National corporate governance responses to Covid 19

A comment about the OECD survey

How did nations respond to the Covid-19 crisis? Did they provide more flexibility to corporations? Were the initiatives enough?

Well, let’s see what OECD found out. You can check the full report here.

Extension of annual shareholder meetings deadline

Some nations extended the deadline for the 2019 annual shareholder meetings. Since meetings of most corporations in countries with fiscal-end on 31 December have to take place in the first or second quarter of 2020, this seems a good way to increase flexibility and decrease bureaucratic pressures over corporate management during Covid.

Remote participation & online meetings

It seems that the quickest response to Covid was the increase of national jurisdictions allowing online meetings.

This seems a little obvious by the time I am writing this post (September 2020) but clearly was not that obvious in march 2020. (A personal comment: it is impressive than we needed a pandemic to allow online meetings. Better late than never!)

It seems that more nations than I expected approved some flexibilization in debt payments when the corporation had financial issues related to Covid. The flexibilization occurred in several different forms, including the more extreme case (in my view), which is the suspension of filing for bankruptcy during the crisis.

More time for disclosure

Also, several countries extended the period corporations had for the quarter or annual financial reports. Extensions ranged from two weeks (Chile) to four months (the Netherlands).

Were these responses enough?

Honestly, I am not sure. They are all beneficial since they provide some level of flexibilization in critical procedures corporations need to execute. However, except for the flexibilization regarding illiquidity issues when related to Covid, I don’t see these responses helping to preserve jobs, for instance.

Thanks for passing by!

Henrique Castro Martins
Henrique Castro Martins
Assistant Professor of Finance