COVID-19 pandemic is not only affecting human health and well being; it has also disrupted businesses globally. The Covid-19 crisis has impacted business conduct and economy; with lockdown being followed globally newer innovative models of conducting business has evolved. The corporate leaders and board of directors have to take decisions on the restructuring of business models but at the same has to commit to the highest levels of Corporate Governance.
The pandemic has affected the financial status of every business corporation, the first important decision the boards of directors have to make is whether to start with the operations or wait till the situations become safer. In times like this, the main concern should be the health and safety of employees. The boards in order to start should follow the guidelines given by the Government and bring in the best practices that ensure safety and should not just focus on earning money. The pandemic has given an understanding that some corporations can operate with a smaller workforce and work from home has emerged to be very helpful and cost-effective, the board of directors and founders may operate their business principles after the pandemic too. The pandemic has disrupted the international supply chain of products which in a way led to localization of products, earlier products that were imported by companies from foreign countries, now due to lockdown importing products is not possible this will push the companies to consider the local suppliers and it is an important decision that the board has to make. During the pandemic the companies will face many Force Majeure clauses which will include situations like laying off employees, salary cut-offs, not adhering to corporate social responsibility norms, stakeholders’ interests; these decisions must be taken keeping in mind not only legal compliances but also on humanitarian grounds. These decisions will be important corporate governance steps and will affect the future of the business corporations; the decisions must be in sync with the Companies Act, 2013.
In order to ensure highest levels of corporate governance, there must be frequent identification and monitoring of risk, the board must be in contact with the CEO and COO in all times and must ensure risk management, there must be risk analysis with regard to operations, productions, costs, etc and risks related to legal complications. The Board should always be briefed about the financial status of the company; the debts, finances, credit lines, returns, etc. The companies will have to maintain communication with the regulators, the stakeholders and shareholders should have a say in the decisions. Important disclosure related to risk factors and business models should be made to the stakeholders and the companies should adhere with the SEBI (Listing Obligations and Disclosure Requirements) Regulations and SEBI (Prohibition of Insider Trading) Regulations. The companies at all times must ensure investor’s interest. At times like this most companies are operating under remote circumstances and it is very important to protect data and unpublished price sensitive information; the company must update to new compliance system and ensure limited use of social media for sharing information, the company must have maximum IT support and other necessary requirements needed for data privacy.
In times like this when most of the Annual General Meetings are being canceled or are being conducted online with minimum attendance the board of directors and corporate players should maintain Corporate Governance standards, every department head should be involved in the meetings and important decisions should be disclosed. The IT teams should be asked to follow compliance in terms of data privacy. The board should always communicate the situations with the employees, suppliers, workmen, and other insiders. The board should constantly take suggestions from their lawyers and accountants for better contract management. Any harsh decision taken must be in sync with the laws and should not have a negative impact on the future of the company.