Quick Guides to Directors’ Duties Across Europe: Overview of Considerations for Directors When a Company Is in Financial Difficulty

    April 2020

    Different countries frame the exact description of the role of directors of a company in different terms. One feature is common to all – the obligation not to continue trading if a company is insolvent. Again, the detailed implications of doing so vary from one jurisdiction to another. However, this obligation not to continue wrongful trading is at the heart of trust in a market-based economic system.

    Whether you are a supplier, creditor, shareholder, customer or employee, you rely on the directors of the company you are dealing with to discharge this duty diligently.

    The coronavirus disease 2019 (COVID-19) pandemic has put this fundamental obligation under severe strain. Governments have responded to the crisis by closing large parts of the economy in order to protect healthcare systems and save lives. At the same time, governments have put in place financial support schemes of unprecedented scale in order to ensure that companies can weather the crisis, employees keep their jobs and businesses respond quickly to demand when the health protection measures allow, enabling the economy to recover as quickly as possible.

    How directors exercise their responsibility is one key factor in determining how strong and fast the economic recovery will be. This set of short guides gives pointers to how directors should think about their duties.