A collaborative report in the times of the Coronavirus:

Government measuresin key jurisdictions: 5th edition

Introduction

Since the last publication of this bulletin covering the position to
31 August 2020, the situation regarding Covid-19 has continued to develop.
Many countries emerged from lockdown, but this resulted in a spike in the virus
in some of those jurisdictions which led to further lockdowns. We have also
seen approval given to a wide range of vaccines, but the production androll-out of vaccines has not gone as smoothly as hoped. In some countries, thecrisis is deepening with spikes in infections and a return to pressure on healthservices. As the world enters the second year of the global pandemic, wethought it would be valuable to take stock of where we are and update you on
the interventionist role that Governments are continuing to take to mitigate theeconomic impact of the virus.
We hope you continue to find it a useful tool toguide you and your business through theseever-changing times.

2

Government measures in key jurisdictions

Please note, this bulletin does not constitute legal advice. It is accurate to
15 February 2021. We recommend that the latest government guidance ischecked as this is changing daily. This publication is a general summaryof the law. It should not replace legal advice tailored to your specificcircumstances.

Government measures in key jurisdictions

3

This report has been put together as a collective
effort from the following firms.

4

Government measures in key jurisdictions

Contents

1

Austria

17

Japan

2

Belgium

18

Jersey3

Brazil19

New Zealand

4

British Virgin Islands

20

Norway5

Canada21

Portugal

6

Cayman Islands

22

Singapore

7

China

23

South Africa

8

Czech Republic

24

Spain

9

Denmark

25

Sweden10

Finland26

The Netherlands

11France27

United Arab Emirates

12

Germany

28

United Kingdom

13

Guernsey29

United States of America

14

Ireland15

Israel16

Italy

Government measures in key jurisdictions

5

Austria

Contributor: Wolf Theiss

Loans andfinancialsupportFinancial assistance is available under several schemes that have been introduced inAustria, such as:•

EUR 15 billion emergency fund which is primarily intended for companies in
sectors particularly affected by the crisis. A combination of governmental guarantees
for new loans and grants for the coverage of fixed costs provided to companies whichsuffered a loss of turnover of at least 40% in 2020 caused by the crisis will be madeavailable to ensure the liquidity of the companies. The companies must be located inAustria and the fixed costs must have arisen from operating activities in Austria. Grants
do not have to be repaid. However, the companies are required to take allreasonable measures to reduce fixed costs and maintain jobs, in particular, thedistribution of dividends is not permitted. It can be applied for the grants from 20 May
2020.

•

AWS State guarantee in the amount of 80% in order to secure credit facilities of up
to EUR 2.5 million granted to the SME by its house bank. Not eligible are associations
and SMEs (i) with an annual turnover of more than EUR 50 million, (ii) in need ofreorganisation, (iii) meet the statutory requirements for the opening of insolvency
proceedings at the request of creditors, (iv) in the tourism and leisure industry, (v) inthe banking and insurance sector, (vi) in the real estate sector, and (vii) in the fishing
and aquaculture industry or in the primary agricultural sector.

•

ÖHT State guarantee to be granted only to SMEs in the tourism and leisure industry(SMEs with mixed business operations are also eligible). Guarantee in the amount of 80%
in order to secure bridging loans (overdraft facilities) granted to the SME by its house bank.

•

OeKB credit line granted to export companies is based on a bill guarantee. Conditionsof the assumption of liability are determined individually. The amount of the loan islimited to 10% (large companies) or 15% (SMEs) of the company’s last year export
turnover. The individual loan is subject to a maximum upper limit of EUR 60 million percompany group.

•

Corona Relief Fund – Guidelines for the issuance of guarantees and direct loans fromthe EUR 15 billion Corona-Relief Fund.

Has thegovernment put
in place any newbank funding
schemes?

Employment
What financial
support isthe government
providing tobusinesses andto individuals on
employment
issues?

