HomeCompany NewsLeadership during Covid-19 – practical considerations for company directors

Leadership during Covid-19 – practical considerations for company directors

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On Tuesday the Government announced a new €3.7 billion package to support Irish people and the Irish economy during the Covid-19 outbreak in Ireland.

It was welcome news for the thousands of Irish businesses struggling in this unprecedented climate. It’s an overused sentiment but it bears repeating: now more than ever, leadership is key for business survival. Strong leaders will pull their businesses through, supporting employees and keeping the lights on until we’re able to trade as normal (whatever that new normal might be) again.

The role of the company director could currently be described as one of crisis management.  In legal terms, under Irish law, directors have duties and obligations not only to act in the best interests of their company and under the Companies Act 2014, but also has a general duty to their employees.

Despite the current global pandemic, in functioning companies, a director’s responsibilities have not ceased. If anything, they’re more critical than ever. Below, we give you an overview of some duties and practical issues company directors need to consider during the Covid-19 outbreak.

Policies and risk assessment

A company should, and most likely will, have policies and procedures in place in order to effectively manage their business and to provide for different scenarios. Most of these polices will be for the ordinary, everyday running of the business; for example a data protection policy, internet usage policy and a health and safety policy.

However, policies for unexpected events should also be prepared so the business can continue to operate smoothly. The policies should be published and conveyed to employees either at the commencement of their employment or as soon as the policy comes into force.

Considering recent events, directors should carefully consider if a new policy needs to be put in place or if any existing policies need updating. Following the government’s announcement yesterday, it’s likely that many businesses will currently be drawing up new policies or amendments to current polices to adhere to health and safety requirements and to support both the business and employees financially. Once these changes or new policies are formally agreed by the directors and written up, the policies should be published and effectively communicated to all staff. It may be necessary to provide additional staff training or provide additional tools.

Duty to Employees

Directors must consider the health of their employees and should continue to abide by the social distancing measures outlined by the Government. Working from home is, hopefully, now in place in the vast majority of companies where this is possible. If an employee cannot safely make it into work, we advise a measured approach is taken. For a comprehensive view of what employers need to know, see our article here.

Business Continuity

Regular and clear communication, now more than ever, is key.  Often through various agreements or in a company’s constitution, directors may be required to hold a board meeting within a specified time frame.

A board meeting may be needed to authorise the company to enter into certain transactions or approve certain changes to policy which would be beneficial for the company. With virtual meeting software like Team Meets, Zoom and Google Hangouts there’s no need for companies to postpone or cancel meetings to adhere to social distancing measures. For meetings to be valid, (please check that your constitution allows for this) each director must be able to exercise their vote and hear each other as if they were physically present at the meeting. If possible, it is advisable for directors to manage the company’s business through this medium given the current situation.

Sections 175 and 193 of the Companies Act allow for any general meetings (but only for companies limited by shares) to alternatively, not actually be convened, but to use a unanimous written resolution and this would be valid as if it had been passed at an AGM or EGM.

Strong leadership will be key in pulling businesses through this unprecedented crisis. Company directors can, through processes, policy, adaptability and perhaps most importantly, communication, help minimise what is sure to be a universal blow.  A director should continue to abide by their duties to act in the best interests of their company and under the Companies Act 2014 and to remember their additional duties to their staff for as long as the COVID-19 risks continue.

If you have any queries or concerns around business continuity during the Covid-19 pandemic, please don’t hesitate to contact our Corporate and Commercial Team at [email protected] or 01 644 5800.