Partner Jeremy Laws provides a further update on the Corporate Insolvency and Governance Act 2020.
Following the implementation of the Corporate Insolvency and Governance Act 2020 (“CIGA”) earlier this year, and the September regulations extending some of the temporary measures it established, further supplemental regulations came into force on 26 November 2020.
The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020 introduces two amendments.
Firstly, previously due to end on 30 December 2020, there has been a further extension to the period relaxing how meetings are held by companies and other bodies. The temporary measure will now continue until 30 March 2021. For further details, please see our earlier update.
Secondly, unlike other temporary measures extended on 29 September 2020, the measure suspending wrongful trading ended on 30 September, its original end date. However, under the new regulations a second period has been established, re-introducing the suspension of wrongful trading liability between 26 November 2020 and 30 April 2021. This will once again remove the threat of directors being held personally liable for allowing a company they believe or know to be insolvent to trade beyond its means.
However, it should be noted that, despite being re-introduced, this measure does not have retrospective effect. Therefore, the actions of directors between 1 October and 25 November 2020 are governed by the Insolvency Act 1986.