Survival of the Fittest, a business perspective – COVID-19

Sonya Mohadeb, Director at C&S Secretarial, explains how good corporate governance, compliance and financial status will ensure your survival as a business whilst sailing through the COVID-19 storm.
The trade-off between keeping businesses afloat and a prolonged lockdown period to contain the spreading of the virus is forcing businesses to face an unprecedented level of real and immediate danger for survival. We are faced with a chicken and egg situation…
What do we do first?
Either we keep businesses running and knowingly allow the virus to spread like wildfire, with the result of massive contagion which will have an irreversible impact on businesses, or we have lockdowns to contain the spread (minimize the contact to contact spreading) and with each day passing by the businesses are on the other hand closer to the ICU (Intensive Care Unit) and in some cases needing artificial life support through government stimulus packages.
So where do we go from there…at C&S we think that in times of great trouble, an honest and objective introspective of the business situation is critical and we shall cover a few aspects further below. Timing, agreeing on a well-defined strategy and execution is everything to ensure survival.
Responsibilities of directors
Every director has a fiduciary duty of care irrespective of how dire the situation is. The director is accountable for the health & safety aspects, data protection, employment law, business contingency plan for the business etc. The director’s responsibilities for business continuity do not go away in difficult times, in fact they become totally relevant during challenging times.
Business decisions must take into consideration clients, suppliers, creditors, employees and other stakeholders to name a few. Where physical meetings cannot be held, remote conferencing is a must to exchange information and ensure informed and right decisions are taken and implemented.
Survival of the business operationally, ensuring that you are operating optimally and know where you are going
Businesses which are able to work remotely are at a bigger advantage since the ability to get in touch with authorities, banks, clients and other stakeholders is a must. Is it business as usual for you despite working from home?
You need to ensure that you make full use of the available schemes which the authorities are putting in place to alleviate the financial stress of businesses, this will ensure that the business engine is still on.
Employees are the ones who will ensure that the business survives so you need to keep them in the loop at all times. Regularly communicate and reassure them, be transparent and involve them.
Many employees and entrepreneurs will lose their livelihood and this will be a human tragedy if a well- defined strategy is not thought of and implemented.
Corporate Governance and Compliance are the cornerstone of business survival
In times of uncertainty, where the risks of financial collapse are great, directors have a fiduciary duty to keep proper accounting books and records (financial status) up to date so that they can take informed decisions. In financial jargon we always say that cash flow is the life blood of any organization and many of you will realise how true this is currently.
Having up to date financial status and adhering to compliance and good governance principles is critical to get financial assistance from commercial banks, authorities and other financial institutions.
Financial status is only one side of the story, since the other side of the story is ensuring that the company is fully compliant with the laws and regulations and adhering to good corporate governance culture. This will include, but is not limited to, filing of financial statements/financial summaries with the registrar of companies, holding regular board/shareholder meetings, having all statutory registers up to date, having minutes book up to date (directors and shareholders). You will have to bear in mind that the financial status of a company cannot be looked at in isolation without the compliance and corporate governance of the business. The triangle balance of financial stability, compliance and corporate governance will ensure that you have put the best chance on your side for your business to sail through the storm and also be in a better position to get external funding. Providers of finance will assess all the risks including financial and non-financial which will involve doing a compliance due diligence. The culture of the business organization will stem out of the good corporate governance culture of the organization.
We are not saying that your business will not suffer hits and blows during challenging times but surely you will receive far fewer that your competitor. This is called being resilient and is termed as survival of the fittest. When you knock at the door of a financial institution for more or less immediate funding you will succeed, whereas your competitor will not because a diagnostic of their situation will mean that they need to remedy a lot of non-compliance and bad corporate governance before they can be eligible. Time is of the essence and most probably they will go out of business. Now is the time to assess your business and the way forward.
C&S Secretarial Services specialises in matters of Compliance, Corporate Governance and Company Secretarial. Sonya Mohadeb invites Platform Africa readers to get in touch with her and is offering a free assessment of the status of your business and advice on the way forward.
Sonya Mohadeb has a Bachelor of Laws (LLB) from Newcastle University, United Kingdom and is an Associate member of The Chartered Governance Institute (ICSA) and has an accumulated work experience from both offshore and banking sectors which she acquired mainly from one of the largest fiduciary firm in Mauritius and from AfrAsia Bank where she was Senior Compliance Officer. She also handled the secretarial work of sovereign funds and companies listed on the Mauritian Stock Exchange.
SOURCE :
https://www.platformafrica.com/2021/03/22/survival-of-the-fittest-a-business-perspective-covid-19/
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