The measures aimed against the further spread of the current coronavirus (COVID-19) have far-reaching consequences. For society and for the economy. Many have questions about the consequences of these measures and how they can best deal with them. This also applies to our clients in the Dutch Caribbean. We have lined-up our team to answer all these questions and to assist our clients in taking appropriate measures. The primary concerns are – understandably – often related to employment law aspects such as use of vacation days, reduction of working hours, teleworking; or in the field of performance, termination or dissolution of commercial contracts, dealing with such matters as penalty or force majeure clauses (or material adverse change clauses, which are often included with mergers and acquisitions), compensation for delays or making preparations for a possible lock-down.
However, please note that the crisis situation has far more legal implications to consider, such as from the perspective of corporate governance. Some of which are:
- Proactively assessing the impact of the crisis situation on the company, from both a short-term and long-term perspective, taking into account various (best- and worse-)case scenarios and considering appropriate adjustments to the strategy.
- Ensuring the adequacy of electronic means of communication for the sake of business continuity and drawing up a continuity plan in the event of a shortage of key personnel; checking the provisions of the company’s articles of association on the absence or impediment of directors.
- Evaluating the company’s dividend distribution policy, employee compensation plans as well as capital allocation and liquidity in general. Taking risk mitigation measures to protect the company’s capital and financing.
- Keeping employees, shareholders and other relevant stakeholders informed of the business activities, the (expected) impact of the crisis situation and measures taken, and communicating frequently with, and seeking guidance from, relevant supervisory authorities and other government agencies.
- Keeping detailed records of decisions, correspondence and other forms of communication as well as actions taken in connection with the (potential) consequences of the crisis situation, showing what was decided and done and for which reasons. This could be particularly important if for some reason, such as for insurance purposes or in connection with legal disputes, the board has to prove that it did everything in its power to reasonably mitigate the potential impact of the crisis situation on the business. Detailed record-keeping may help the board to show that it properly fulfilled its tasks and duties and acted in the best interest of the company and its business, taking into account the interests of all relevant stakeholders.
Meanwhile, swift and intensive dialogue between the business communities, financial institutions, and departments and other agencies of government within the Dutch Caribbean has resulted in several financial relief measures being proposed or already being implemented such as temporary:
- Additional credit facilities.
- Suspension of mortgage and other loan payments.
- Suspension of income and corporate tax payments.
- Suspension of employer’s contribution of social security premiums.
- Suspension of sales tax payments.
Please note that some measures are generic while others are industry specific and/or only apply to certain (essential) businesses or services. At least for now. However, the situation is evolving on a day-to-day basis.
If you have any questions about these matters, or any other legal questions or issues relating to the coronavirus crisis situation, please contact your regular contact person at BBV Legal.