As the outbreak of the COVID-19 virus rips across the globe, many organizations are struggling to maintain their operations. Many state governments have ordered the shut down of “non-essential” organizations, and prohibited gatherings of people. Employees in businesses that are still open are afraid to go to work for fear of spreading the virus, and many boards are left wondering how to keep up their fiduciary responsibilities while also doing right by their employees. Here’s some things to keep in mind.
Carefully review your Directors and Officers insurance policy – there may be provisions that may be relevant for restructuring and financial hardship. Your individual coverage may have priority over the company’s with regards to payments, and you’ll want to be sure that coverage is explicitly your property, and that it won’t be impacted by changes that are implemented due to the effects of the pandemic.
If you don’t have regular board meetings scheduled often, do so. With the situation surrounding the Coronavirus changing daily, it is important that the board is kept up to date with any new information. Directors should keep detailed documentation of the minutes as the board continues to strategize and oversee operations during the development of this crisis and ensure that said documentation aligns with public statements.
Keep tabs on the organization’s financial strength: income sources, debt service requirements, and other needs. Identifying where cutbacks can be made in order to keep operating may be necessary, or temporary shutdowns may need to be enacted in order to stave off further financial distress. Consider hiring legal and financial professionals in order to better plan for the worst. These professionals can advise more in-depth about fiduciary responsibilities.
Stay calm. This is an extremely unique and constantly shifting situation, and the business world is rife with uncertainty. Staying calm, and being confident in the organization’s ability to understand the realities of the pandemic, and being able to make sound decisions from that knowledge, can help make sure that you have the best chance to make it through this crisis. We’re all in this together – directors are counted on to provide leadership in times like these, and everyone will be looking to them for information and thoughtful judgement throughout.