Posted by jonathanfullarton - May 21, 2020 2:23 pm
What is the Corporate Governance and Insolvency Bill?
On Wednesday 20 May, the government introduced a new Corporate Governance and Insolvency Bill which is now making its way through parliament. The Bill consists of six insolvency measures and two corporate governance measures.
Many of the measures in the Bill will need secondary legislation before they come into force, and this will be introduced in due course, In the meantime, nothing will change until this legislation is introduced.
Purpose of the Bill
The Bill will relieve the burden on businesses during the current pandemic, allowing them to focus all their efforts on continuing to operate.
What this Bill means for businesses
The Bill will:
- introduce temporary easements on filing requirements and Annual General Meetings (AGMs)
- introduce new corporate restructuring tools to the insolvency regime providing companies the extra time they need to increase their chance of survival
- temporarily suspend parts of insolvency law to support directors during this difficult time
Changes to AGMs
Temporary easements on filing requirements and AGMs will include more flexibility around when and how AGMs are held, and extending deadlines for:
- confirmation statements
- accounts
- registrations of charges (mortgage)
- event-driven filings, such as a change to your company’s directors or people with significant control
The measures in the Bill will support businesses, and where applicable charities and mutual societies, through the coronavirus emergency by:
- introducing a new moratorium to give companies breathing space from their creditors while they seek a rescue
- prohibit termination clauses that engage on insolvency, preventing suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process
- introducing a new restructuring plan that will bind creditors to it
- enabling the insolvency regime to flex to meet the demands of the emergency
- temporarily removing the threat of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency
- temporarily prohibiting creditors from filing statutory demands and winding up petitions for coronavirus related debts
- temporarily easing burdens on businesses by enabling them to hold closed Annual General Meetings (AGMs), conduct business and communicate with members electronically, and by extending filing deadlines
- allowing for the temporary measures to be retrospective so as to be as effective as possible
Response from Business Secretary The Rt Hon Alok Sharma
Business Secretary Alok Sharma said of the Corporate Governance and Insolvency Bill: “This is a particularly challenging time for businesses right across the UK, and we are doing all we can to support them through this period.
Our proposals have been widely welcomed by business groups. The Bill will help companies that were trading successfully before the COVID-19 emergency to protect jobs and put them in the best possible position to bounce back.
The corporate governance measures will introduce temporary easements and flexibility to businesses where they are coping with reduced resources and restrictions”.
What you need to do
If you believe you will not be able to meet your accounts filing deadline, then you should apply for a 3 month extension. By citing issues around COVID-19 you should automatically be granted an extension. However, you will need to apply prior to your filing deadline as extensions are not automatic.
For all other filings, your deadlines will remain the same at this time
For further details of the new Bill and its implications you can read the government’s official press release here.
We will update you further about the progress of this Bill and its further implications once the Bill has been passed.