6

Sarah Wared | sarah.wared@wolftheiss.com | +43 1 51510 5200
Roland Marko | roland.marko@wolftheiss.com | +43 1 51510 5880•

The main wage subsidy program implemented due to the Coronavirus crisis is the
Short Time Work model (STW) as a temporary reduction of normal working hours
due to economic difficulties. This scheme provides for state financial aid tocompensate for the loss of work performance on working days. The goal is tobridge the current difficult economic situation by way of a subsidy without having
to reduce the workforce. The normal working hours are reduced (shortened
normal working time). Employees receive STW aid (Kurzarbeitsunterstützung)from the employer for the non-worked hours to bring their income closer to theirnormal salary level. In order to do so, the employer receives a STW subsidy(Kurzarbeitsbeihilfe) from the state. Under the STW model a reduction in working
hours down to an average of 30-80% is possible (in some cases to 10% or evenless). Even a reduction to 0% for a period of time is possible under certain
circumstances if the applicable average for working time loss for the STW period
is met. The STW subsidy paid from the Austrian Employment Market Authority(AMS) to the employer in general do not have to be paid back, unless theemployer violates the applicable rules and restrictions of the STW scheme

Government measures in key jurisdictions

Austria

Insolvency•

The duty to file for bankruptcy due to over-indebtedness is suspended until 31
March 2021.

•

Loans entered into prior to 15 March 2020 and granted to a consumer ora microenterprise (i.e. a company which employs less than 10 persons and whose
annual turnover and/or annual balance sheet total does not exceed EUR 2
million.) will be subject to a moratorium to the extent the consumer has suffered aloss of income due to the Covid-19 crisis as a result of which it cannot be
expected to continue the debt repayment or the microenterprise is unable tocontinue the debt repayment or it cannot be expected to continue the debt
repayment without impairment the economic basis of its business due to the
Covid-19 crisis. This regulation encompasses any payment obligation under the
relevant loans which fell due between 1 April 2020 and 31 January 2021. The
mentioned payment obligations are deferred for a period of ten months fromthe initial due date and the lender may not terminate the loan on the grounds of amaterial adverse change or the non-payment during the period of the moratorium.

•

To the extent a party under an agreement entered into prior to 1 April 2020 fails
to make a payment which fell due between 1 April 2020 and 30 June 2020 as aresult of a material impairment of its economic basis due to the Covid-19 crisis, theother party may not claim an agreed default interest in excess of 4%. Furthermore,such party would not be required to pay out-of-court enforcement costs.

•

To the extent a party under an agreement entered into prior to 1 April 2020
defaults on an obligation due to a material impairment of its economic basis as aresult of the Covid-19 crisis or due to performance being impossible as a result of the
trade restrictions, the other party may not claim a contractually agreed
penalty, irrespective of whether it was stipulated to apply irrespective of the obligor’s
fault or not.

•Covid-19 is generally considered to constitute an event of force majeure under
Austrian Law. Various legal doctrines are available to legally assess the legal
consequences resulting from the permanent or temporary non-performance ofcontractual duties caused by Covid-19. However, due to the multitude of possible
factual constellations, it is difficult to state in general whether and to which extent
Covid-19 provides an exemption from performance obligations. Rather, suchanalysis depends on the underlying circumstances of or affecting a contractual
arrangement or the specific contractual agreements in place.

•

Does Covid-19 constitute Force Majeure?

Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

Government measures in key jurisdictions

7

Austria

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation•

If a tenant does not pay/has not paid rent (or a part thereof) due from 1 April 2020 until
30 June 2020 because he or she has been significantly economically impaired by thecrisis, the underlying lease agreement may not be terminated by the landlord solely
based on the payment default until expiry of June 2022. Moreover, the landlord is notentitled to enforce these outstanding rent payments until the end of March 2021.

•

However, the landlord is entitled to assert claims for default interest as of the due dateof the rent payment, whereby the default interest rate is limited to 4% p.a.

•

An eviction is to be postponed at the request of the tenant if the apartment is
indispensable for urgent housing needs of the tenant and other persons living in thesame household, unless the eviction is necessary to avert serious personal or economic
disadvantages of the landlord. Before the decision on suspension is made, the landlord
shall be given the opportunity to make a written statement.

•

Under the Austrian Civil Code tenants may be entitled to a rent relief provided that
their premises cannot be used as contractually agreed due to Covid-19; in practicethis currently mostly concerns leases in the retail and leisure industry, as most ofsuch businesses had to be closed due to respective ordinances. However, as theseprovisions of the Civil Code are not mandatory and can therefore be deviated from(which in practice rarely has been the case, though), the question if and to which extent
a rent relief actually applies, needs to be reviewed on a case by case basis.

•

In Austria, courts are operating regularly again: the court proceedings take placemainly by attendance of all parties respecting strict measures (wearing FFP2
masks, using partition walls, keeping distance etc.). However, court proceedings
take place to a limited extent virtually (video conference). Procedural periods atcivil courts and administrative courts, which had not expired as of 22 March
2020 were suspended. These time limits restarted as of 1 May 2020.

