Directors’ Duties and COVID-19 challenges
The financial impact of the spreading pandemic is inescapable. From employees to business owners, we all are facing short to mid-term trials that may require innovative solutions. Furloughing staff or home working are just two ways of trying to beat these unexpected financial constraints.
The government financial help extends to employees, businesses and self-employed in the attempt to keep the companies going through the coronavirus outbreak. You can find the FSB’s comprehensive guidance and advice here.
Directors’ duties continue
However, it’s worth remembering that in the rapidly changing landscape, directors remain subject to their fiduciary responsibilities. And their decisions need to be assessed continuously to make sure that they protect themselves, their employees and the business.
Taking practical steps
In times of uncertainty, we encourage business owners to stress test any business decision they make. Staying in regular communication with the stakeholders, such as lenders, creditors, suppliers, and customers, will allow them to get a bigger picture and take a more informed decision.
When cash is a problem
If the company is faced with severe financial difficulties or on the verge of insolvency, it should seek professional advice.
As the directors are prohibited from wrongful trading, they can face personal liability if they act in breach of their duties as directors. The same rule applies when it comes to any preferential treatment of creditors, or asset transferring.
Getting professional help earlier usually means a broader range of solutions could be available. If you or your business is facing financial problems, then please do not put it off. Call us for a free chat on ☎️0800 118 2948.
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