In May, legislation was passed[1] amending the Companies Act 1993 to help businesses facing insolvency due to COVID-19. The changes include:  

  • A 'business debt hibernation' regime that will allow businesses that meet the required criteria to place existing debts into hibernation for one month, or up to seven months if creditors approve
  • Providing directors of companies facing significant liquidity problems due to COVID-19 with a 'safe harbour' which will, under certain conditions, relieve directors of their duties with regard to reckless trading and incurring further obligations. Directors need to be aware that this safe harbour will not release them from their other duties under the Act. The safe harbour lasts for six months from 3 April but may be extended until 31 March 2021
  • Enabling the use of electronic means (such as holding meetings electronically, voting electronically or using electronic signatures) even when a business's constitution does not allow this
  • Providing relief for businesses that cannot comply with their constitutions due to COVID-19, and
  • Giving Registrars (government officials responsible for the Companies Register or the Personal Property Securities Register, for example) and Ministers of the Crown the power to grant exemptions from certain statutory obligations.

If you think any of the above measures could apply to your situation, please don't hesitate to contact us for advice specific to your business.

[1] COVID-19 Response (Further Management Measures) Legislation Act 2020 and the COVID-19 Response (Requirements for Entities Modifications and Exemptions) Act 2020.