Covid-19 – The challenges of remote working for boards of directors

This note is part of a series that the lawyers of Reddy Charlton will issue on the major legal, personal and business issues that will confront us all during the COVID-19 crisis.

Boards of Directors will face many challenges during the Coronavirus pandemic and their ability to engage in day-to-day duties and obligations may become problematic. The magnitude of the pandemic will present difficult issues and many risks which may have been deemed inconceivable before and will affect companies of all sizes.

In particular directors will need to implement many adaptations to how they operate a board. In this article Reddy Charlton examines some of the issues that may arise in that regard.

Board Meetings

• Board Meetings & Communication

One of the main restrictions imposed on the board of directors by this crisis is their ability to meet and operate as a unit. At this stage, we have reached the point where most board members either do not wish to or cannot travel to board meetings.

Many boards already operate meetings by phone or video conference if, for example, the directors are not in the same country. However the virus is occasioning many more boards to meet via these mediums.

Such remote meetings are contemplated and permitted by section 161(6) of the Companies Act 2014. Provided that all persons participating in the meeting can hear and be heard this is not an issue. The location of the meeting shall be wherever the largest group or participants is located or if everyone is in a different location, wherever the chairperson is located.

However, each company constitution should be checked to ensure that it does not impose any additional conditions or dis-apply the entitlement to hold remote meetings in this manner.

Undoubtedly, virtual meetings are not without challenges. It is important for the Chair to ensure that all directors can hear and be heard and are participating. Ensuring that each director has received an agenda for the meeting and access to the relevant supporting documentation for the meeting in advance will be important. We would recommend that the Chair makes individual contact with the directors in advance of board meetings to check-in and elaborate on issues to be raised at the meeting to ensure that all participants are fully briefed. In particular if there are issues on which the directors will be required to vote.

• AGM’s & Shareholder Communication

The board will need to ensure that they are reaching out to their Shareholders to communicate their Covid-19 responses and proposals. Shareholders will want to understand the impact of Covid-19 on the company and the steps that the board are taking to mitigate any negative impacts.

How EGM’s and AGM’s are conducted will need careful consideration. Obviously the board must take account of HSE guidelines and relevant information on how that impacts the AGM should be sent with the AGM notice.

Matters to be considered are:-

– Recommending that all shareholders review the HSE guidelines.

– Recommending that shareholders do not attend in person if possible but rather appoint a proxy. Proxies should enable the minimising of the numbers in attendance. Of course quorum numbers will need to be considered.

– The suitability of the venue to accommodate social distancing.

– Whether electronic participation is possible and/or permitted and if so how shareholders can participate or view proceedings. This will depend on the individual company’s constitution. Even where they cannot formally be counted as being present, the board may still consider live streaming the meeting.

Welfare of Employees

It is important that the safety of staff and their families is viewed as a priority by any employer. During this time the board will need to determine a strategy that would enable employees to continue working while also managing costs to ensure the business does not suffer. What that strategy looks like will very much depend on the nature of the business in question and the prevailing HSE and governmental guidelines.

Matters to consider include:-

– Where employees are required to be on site what Covid safety measures can be put in place including staggering of hours, social distancing, provision of hand sanitiser, gloves or masks.

– Where roles are public facing these considerations apply equally to customers or clients attending at your business premises.

– If employees can work from home has the company appropriate IT infrastructure to enable that such as remote dial in, phone diversion etc. Furthermore, the business should ensure that it as appropriate policies in place to govern remote working such as data protection and use of company equipment.

– Are any changes required to the company insurance to reflect the changes in business practices?

– The board may also want to review if the company relies on a specific individual as the sole signatory to its bank accounts or to organise payroll for the employees. If this is the case, the board may consider appointing other individuals to take on this role should the single individual become unable to attend to their duties.

– A contingency plan should be put in place to deal with employees who develop symptoms or who believe have been exposed to an actual case of Covid-19.

It is advised that boards should have a clear record of each employee’s location and if this is due to change over a period of days/weeks. Communication with all staff members is vital to ensure work productivity and boost a sense of positive work spirit.

It is also important to review the position in relation to remote working and cross-boarder workers. The board and management may want to review this in light of necessary work permits and personal and employer taxes which may be involved.

Working from home & Cybersecurity/Data Protection

Due to a large number of employees working from home at this time, it is crucial that directors review their cyber security polices and IT controls to ensure they are up to date and staff are made aware of them.

Directors must advise staff to be cautious at this time as we are reminded that cyber criminals will try to capitalise on this Covid-19 crisis and workplace disruption by creating additional phishing and fraud attacks.

Employees should also be informed of the importance of keeping business and client information confidential while working from home. Appropriate security will need to be applied and documents stored away safely at the end of each working day.

A look to the future

When we begin to see a shift towards life returning to what we originally considered ‘normal’ it is important for management to initiate a post Covid-19 review and assessment.

Many companies will feel they were not prepared for this crisis and will be eager to capture the lessons learned and prepare accordingly for an event like this in the future should it occur.

Company plans and procedures for reacting to abrupt business disruptions such as this global pandemic should be reviewed.

How can we Reddy Charlton help?

During this Covid-19 crisis, Reddy Charlton Solicitors are eager to support, encourage and guide your business. If you have any queries or seek further information on above challenges faced by boards of directors or any other area of commercial law, please contact Niamh Gibney on ngibney@reddycharlton.ie