The COVID-19 pandemic and the resulting economic downturn has changed the business world as we know it. Some of these changes will be temporary and revert back to normal as the virus fades. Other changes, however, will be permanent – marking a firm break from the pre-COVID world. One area that has been both temporarily and permanently altered by the pandemic is corporate governance. Below, we discuss how these changes will affect board leadership, shareholders and other stakeholders.
Board Leadership: The way that corporate boards oversee the operations of their companies is changing profoundly. As the virus subsides, we recommend that businesses partake in the following:
- Develop robust risk assessment and mitigation policies
- Oversee extensive long-range contingency planning
- Closely examine management’s assessment of the company’s exposures
- Ensure directors are able to receive timely information and business intelligence
- Carefully review succession and business continuity plans
Shareholders: Currently, the biggest change for shareholders is virtual meetings – but will virtual meetings remain once the virus is gone? According to a recent Bloomberg Law article, the answer to this question depends on how comfortable shareholders will feel gathering in large numbers. As a result, the return to normal shareholder meetings may take weeks, months or even years depending on the specific company.
Other Stakeholders: One of the most vital aspects of corporate governance is maintaining a commitment to all stakeholders. However, in times of global crisis, such as the current pandemic, this objective can be forgotten as companies shift all their focus to immediate survival. Conversely, the pandemic also points out that stakeholders are a crucial part of achieving success both now and after COVID-19. Businesses must understand and cater to the needs of their employees, customers, suppliers and service providers – in addition to shareholders.
If your business has any questions regarding corporate governance in a COVID-19 world, please do not hesitate to contact Busch Mills. Our experienced legal team has the knowledge and corporate governance expertise to effectively guide your business through these important changes.