Deadline for Covid insolvency measure changes extended
8 Dec 2020
The government has announced a further extension to changes to insolvency measures and the regulations for company AGMs, designed to relieve the pressure on businesses dealing with coronavirus
8 Dec 2020
It has decided to reinstate the temporary removal of the threat of personal liability for wrongful trading from directors until 30 April 2021. Previously, the deadline was the end of this year.
Termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process.
The modifications to the new moratorium procedure, which relax the entry requirements to it, will also be extended until 30 March 2021.
A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding up petition. The temporary moratorium rules will be extended to 30 March 2021.
The government also announced that companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 31 March 2021. This means that shareholders can continue to examine company papers and vote on resolutions remotely.
Financial Reporting Council
Separately the Financial Reporting Council (FRC) has published consolidated Covid-19 guidance for companies and auditors, which supersedes all previous FRC guidance for companies and auditors.
The updated bulletin for auditors now incorporates some new guidance. This includes advice in the section on the 'planned audit approach’, to give examples of factors that may heighten risks of material misstatement due to fraud or irregularity.
In the section on 'compliance with laws and regulations', auditors are advised to identify that improper claims for financial support could result in liabilities for repayment and fines.
The section on 'subsequent events' has been edited to reflect the updated guidance for companies and other minor edits have been made in the Bulletin to reflect that this is no longer a 'new' situation.