[Updated 6 November 2020, originally published 22 March 2020]
In addition to drastically cutting interest rates and introducing asset purchase programmes, governments and central banks around the world continue to introduce new measures directly available to companies as the “second wave” takes hold.
This paper provides an overview of the measures available to companies in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, the UK and the EU. Governments are still having to be reactive as the full impact of COVID-19 continues to unfold and we will update this alert periodically to capture new developments.
Cash is king and we have been assisting clients navigate the constantly changing list of measures to identify how they can reduce their expenses and bolster their cash position.
No international cap
To date, no ‘unified’ approach has been taken by governments in different jurisdictions, and the key thing for corporate groups to note is that there is no international cap on government aid. Corporate groups should have a plan in place to access what they can where they can.
We continue to receive queries about the EU’s State aid regime, which has traditionally restricted the form and quantity of financial assistance provided by Member States. The COVID-19 measures put in place by Member States and the UK will need to adhere to EU State aid rules and, for good order, we recommend that clients check that any government support they are considering accepting in light of COVID-19 is compliant with these rules. The European Commission (the executive branch of the EU) is fast tracking all necessary approvals and, on 19 March 2020, the European Commission adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the COVID-19 outbreak. The Temporary Framework has since then been extended to enable governments to recapitalise companies in need in return for equity and to grant subordinated loans and has recently been prolonged until middle/autumn of 2021. In light of these actions, we expect that, going forward, State aid rules will still not be an impediment to COVID-19 financial assistance from Member States and the UK.
It’s not just about money
In addition to offering companies financial support by providing loans, tax holidays and covering employee wages, laws have been adjusted to enable companies to comply with social distancing laws (e.g., by convening virtual shareholder meetings, etc.) and to relax insolvency related requirements (e.g., directors need to file for insolvency less hastily in a number of jurisdictions). These legal amendments are also summarized in this paper.
In these unprecedented times, directors of companies will need to be well-prepared by having a solid understanding of directors’ duties and the insolvency framework in the jurisdictions within which their businesses operate. We assist clients with this during this difficult period.
See the following links for individual government responses or download the entire document here.