•

Taxpayers affected by a liquidity shortage due to Covid-19 may apply for a deferral of tax.
Between 15 March 2020 and 30 June 2021, no interest is being charged on deferred
amounts. Thereafter, the interest rate will be 2% above the base rate (with the base ratecurrently being -0.62%). If the taxpayer has already been granted a tax deferral after 15
March 2020 due to Covid-19, this deferral is automatically extended until 30 June 2021 byvirtue of law.

•

Further, a special scheme for payment in instalments was introduced. The scheme has
two phases. Taxpayers can apply for phase 1 from 10 June 2021 to 30 June 2021. Pursuant
thereto, outstanding taxes which mostly accrued from 15 March 2020 to 30 June 2021
shall be paid in instalments until 30 September 2022. If repayment of the entire
outstanding amount is not possible in phase 1, but at least 40% of the outstanding taxes
have been paid, then the taxpayer can apply for payment in further instalments until June
2024. Such application must be made by 31 August 2022. Interest is triggered at 2%
above the base rate.

•

Legal transactions necessary for the proper handling of the Covid-19 crisis are exempt
from stamp duty if concluded any time from 1 March 2020 to 30 June 2021 (e.g., sureties
granted to ensure the liquidity of a company during the Covid-19 crisis).

•

Public grants paid since 1 March 2020 to maintain sustainability during the Covid-19 crisis
are partly tax-free.

Are the courts
operating?

Tax
Has any new
legislation been
introduced in lightof Covid-19?

8

Government measures in key jurisdictions

Austria

Company
law matters•

Meetings of all types of Austrian companies can be held without the physical presenceof the participants. In principle, an acoustic and optical connection is necessary inorder to hold virtual (general) meetings, whereby a common video conference solution
should be sufficient. In exceptional cases, participants can only participate acoustically.
Special rules apply, inter alia, to the general meetings of listed companies: submitting
an application for a resolution, voting and raising of an objection in the virtual general
meeting can only be made by a special proxy instructed by the company. In such case,the company has to propose at least four suitable and independent proxies, whereby atleast two of such special proxies must be lawyers or notaries.

•

To the extent a notarial deed or a certification is required with respect to e.g. M&Atransactions, capital measures and any legal document, notaries are entitled to use
electronic tools to render their services.

•

The deadline for the ordinary general meetings has been extended to twelve months
following the balance sheet date.

•

Furthermore, the deadline for submitting the annual financial statements has been
extended by three months, so that the annual financial statements of companies mustbe submitted to the responsible commercial register court no later than twelve months
following the balance sheet date.

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

Government measures in key jurisdictions

9BelgiumContributor: Monard Law

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Employment
What financial
support isthe government
providing tobusinesses andto individuals on
employment issues?

10

Pieter Van den Broeck | Pieter.VandenBroeck@monardlaw.be | +32 (0)3/286 79 40
Ava Tu | ava.tu@monardlaw.be | +32 (0)2/234 67 10•

In Belgium, the federal and regional governments have put in place
numerous financial support measures. Such measures include one-offcompensation to enterprises which are required to temporarily close down (such as
the hotels and restaurants), deferral payment of bank loans, government
guarantees, bridge guarantees and other measures oriented to support specificsectors or SMEs.

•

At the federal level, the federal government decided to allow a deferral of payment forexisting credits, including corporate loans for viable non-financial enterprises, SMEs,
self-employed persons and non-profit organizations. The deferral can be requested at
the latest on 31 March 2021 for a maximum period of 9 months for payments due(ending on 30 June 2021). However, the total deferral of payments for 2020 and 2021
together may no exceed 9 months. For companies that have already reached the
maximum term of 9 months’ payment postponement and financially healthy, it will still
be possible to obtain an additional payment extension until 30 June 2021. In addition, astate guarantee scheme has been implemented for new loans with a term of more 12
months and a maximum of 60 months. This guarantee can be granted from 24 July
2020 until 30 June 2021.

•

The sectoral organization of insurance companies active on the Belgian market has
committed itself to continue the coverage of the collective insurances taken out by theemployer without any further formalities. The payment of the premiums by the employer
is postponed until 31 March 2021.

