private sector funding. Investment proceeds may only be used for working capital purposes and will be for a 3 year term at a rate of 8% interest per annum. On a qualifying financial round the note converts into equity at a 20% discount to the next round price. On sale, IPO or maturity, the note is either repayable with interest plus a 100% redemption premium or converted into equity. The terms will also include most favoured national provisions.
16 April 2020
- The Insolvency Lawyers Association has published a Protocol which could be used by an administrator to consent to directors of a company in administration continuing with certain management powers under paragraph 64 Schedule B1 Insolvency Act 1986.
- The Chartered Governance Institute (ICSA) has issued updated guidance for companies needing to or wishing to hold their AGM whilst the 'Stay at Home' measures are in force. This can be located here: https://www.icsa.org.uk/features/a-season-disrupted. ICSA believes that legislation will shortly be brought forward by the Government to provide a statutory basis for this increased flexibility.
- The International Federation of Accountants has published guidance on the financial reporting implications of COVID-19. This includes guidance on how companies should assess COVID-19 events after the reporting period, how companies should assess going concern and other significant effects on accounting and reporting. Full guidance: https://www.ifac.org/knowledge-gateway/supporting-international-standards/discussion/financial-reporting-implications-covid-19.
14 April 2020
Government Guidance on social distancing in the workplace for Shops running a pick-up or delivery service updated 7 April 2020 provides updated guidance on how delivery services should be operated safely including not physically handing food to a customer, maintaining a safe distance from the door, notification procedure for those self-isolating and handwashing and use of sanitiser by delivery drivers
- The Pensions and Lifetime Savings Association (PLSA) have published a press release stating that pension fund investors must be prepared to hold directors of companies in which they invest accountable for decisions they make during the COVID-19 crisis which may impact their long-term investment prospects. This will be relevant when considering how to successfully communicate decisions that are being made.
- The Financial Reporting Council (FRC) has published an update stating that it will bring forward a review of s.172 Companies Act 2006 statements in financial reports in light of the COVID-19 crisis. This review may be relevant if you have financial reports due in the near future.
- The Financial Conduct Authority (FCA) have released a statement summarising the new and existing measures in place to assist public companies in raising capital. If you are looking to raise new capital and would be interested to hear more about these measures please let us know.
The ICO has announced that intends to take account of the current circumstances when carrying our its duties. They have stated that they will take a flexible and pragmatic approach. While the ICO continues to expect organisations to comply with data protection requirement, they will take a more lenient approach in light of the strain the current health crisis is placing on organisations.
6 April 2020
On 3 April the government announced £20m of government funding for businesses who could help boost the UK’s resilience to the long-term impact of the coronavirus outbreak and similar situations in the future. Grants of up to £50,000 will be available to technology and research-focused businesses to develop new ways of working and help build resilience in industries such as delivery services, food manufacturing, retail and transport, as well as support people at home in circumstances like those during the coronavirus outbreak. All the projects will begin by June 2020 and will last up to 6 months, with products and services expected to be available to the public towards the end of this year.
- The Government made amendments to the Coronavirus Business Interruption Loan Scheme ("CBILS") by banning lenders from asking for personal guarantees on loans under £250,000 and extending the scope of the scheme to cover all viable small businesses. A viable small business is one that the lender would have considered viable were it not for the current pandemic. An applicant for the CBILS must provide enough evidence in their borrowing proposal to satisfy the lender that the business would have been considered viable, absent the effects of COVID-19. Under the previous scheme rules, lenders could only use the CBIL scheme in situations where they could not provide a facility under normal commercial terms.
- The Government announced a Coronavirus Large Business Interruption Loan Scheme ("CLBILS"). Under the CLBILS, the Government will provide a guarantee of 80% on loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.
1 April 2020
Execution of deeds
Guidance around execution of deeds (which require a witness to be present) has not been forthcoming. As such we (and many other city law firms) still recommend against using DocuSign if possible. It is generally recommended not to ask a family member to witness a signature, however this is simply best practice guidance (rather than a legal requirement) and so many companies are relaxing their signing requirements to allow witnessing by a family member.
The Bank of England (B0E) have set up a new lending facility intended to help larger firms with liquidity and cash flow. The BoE has also announced a £200bn increase in its corporate bond asset purchase facility.
Reporting financial risks
The Financial Reporting Council (FRC) has published guidance on how to report on COVID-19 and the associated risks in your financial reports. If you have financial reports due in the near future these will need to take into account supply chain and product disruption, impact on workforce health etc.
Companies House has issued guidance to permit a delay to the filing of accounts at Companies House by companies. While companies will still have to apply for the three-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension via a fast-tracked process.
