Effects of Coronavirus on Directors
The Companies Act 2006 statutory duties, fiduciary duties, remain unchanged and directors must continue to have regard to these when making decisions and considering the best course of action to take as far as navigating the company through the pandemic. This includes potential conflict issues and following the correct approvals procedures. The company must above all act in the best interests of the company to promote the success of the company for the benefit of its shareholders.
Given the uncertainties created by the pandemic, and the decisions faced and made by directors in balancing short-term needs against the long-term success of the business, the risks to the directors in carrying out their duties may have escalated. To mitigate such risk, directors should ensure they act in good faith in a prudent and reasonable manner based on current information at the time of the decision(s), and record the interests and factors taken into consideration.
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