Corona quick check for decision-makers

SECURING CURRENT BUSINESS OPERATIONS:

Securing and continuation of business operations (e.g. appointment of further managing directors/authorized signatories (Prokuristen)/authorized representatives (Handlungsbevollmächtigte):

• sole power of representation could be useful (if currently joint power of representation is prescribed);
• appointment of further managing directors (if necessary impose restrictions on the internal relationship) or authorized signatories; ATTENTION: In case of authorized signatories, a separate authorization for sale/encumbrance of real estate is required

Management in cases of illness/quarantine, powers of attorney in the company, general and provisional powers of attorney:

• In the company:
  • in case that there shall be no registration in the commercial register: (General) powers of attorney; ATTENTION for real estate transactions: notarial form required for powers of attorney
• Private/as shareholder:
  • general/provisional powers of attorney: usually in notarial form, so that property transactions can also be effected
  • should, in order to avoid misunderstandings, also expressly refer to representation in shareholder meetings and real estate transactions

How are you secured in times of crisis at your branches abroad and what do you have to do/consider:

• appointment of other persons authorized to represent the company, granting of powers of attorney, always in compliance with the respective local jurisdictions

INTERNAL LEGAL QUESTIONS:

• Current labor law issues
  • general rights of the employees (home office) and obligations of the employer in the crisis
  • duty to continue to pay remuneration
  • obtaining short-time working allowances and other state aid
  • information on the procedure for obtaining the short-time working allowance
  • retention of key employees
• Labor law liquidity management

LEGAL ISSUES RELATING TO THIRD PARTIES:

• examination of contract amendments for cases of force majeure (e.g. continuation of financing contracts), withdrawal and termination of contracts, claims for damages
• amendment of general terms and conditions
• tactical litigation before state courts and arbitration tribunals
• restructuring of supply chains and distribution chains
• termination of distribution agreements without compensation
• deescalation of disputes and alternative dispute resolution
• assertion and defense of claims for damages

INSOLVENCY LAW ASPECTS:

• Examination of duties to file for insolvency
  • suspension of the duty to file for insolvency due to the corona epidemic
  • liability risks
• Financial instruments to avoid insolvency
  • KfW loans (Kreditanstalt für Wiederaufbau, Reconstruction Loan Corporation)
  • guarantees by the Federal State banks (Landesbanken)

• Insolvency as instrument of restructuring

  • protective shielding procedure (Schutzschirmverfahren)

  • insolvency plan proceedings under own management

STATE AID IN CORONA TIMES/THE TAX SHIELD:

• granting of tax deferrals
• adjustment or reduction of advance tax payments
• waiver of late payment fines and enforcement measures

• liquidity planning
• measures to secure short-term liquidity
• stress test business plan/reorganization report (Sanierungsgutachten)
• communication with banks, other financing partners and other stakeholders in the times of crisis
• going-concern examination

EFFECTS OF THE CRISIS ON THE RISK AND FORECAST REPORTING IN (GROUP) MANAGEMENT REPORT:

• At what point and to what extent must the corona crisis be reported?

EEFEFTS OF THE CORONA CRISIS ON THE ANNUAL AND CONSOLIDATED FINANCIAL STATEMENTS:

• government grants and subsidies
• impairment of investments/inventories/receivables
• provisions for risks
• going concern
• disclosures in the management report

WHAT ARE THE CONSEQUENCES FOR ONGOING OR PLANNED AUDITS?

• Are there any time restrictions to be observed?
• Under what conditions can the current/planned audit be performed remotely?

• How companies can counter a crisis in their own IT department
• effects on the internal monitoring system with regard to financial losses
• What happens when the Chief Information Security Officer, central security engineers and the data protection team break down
• handling IT projects/reducing payment obligations
• examination of the extent to which business partners influence the performance of IT
• IT contingency plan and creation, testing, practicing, adapting, updating of the business continuity management to the following dimensions:
  • importance of IT in individual business processes
  • IT-operation, support, field service, key-user and so on (personnel)
  • net, server, storage, security technology and so on (technology on prem)
  • business partner, IT-provider (service-level)
  • data centers, cloud services, micro services (performance & availability)
  • staff unit CISO, security engineers, data protection (personnel)
• Check and modify the capacity of the IT business partners/IT service providers
  • classification of business partners in risk classes
  • partner-specific emergency measures
  • control in case of emergency
  • essential contractual provisions
• Emergency assessment of current and upcoming IT projects
  • identification of projects that are critical to operations or value creation
  • identification of the dependencies of the projects
  • evaluation of the emergency plans of the project partners
  • derivation of emergency measures
• Securing liquidity with IT and through IT
  • IT in the focus of securing liquidity; savings through
    • license measurement (over licensing)
    • reduction of cost-intensive storage consumption
    • identification of unused servers (zombie server)
    • unnecessarily high service level to service providers
    • as well as to own users
    • analysis of typical overhead cost types (telecommunications, energy, maintenance, etc.)
    • analysis of intercompany services or shadow IT
  • Securing liquidity through IT deployment; data analysis in the ERP system:
    • analysis of the age structure of open items and thus prioritized dunning procedures
    • analysis of first, second and third degree liquid funds
    • analysis of recurring bookings according to expense types such as memberships, allocations, contributions, etc. and analysis of whether these expenses can be reduced
    • avoidance of unnecessary purchase orders through analysis of the release strategy and purchase order limits
    • examination of payment conditions and their optimization
    • and many more
  • Avoidance of financial losses due to IT deficiencies
    • secure representation in manual and automated controls of the internal monitoring system
    • ensuring controlled states of emergency to avoid gaps in control
    • establishment of normal post-emergency controls
    • analysis for suspicions of fraudulent acts
• Data protection in view of the coronavirus
  • protective interest of the company
  • permissible measures
  • disclosure of personal data
  • rules for after the corona crisis