•

At the regional level, in Flanders, the coverage of PMV (Flemish corona crisis guarantee) has
been extended. PMV can now also grant medium-term subordinated loans to healthy
SMEs for a term of 3 years (to be applied for before 15 April 2021), with a minimum of
Ä25,000 and a maximum of Ä2,800,000. From 15 May 2021, you can apply for a restartloan or restart credit at VLAIO (the Flanders Innovation and Entrepreneurship).

•In the Brussels-Capital Region, the enterprises can request loans with reduced interest
rate from Finance and Invest Brussels. Emergency loan start-up investment fundcan provide loans for cultural and creative enterprises for a maximum duration of 2 years.
The Brussels’ microcredit has been strengthened in order to boost cash-flow in general
under the project “Lening BRUSOC Recover”. In addition, Brussels Waarborgfonds(Brussels guarantee fund) also can provide guarantees on bank loans. Brussels has
introduced the Proxi loan by decree of 1 October 2020, which allows Brussels selfemployed persons and SMEs to borrow money from private individuals who benefit froma tax credit. Under certain conditions, Brussels companies can take out an Oxygen loan of
Ä10,000 to Ä100,000, with an interest rate of 1.75%, to supplement their working capital,purchase stocks, make investments or pay off arrears.

•

In the Walloon Region, there are also similar support measures provided by SRIW,SOWALFIN and Groep SOGEPA (guarantees, loans anddeferrals).

•

Teleworking will remain compulsory or the norm until at least 30 June 2021. The sociallyand fiscally exempt office or home working allowance of a maximum of Ä129.48 permonth will be increased to Ä144.31 in the second quarter of 2021. This is part of the fiscal
support measures, but employers are not obliged to grant this allowance. Moreover, itremains to be seen whether the National Social Security Office will accept this increased
cost lump sum. A cautious employer will therefore not promise anything to his employees
for the time being, or will do so subject to acceptance by the NSSO.

Government measures in key jurisdictions

Belgium

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

Contractual •IssuesWhat measures
have been taken
to reinforce
contracts?

•

The simple application procedure for temporary 'corona unemployment' due to force
majeure, for all sectors and companies, is maintained until 30 June 2021. This simple
procedure will be extended by one quarter.

•

The possibility of invoking temporary unemployment for the parent to care for a child incase of quarantine is also extended until 30 June 2021.

•

Low-wage workers who have been temporarily unemployed for more than 52 days and who
work in a sector that has not yet reopened on 1 March 2021 will receive an additional
premium of up to Ä780 gross. The size of the premium depends on the number of days
these persons have been unemployed in the first three months of this year. This premium
will mainly benefit hospitality personnel, personnel in the cultural sector, the events sector.

•

From now on, it is possible to work in an essential sector while retaining 75% of thetemporary unemployment benefit. Previously, this was only possible in limited essential
sectors. For the time being, we will have to wait and see how this will be legally elaborated
and whether specific conditions will be imposed.

•

For the relevant topics, please refer to section Personnel at our Corona Desk website.

•

The Royal Decree n° 15 on the suspension of implementing executive measures andother measures in favor of undertakings during the Covid-19 crisis was no longer
applicable.

On April 24, 2020, a number of measures were taken to ensure the continuity ofcompanies during Covid-19, which also have an impact on current contracts: agreements
concluded before April 24, 2020 cannot be (unilaterally) terminated or (judicially)
dissolved, in case of late payment as a result of Covid-19. The other contractual and/or
legal obligations and/or rights of the contracting parties remain in place, such as set-off,the exception of non-execution, the right of retention, etc.

•

This measure expired on June 17, 2020 which means that the general legal andcontractual provisions apply.

•

No other specific legal regulations were taken to reinforce contracts. The parties will
have to analyse the applicable contractual provisions in order to establish whether thecurrent governmental measures can be invoked to suspend performance under thecontract or to lift liability for non or late performance. Contracts in Belgium often
include clauses relating to force majeure or hardship.

•

If parties did not include such provisions, Belgian law and jurisprudence of the highest
court provide for several mechanisms to protect contracting parties against adverse
events. Principles of good faith and obligations to renegotiate contracts can be invokedunder strict conditions. Application of these principles are casuistic and must be
assessed in detail.

•For more details on this topic, please refer to section Contract at our Corona Desk website.

