Written by: Keith Tully
Published: 30th March 2020
A series of rule changes relevant to the corporate insolvency and rescue process have been announced by government.
Wrongful trading provisions will be suspended, retrospectively from March 1st for a period of three months, with the intention being that company directors can keep their businesses afloat without the threat of personal liability.
As a result, directors will be able to buy in the most essential supplies their companies need while they try to carry out a restructuring and rescue process.
Alok Sharma, business secretary in the UK government, explained the decision as having been taken with the aim of supporting British companies during what is an extraordinarily difficult time for organisations across the economy.
He said in a statement that the policy of suspending wrongful trading rules would “reduce the burden on business, giving bosses much needed space to keep their workers employed and their companies going”.
Matthew Fell, chief UK policy director at the Confederation of British Industry (CBI), said: “The temporary suspension of wrongful trading provisions, along with other measures, will give much needed headroom for company directors to enable otherwise viable businesses to use the government’s support package and weather this crisis.”
Alongside its new policies on trading during rescue and restructuring processes, the government announced it will be allowing companies to hold their otherwise legally necessary Annual General Meetings online or to postpone them as the coronavirus crisis goes on.
Meanwhile, companies are also being allowed to push back the dates of their annual accounts filings via a fast-tracked online process, with thousands of businesses having already applied for such an extension.
The government has also told the Health and Safety Executive and local authorities to fast-track their product safety tests in relation to personal protective equipment (PPE), which is so desperately needed in hospitals and care facilities across the country as the COVID-19 situation worsens.
“The government is doing everything in its power to save lives and protect livelihoods during these unprecedented times,” Mr Sharma said.
“Applying a common-sense approach to regulation will ensure products are safe and reach the market without any unnecessary delay, getting vital protective equipment such as face masks to frontline staff as quickly as possible.”