Temporary and permanent measures.
The long-awaited Corporate Insolvency and Governance Act 2020 is now in place but what does it mean for companies? We provide a summary of the key changes.
It means greater flexibility…
1) Shareholder meetings due to be held between 26 March to 30 September 2020:
- Can be held electronically (regardless of the wording in the articles of association).
- Do not need shareholders to be in the same location.
- Shareholders do not have a right to attend in person, participate in (other than by voting) or vote by particular means at the Meeting.
- Companies with Annual General Meeting (‘AGM’) deadlines expiring between the above dates can defer holding their AGM until the end of the ‘Relevant Period’ which is currently set as 30 September 2020.
2) Filing of PLC accounts with Companies House due between 26 March and 29 September 2020:
- Extensions to filing deadlines have been granted to the earlier of 30 September 20201 or 12 months from the year end.
3) Insolvency framework changes – temporary measures:
- Temporary removal of the threat of personal liability for wrongful trading from directors between 1 March to 30 September 20202.
- Most creditors prevented from presenting a winding up petition (on an unsatisfied statutory demand) served between 27 April and 30 September 2020.
- The conditions for obtaining a moratorium have been temporarily relaxed.
4) Insolvency framework changes – permanent measures:
- A new 20 day moratorium on enforcement action during which trade creditors and lenders are prevented from initiating insolvency or other legal proceedings and landlords are unable to forfeit leases.
- A new ‘restructuring plan’ process to support existing creditor cooperation mechanisms.
- Suppliers cannot terminate the supply of goods or services when a client becomes subject to an insolvency procedure.
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1. If the AGM takes place more than 15 months from the last AGM the resolution authorities will expire before the next meeting.
2. The Government has not relaxed any other director misconduct measures. All directors should continue to act in the best interests of a company (in accordance with their duties under the Companies Act 2006 duties).