Government measures in key jurisdictions

11

Belgium

Property•

In respect of payment of rent, the current pandemic does not constitute force majeure
for tenants. They have to pay rent and may not suspend payment of rent. However, there
are measures to mitigate the impacts of this pandemic. For instance, in the Flemish
Region:– it is possible to extend the lease agreement by e-mail if the agreement is about toexpire during the confinement period,– a social tenant who has lost his or her income due to temporary unemployment as aresult of force majeure will be able to ask the social landlord for a temporary adjustmentof the rent, and– social landlords will be able to provide temporary shelter, directly or through anintermediary institution, to individual or families in an emergency situation as a result of
the Covid-19 virus measures.

•

In addition, due to social distancing requirements, some procedures or meetings withphysical attendance requirements that have to be organized during the period between
10 March 2020 and 30 June 2020 have been either postponed or allowed for alternative
attendance means, this is the case for the participation in the general meeting of
association of co-owners.

•

The Flemish government has set up a system of commercial lease loans to support
companies and is valid from April 2020.

•

Tenants who due to liquidity problems have difficulties to pay the commercial rent canapply for a commercial lease loan. The tenant submits an application via the website of
the Agency for Innovation and Entrepreneurship before 1 July 2021. An application may
relate to several properties of the same landlord, for which the tenant applies for a single
commercial lease.

•

The following conditions must be met in order to be eligible for a commercial lease loan:- The company must have a registered commercial lease,- The property must be located in the Flemish Region,- The company has been obliged to close all or part of its physical location, and- The company had no arrears in the rent for this property on 15 March 2020.

•

The regulation consists of the Flemish government advancing a maximum of fourmonths’ rent (and a maximum of Ä60,000 per property), on condition that the landlord
remits one or two months' rent.

•

The tenant and landlord must sign a model agreement for this, which is made available
by the Innovation and Entrepreneurship agency.

•

The commercial rental loan is also applicable to companies in the event sector.

Litigation•

Are the courts
operating?

•

The College of Courts and Tribunals has updated its guidelines on the operation of the courts
and tribunals as of 1 November 2020.
In principle, all hearings are conducted as normally as possible, taking into account theavailability of magistrates and clerks. If not all hearings can be held, reasonable choices haveto be made. In any event, all urgent matters are dealt with. Given the exceptional
circumstances, the College encourages the use of videoconferencing. The use of the written
procedure without oral pleadings is encouraged whenever the case circumstances allow.
The President of a chamber must be diligent in ensuring that all health regulations are strictly
observed in the courtroom.

Have any changes
been made to
the laws aroundproperty, rent andenforcement?

•

12

Government measures in key jurisdictions

Belgium•••

The clerk’s offices are accessible, subject to the known precautions: the rule of social
distancing (1,5m) must be complied with, limiting the number of people in a room, wearing amouth mask etc. It is best to contact the clerk’s offices in advance by telephone or e-mail.
Please find the necessary e-mail addresses and telephone numbers on the website of thecourt or tribunal concerned.
Wearing a mouth mask is still compulsory in all courthouses and courtrooms. The President of
the courtroom may allow the mask to be taken off if sufficient distance can be kept and if it isnecessary for the proper conduct of the hearing. The staff of the court monitors compliancewith the corona precautions.
In summary, the courts continue to function as before, and apply the necessary precautionary
measures. Justice is an essential service that will be further ensured in the interest of all.
Furthermore, it is advisable to consult the websites of the different courts and tribunals formore news on the different measures taken, as these often differ and are quickly updated.

Tax

In Belgium, the federal and regional governments have provided many tax supports measures.

Has any new
legislation been
introduced in lightof Covid-19?

