Krishna Veeraraghavan, Scott Crofton and Lee Parnes Explain COVID-19 Risks Facing Boards in Corporate SecretaryMay 15, 2020
S&C M&A partners Krishna Veeraraghavan and Scott Crofton, together with associate Lee Parnes, have authored an article in Corporate Secretary in which they discuss the risks that company boards face as a result of the coronavirus pandemic and how boards may mitigate them. The authors examine the problem through the lens of Delaware’s Caremark doctrine, which prescribes the standards that apply to a board’s duties.
The authors posit that “[t]he Covid-19 pandemic represents a highly visible red-flag risk for boards of directors that is potentially ripe for Caremark claims.” Although these claims are typically difficult to sustain, the authors explain how recent rulings and the new realities of operating a business during a pandemic may leave directors more exposed. Boards can reduce these risks through measures such as implementing board-level processes and protocols to address Covid-19-related issues and requiring or encouraging management to provide the board with regular reports relating to Covid-19-related issues and metrics.
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