1. What are the key topics that boards should focus on to ensure proper discharge of their duties as directors, as their businesses return to work following a lockdown?
Key topics that boards should focus on as their businesses return to work following a lockdown are as follows:
- observation of government regulation, guidelines and recommendations
- ensuring employee safety
- developing an effective communication plan for interacting with employees and, for listed companies, updating the market
- conducting a fresh internal risk review to assess the logistics of a return-to-work operation
- being mindful of the time limits on temporary measures introduced during lockdown regarding legal and regulatory obligations, for example regarding statutory filings and relaxation of certain aspects of the listed company regime
- understanding the impact of COVID-19 on their sector as a whole and on their particular business
- given the volatility in the markets and the uncertainties surrounding COVID-19, directors should conduct assessments of their company's value on an ongoing basis.
2. Should boards adopt particular governance practices in this context?
Yes. Boards should understand the risks, manage health and safety, play an effective role in overseeing management’s plans to return to the workplace, rethink facilities and technology, and revisit their takeover response plans with their advisors to ensure they will be able to respond effectively to any takeover bid.
The Confédération Générale des Entreprises du Maroc (CGEM) has put in place three practical guides and a training kit for the benefit of companies entitled to resume their activities.
3. To what extent are boards being encouraged to take into account corporate purpose and values in the context of COVID-19 and a return to work?
All members of the board need to engage with their management teams so they can understand and assess the impact of, and, if necessary, revisit, decisions taken in response to the effects of COVID-19.
They should be mindful that their response is in line with the values the company is seeking to promote, and should also as far as possible ensure that measures taken are within the corporate purpose of the company.
The Confédération Générale des Entreprises du Maroc (CGEM) recommends the adoption of a business continuity plan to limit risks.
4. Your company is facing liquidity issues as a result of COVID-19:
a. What are the repercussions for continuing to operate your company?
Under Moroccan law, directors of a company facing liquidity issues should file an insolvency petition within 15 days as of the suspension of payments.
If the directors fail to file the petition within the abovementioned period, they can be found personally liable. This may result in civil and/or criminal liability of the directors.
b. Do you have to file for insolvency if your company cannot pay all its debts as they fall due?
Moroccan legislation refers to the suspension of payment, which is established when the company is unable to meet its liabilities with its available assets.
The directors should request the opening of a receivership procedure within 30 days from the date of the company's suspension of payments.
Directors should file the petition at the registry of the competent court, and this petition must be supported by a certain number of documents.
c. Are there any steps that should be taken to minimise the risk of your actions as director being challenged?
To minimise the risk of the director's actions being challenged and to protect themselves, several actions might be taken by directors:
- hold meetings to take all the appropriate decisions or authorise actions
- consider reducing losses by avoiding any damaging transactions
- request delays to creditors
- ensure accurate financial information is available
- implement part-time working for employees
When necessary, directors should file an insolvency petition on time.
d. Will your company be wound up if you fail to make payments when due?
Under Moroccan law, a receivership procedure could be opened by the competent court when a company is in a state of suspension of payments. The receivership is pronounced only if it appears that the company's situation is not irremediably compromised. If not (i.e. the company's situation is irremediably compromised), this could lead to the winding up of the company.
In the light of the above, the judicial liquidation is not automatically pronounced if a company fails to make payments when due.