At the federal level:
Law of 15 July 2020 concerning urgent tax provisions due to Covid-19:• Tax Shelter: tax reduction of 20% for the acquisition of new shares in companies facing aloss of turnover of more than 30% in the period from 2 November 2020 to 31 December
2020 due to the Covid-19 pandemic. This measure will be valid until 31 August 2021.
• Federal Public Services Finance can foresee repayment schemes for existing fiscal debts
for businesses that find themselves in difficulties due to the Covid-19 outbreak. It applies
to withholding tax, VAT, personal income tax, corporate tax and legal entities tax.
• VAT rate of 6% on the supply, intra-community acquisition and importation of protective
equipment until 30 June 2021.
• Covid-19 virus should be considered as an exceptional circumstance justifying the
exemption of a write-down on a trade receivable.
• Non-taxable telework compensation up to Ä144,41 per month to cover costs likeelectricity and small office supplies, for the period from 1 April 2021 until 30 June 2021.
The Belgian federal government introduced two optional powerful tax measures in response to
the Covid-19 crisis;• carry back of tax losses of companies: deduct the loss of FY2020 from the taxable profit of
FY2019; and• reconstruction reserve in order to improve the solvency of companies in the longer term.
Tax exemption of the compensations granted by the regions, communities, provinces ormunicipalities due to the Covid-19 crisis until 31 December 2021.
Tax exemption for overtime pay in the critical sectors (including the care sector) for the
first and second quarter of 2021. The number of exempted voluntary overtime hours is set
at 120 hours for the first and second quarter of 2021 together.
The decrease of the withholding tax up to 15% for the temporarily unemployed.
The non-inclusion of remuneration for student work in the care and education sectors in thecalculation of means of subsistence.
No deduction of withholding tax from the remunerations for student work in the care andeducation sectors for the second quarter.
The exemption for notarial powers of attorney.

Government measures in key jurisdictions

13

Belgium

New measures:• Remission of rent: a 30% tax reduction for landlords who remit the rent of tenants who
were forced to close their businesses due to the measures. The measure is valid for therent for the months of March, April and May 2021. A maximum of Ä5 000 per month perlease can qualify for the tax reduction, and a maximum of Ä45 000 per landlord. For
corporate tax purposes, the benefit is granted in the form of a non-refundable tax credit.
• VAT, customs and excise duties: as for the second quarter of 2021, the late-payment
interest and moratorium interest will drop drastically from 9.6% to 4% and 2%
respectively. The high VAT fine for late payment will also be reduced from 15% to 10%.
• Lowering of minimum thresholds for the refund of vat: as of 1 January 2021, starting
businesses can request a monthly refund of their VAT credit. The VAT refund can berequested as from Ä400 for periodic declarations and Ä50 for start-ups or end-of-year
declarations.
• Abolition of the December advance payment for vat and withholding tax.

•

Exceptional teleworking measures for cross-border workers due to Covid-19 virus:– the presence of cross-border workers Belgium – Luxembourg in their place ofresidence will not be taken into account for the calculation of the 24-day period until 31
March 2021;– the presence of French cross-border workers in their place of residence in France will
not be taken into account for the calculation of the 30-day period until 31 March 2021;– the presence of cross-border workers Belgium – the Netherlands in their placeof residence due to Corona measures will not be taken into account until 31 March 2021;
and– the presence of cross-border workers Belgium – Germany in their place of residence
due to Corona measures will not be taken into account util 31 March 2021.

•

For more information, please view here.

At the regional level: Flanders
•
•

•
•
•
•
•

Property withholding taxes sent to legal entities for the assessment year 2020 may
exceptionally be paid by 30 April 2021.
For the payment of property withholding taxes sent to sole proprietorships for theassessment year 2020 that relate to real estate used professionally by sole proprietors,
a payment plan can be requested, with 30 April 2021 as the final payment date.
Premium for companies that are obliged to close down completely.
Extension of periods to meet tax obligations for inheritance tax and registration tax.
Taxes on automatic relaxation devices are suspended.
Facilitating repayment plans.
For more information, please view here.

At the regional level: Brussels-Capital• Premium for companies that are obliged to close down completely.
• Property withholding taxes for the assessment year 2020 may exceptionally be paid by 30
April 2021.
• Exemption for hotel tax.
• Taxes on automatic relaxation devices are suspended.
• For more information, please view here.

14

Government measures in key jurisdictions

BelgiumAt the regional level: Wallonia• Premium for companies that are obliged to close down completely.
• With regard to disputes concerning regional taxes, reimbursements following positive
decisions are accelerated.
• Recovery procedures are made more flexible, including at the level of the judicial
officers.
• Repayment plans are facilitated.
• Prolongation of the time limit to benefit from the favorable succession tax regime, tosubmit the declaration of inheritance and to pay the succession rights, up to 4 months
if the expiry date is between 1 November 2020 and 31 January 2021.
• Exceptional reduction of the registration fee for mortgage mandates to 0%.
• Prolongation of the time limit to benefit from a favorable registration tax advantage,of the registration deadline and to pay the registration rights, up to 4 months if the
expiry date is between 2 November 2020 and 31 January 2021.
• For more information, please view here.

Company
law matters

The Belgian government published on 9 April 2020 a Royal Decree to allow
deviations from the conditions of convening shareholders’ meetings under the Codeof Companies and Associations, due to social distancing requirements.

