Earlier this year, the Government made temporary changes to the Companies Act and other legislation to support businesses affected by COVID-19, both financially and in terms of their compliance obligations.
Powers and exemptions to help businesses cope with the disruption caused by COVID-19
Still available, extended to 2021
These measures allow companies, incorporated societies and other entities to hold meetings online, use electronic signatures for powers of attorney, and make temporary exceptions to their own rules. They also allow certain Registrars and Ministers to exempt businesses and organisations from requirements in 12 Acts of Parliament. This measure was due to expire this year but has been extended.
- 31 March 2021 — Expiry of provisions allowing meetings to be held online, temporary exceptions to be made to entity rules, and Registrars and Ministers to create exemptions.
- 15 May 2021 — Expiry of provisions allowing the use of electronic signatures when signing security agreements that contain powers of attorney.
- Enable use of electronic means
- Allow certain modifications to constitutions or rules
- Exemptions from compliance obligations
Business Debt Hibernation
Still available, extended to October 2021
Business Debt Hibernation allows businesses affected by COVID-19 disruptions to get a month of protection while they talk to their creditors — during this period most creditors can’t take legal action to enforce their debts, eg applying for your business to be liquidated. If your creditors agree, you can get a further 6 months of protection.
As part of the Government’s plan to accelerate the economic recovery from COVID-19, rules allowing affected businesses to put their debts on hold have been extended by 10 months. The Business Debt Hibernation scheme was due to expire on 24 December 2020 but is now going through to 31 October 2021.
- 31 October 2021 — Cut-off date for businesses applying to enter into debt hibernation.
‘Safe harbour’ for company directors from their insolvency-related duties under the Companies Act
Expired 30 September 2020
The ‘safe harbour’ gave directors greater confidence to continue trading during the period immediately after lockdown, without worrying about breaching their insolvency-related directors’ duties (sections 135 and 136 of the Companies Act 1993). This expired on 30 September 2020.
As of 1 October 2020, directors have had to again comply fully with their obligations under the Companies Act, even when facing financial distress due to COVID-19.