Stamp duty relief
HMRC has stated that applicants for stamp duty relief on intra-group transfers should email their claim and relevant documentation to email@example.com.
Companies are entitled to apply for an automatic, immediate extension to file accounts at Companies House if they will be unable to meet their filing obligations under the Companies Act 2006 due to COVID-19. This application must be made before the company's filing deadline. Failure to apply for the extension will result in an automatic penalty.
Annual General Meetings
On 28 March the government announced that it will publish legislation to enable companies required by law to hold AGMs to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus. Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings. If you have an imminent general meeting, please let us know and we can outline practical steps to holding an AGM during coronavirus. Otherwise, legislation will be published in due course.
Market Abuse Regulations
The disclosure obligations under the Market Abuse Regulations have not been relaxed. As such, directors need to consider there are any material changes to the business as a result of the impact of COVID-19 (such as material adverse changes to the company's performance) need to be disclosed to the market.
Guidance on social distancing for everyone in the UK, Updated 30 March 2020 includes avoiding non-essential use of public transport when possible, working from home, avoiding large and small gatherings in public spaces, avoiding gatherings with friends and family and to significantly limit your face-to-face interaction with friends and family if possible, particularly if you are over 70 have an underlying health condition or are pregnant. Separate advice is available for individuals or households who are isolating, and for the most vulnerable who need to be shielded.
Government Guidance Staying at home and away from others (social distancing) Updated 29 March 2020 provides every person in the UK must stay at home and only leave for very limited purposes such as shopping, exercise and medical needs and travelling for work purposes, but only where you cannot work from home. These reasons are exceptions - even when doing these activities, you should be minimising time spent outside of the home and ensuring you are 2 metres apart from anyone outside of your household. The government will look again at these measures after three weeks, and relax them if the evidence shows this is possible. All gatherings of more than two people in public are prohibited. The police have the powers to enforce these measures where people do not comply. These measures are initially in place for 3 weeks, they will then be reviewed.
Guidance for food businesses
Government Guidance for food businesses on coronavirus (COVID-19) 25 March 2020 provides in relation to food hygiene and social distancing, it is very unlikely that you can catch coronavirus from food, COVID-19 is a respiratory illness, it is not known to be transmitted by exposure to food or food packaging. Any food handler who is unwell should not be at work. If they have symptoms, they should follow government advice and stay at home. The advice on social distancing is to maintain a distance of 2 metres between individuals. This advice applies to both inside the food business and in the external public areas where customers may need to queue. People should be reminded to wash their hands for 20 seconds and more frequently than normal.
Government Guidance for food businesses on coronavirus (COVID-19) 25 March 2020 provides for takeaways and restaurants offering a pick-up service that such businesses should only take orders online or by telephone, customers could have staggered collection times, customers arriving without having already placed an order should be encouraged to leave the premises to place their order by telephone or online, and to return at a designated time for collection customers whose orders are ready should enter one at a time to collect orders, businesses should discourage crowding outside the premises and where possible, use queue management systems to maintain 2 metres separation.
Government guidance on closing certain businesses and venues of 27 March 2020 provides food delivery and takeaway at restaurants and cafes can offer can remain operational. This covers the provision of hot or cold food that has been prepared for consumers for collection or delivery to be consumed, reheated or cooked by consumers off the premises. This means people can continue to enter premises to access takeaway services, including delivery drivers. Businesses are encouraged to take orders online or by telephone. Planning regulation has been changed to enable restaurants, cafés and pubs which do not currently offer delivery and hot food takeaway to do so.
The Health Protection (Coronavirus, Business Closure) (England) Regulations 2020 ("Regulations") came into force on 21 March 2020 requiring all restaurants and cafes not to sell food or drink for consuming on the premises - and any part of the premises, or part of the premises, in which food or drink are sold for consumption on such premises must be closed. These restrictions will be reviewed in 28 days from the date the Regulations came into force. The Regulations allowed takeaway and delivery from restaurants and cafes.
The new Coronavirus Bill includes obligations for anyone in or connected to a "Food Supply Chain" (defined broadly) to give up information about actual or potential supply disruption to certain government agencies. A fine of up to 1% of turnover can be applied for failure to do so. There is an exemption for disclosing personal data where doing so would contravene data protection legislation.
Data protection and Coronavirus
On the 12 March the Information Commissioner's Office published an FAQ about data protection and coronavirus. The ICO stated that the processing of health data by employers can be justified under employers’ obligation to ensure the health and safety of their employees but must be necessary and proportionate. It also stated that it would be understanding of delays in responses to data subject requests and other data protection issues and would not penalise organisations that need to prioritise other areas or adapt their usual approach during the pandemic. https://ico.org.uk/for-organisations/data-protection-and-coronavirus
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