Have anymeasures been put
in place toaccommodatesocial distancing(such as remote
general meetings)?

This Royal Decree is no longer applicable.

Government measures in key jurisdictions

15

Brazil

Contributor: MattosFilho

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Employment
What financial
support isthe government
providing tobusinesses andto individuals on
employment
issues?

Alessandro Amadeu da Fonseca| afonseca@mattosfilho.com.br | +55 11 3147 7826
Rodrigo Ferreira Figueiredo | rodrigof@mattosfilho.com.br | +44 207280 0161

Since the beginning of the outbreak, the government has been taking some importantmeasures to mitigate the effects of the current scenario. The federal government, throughBrazilian government-owned banks, has been providing funds to support mostly small andmedium-sized companies with respect to employees’ payroll and working capital during theperiod of crisis. The federal government has also been encouraging the Brazilian
government owned/development banks (such as BNDES, BNB, CEF and Banco do Brasil) topostpone the payment of principal and interest of existing loans for periods of up to six
months. The financial conditions may vary from bank to bank.
Brazilian federal agencies have also issued temporary regulation suspending certain
obligations in order to foster loans and issuances in the financial and capital markets (e.g.,suspending the obligation of filing and registering certain corporate acts with the Boards ofTrade, lifting restrictions for companies to issue the same type of security within fourmonths from its last issuance). The federal government had also suspended the payment ofcertain taxes applicable to certain financial transactions that were contracted until
December 31st 2020.

Currently, there is no financial support from Federal Government to businesses andindividuals on employment issues. Las year, however, the government issued a Provisional
Measure No. 936, later turned into Law No. 14,020, which provided an allowance called“emergency benefit” to employees who (i) had their employment agreements suspended,
and/or (ii) reduced to part-time with a corresponding salary decrease, by means of collective
or individual agreements, according to certain requirements set forth therein. Although thefinancial aid is not currently in place, there are discussions to extend the state of calamity for
another six months and, possibly, such benefits as well.
Moreover, at the Federal level, there are pending bills in Congress extending the payment ofemergency aids, similar to the previously granted so-called “corona voucher”, tomicroentrepreneurs, autonomous, informal workers and the unemployed , which have beenin the centre of intensive budgeting debate.
At the local level, Brazilian States are envisioning their own emergency aid programs for local
workers. For example, the governor of São Paulo has recently announced a program
proposal that is going to be presented to local Legislators. The State Legislative of Rio deJaneiro is also processing its own initiative.

Law No. 4,458/2020 was issued on December 24, 2020 (“Law”), amending significant
provisions of the Brazilian Judicial Reorganization and Bankruptcy Law currently in force(Law 11,101/2005) “Brazilian Bankruptcy Law”, Brazilian Federal Law 10,522/2002 (which
Has thegovernment made provides for the Registry of Defaulted Credits – CADIN), and Law No. 8,929 of August 22,
1994 (which instituted the Rural Product Bond – CPR in Brazil).
any changes

Insolvency

to insolvency
legislation?

16

The Law is in effect since January 23, 2021, but some provisions, vetoed by the President,
shall remain ineffective and unenforceable until further analysis by the Brazilian Congress,
which should take place until March 4, 2021 – otherwise, it will be suspended. The
Congress will decide to either maintain or overrule the vetoes, and if overruled theseprovisions will also become part of the Brazilian Bankruptcy Law definitively. The vetoedsections are related to issues such as the protection of acquirers of assets from debtors injudicial reorganization, unenforceability of the judicial reorganization law to credits andguarantees arising from CPRs, tax effects arising from the sale of assets and/or
renegotiation of debts, as well as the suspension of labour enforcement proceedings.

Government measures in key jurisdictions

BrazilSome key points that are addressed in the Law in order to improve the reorganization
mechanisms are: (i) a more predictable framework for DIP Finance; (ii) more certainty as
to the requirements to ensure lack of successor liability in Distressed M&A; (iii)
possibility under certain circumstances of the sale of the whole company without
successor liability for acquirer; (iv) possibility of creditors, under certain terms andconditions to present an alternative judicial reorganization plan; (v) adoption of theprovisions of UNCITRAL Model Law on Cross-Border Insolvency; (vi) more clarity on
requirements for procedural and substantive consolidation; (vii) improvements in theout-of-court reorganization framework; (viii) encouraging parties to resolve disputes
related to the insolvency through mediation and preventive negotiation; (ix) protectionof early termination events and set-off provisions for derivatives in judicial
reorganization proceedings; (x) possibility of judicial reorganization of individual rural
producers provided that they have been exercising rural activity for at least 2 years;
and (xi) possibility of out-of-court reorganization.
Bankruptcy liquidation proceedings are applicable in case the company’s rehabilitation
is not possible. In this respect, the Law includes provisions to expedite the liquidationof assets, in order to allow for a faster reintegration of the bankrupt entrepreneur into
the market (the so-called fresh start).

