Many UK boards will be operating on a remote basis in response to the government’s guidance to avoid non-essential social contact and travel with effect from March 16 2020. Listed entities in particular will be facing difficult decisions about the impact COVID-19 is having, or might foreseeably have, on expected performance in a fast evolving environment and therefore need to keep in mind their ongoing disclosure obligations at all times. The FCA has made it clear it is unlikely to make allowances where companies struggle to convene disclosure committee meetings, stating “we continue to expect listed issuers to make every effort to meet their disclosure obligations in a timely fashion” (see the FCA’s Primary Market Bulletin 27 and our related commentary).
While some directors will be accustomed to and unfazed by participating in conference calls or virtual meetings, others may be less experienced or forthcoming (such as newly appointed directors or non-executive directors) which may impact on the efficacy of the governance around decision making. Replacing face to face meetings with conference calls may give rise to a number of risks including:
- The conference call or virtual meeting environment can be stilted and/or intimidating which could make it less likely that issues are raised; or that participants provide effective challenge, particularly where the direction of decision making is disproportionately influenced by more dominant or talkative individuals.
- Often the default position is for participants to join on mute and so the ability to interject at an opportune moment could be lost during the short delay caused by pressing the “unmute” button.
- Participants could be more easily distracted by events around them (for example by emails, news feeds or family members) and not fully participating and so may miss crucial points or misunderstand points made by others.
- Participants often talk over each other and discussion becomes confused or points may be lost.
Companies and their boards may want to give some thought to best practice for chairing a conference call or virtual meeting and maintaining proper governance. Such practice might include:
- Sending an agenda in advance so that all participants have time to consider the issues, gather thoughts and prepare an appropriate contribution.
- Where external information or events such as press articles/market rumour will be discussed, circulating supporting material and/or links in advance where possible.
- Considering whether certain documents should be given particular prominence by circulating them by email separately from the board pack and sufficiently in advance of the call/virtual meeting to enable review and consideration by participants.
- Considering whether a virtual meeting via video link or equivalent is possible and/or preferable to a conference call so that all participants can see one another.
- Ensuring the chair of the meeting identifies themselves at the start of the meeting (or nominating a person to chair, where necessary).
- Introducing everyone so those participating know who is participating in the call or virtual meeting.
- For key/difficult decisions (such as whether there is a reason to update the market in relation to forecasts), asking everyone in turn whether they have anything to add.
- Considering whether to follow up with individuals afterwards to check they are in agreement on key decisions.
- Where participants speak over each other (which is natural), looking for an opportunity to return to the specific individuals concerned to give them another opportunity to speak.
- Circulating a short summary of key points after the call to record discussion and provide a further opportunity for anyone to input.
- Preparing minutes of the meeting (if it is a board or committee meeting) in the usual manner and ensuring that the record of discussion includes the reasons why key decisions were reached, including dissenting views and why particular matters were given more weight or certain information, factors or views were dismissed (such as unfounded market rumours).
For advice to US boards in the context of Covid-19 click here and Canadian boards click here. We have produced both a short form and long form checklist of suggested actions that financial services clients may wish to consider as they respond to the COVID-19 outbreak. This is built around the four headline actions outlined in our publication COVID-19: Regulatory aspects for boards to consider. It is intentionally not prescriptive or exhaustive, and should be tailored by each firm to their business or arrangement.