law addresses the general rules regarding force majeure. According to theContractual Braziliansole paragraph of Article 393 of the Brazilian Civil Code, force majeure or act of God
Issues(provided that such Article treats both concepts equally) is considered to be “theWhat measures
have been taken
to reinforce
contracts?

necessary event, whose effects were impossible to avoid or impair”. The event must
be beyond the [affected] party’s control and diligence and must make it impossible tocomply with certain contractual obligation(s). Under such provision, if the party has
not expressly undertaken liability for force majeure and act of God events, no liability
should arise from such events.
To qualify as force majeure, an event must cumulatively satisfy the following
requirements: (i) be unforeseeable; (ii) be beyond the party’s control; and (iii) preventthe performance of contractual obligation(s). Accordingly, the Covid-19 pandemic
may be considered as a force majeure event, to the extent that the Covid-19
pandemic and its related consequences directly affect the party’s contractual
obligations. In addition, orders enacted by the Brazilian government (or other relevant
local authority) in response to the Covid-19 pandemic, which prohibits theagglomeration of individuals at the place of work, for example, may also qualify as
force majeure.
Except for contracts ruled by consumer or labour laws, the parties are free to allocate
liabilities. Therefore, the proper determination of the parties’ liabilities, in case of aforce majeure event, must always be made on a case by case analysis and should
consider contractual provisions as a key factor.
Should the contract be silent in expressly governing force majeure, or if there aregaps on the contract’s terms in that regard, the Brazilian Civil Code will be applicable
and will serve as guidance for the interpretation and application of the law by the
courts. Considering the Covid-19 pandemic, the parties must pay attention to thecontract’s provisions and whether the pandemic and/or its consequences (such as
lockdown measures; restrictions on travelling and transportation of goods) do in fact
impede the compliance with certain contractual undertaking(s).

Government measures in key jurisdictions

17

BrazilAmong other relevant issues, the parties must verify whether the contract provides for: (i)specific notification proceedings; (ii) the allocation of risk between the parties in case of aforce majeure event; (iii) extension of time for the affected party to overcome the delay
due to a force majeure event; (iv) specific remediation measures and mitigation of theother party’s losses that must be implemented; and (v) termination due to a prolonged
force majeure event and consequences.
In such cases, the affected party must comply with the specific notification proceedings
provided for under the contract, describing (i) the force majeure event; (ii) which
contractual obligations were directly affected; and (iii) the measures adopted to mitigate
and reduce the impacts of the force majeure under the contract. In addition, the affected
party remains bound to comply with all other contractual obligations which were notaffected by the force majeure event.
It is important to highlight that, due to the drastic economic and social consequences of
the Covid-19 pandemic, the Brazilian government authorities have been comprehensivewith projects that adopt mitigatory measures, such as robust action plans, in line with thedeterminations and recommendations of the competent health authorities, to prevent thedissemination of Covid-19 in the place of work, allowing for the continuity of theseprojects in compliance with some restrictions.
In addition, Article 422 of the Brazilian Civil Code establishes that the parties must
proceed in good faith when performing the contract. Therefore, in case the parties do notreach an agreement regarding the measures to restore the contract’s economic balance,
necessary due to Covid-19 pandemic effects.
Articles 317 and 480 of the Brazilian Civil Code provides that, in case supervenient andunforeseeable events arise and cause the obligations of one of the parties to become
excessively disproportional in view of the transaction, the courts may take actions, at therequest of a party, to restore the economic balance of the contract.
As per the requirements provided under such Articles, in order to interfere in thecontractual relationship, courts should assess (i) the (un)foreseeability of the supervenientcircumstances and (ii) the disproportion between the obligations of the parties.
Notwithstanding the above, according to the courts’ and jurists’ prevailing understanding
and the Brazilian law, especially in business relations, the extent of the court interferencein contractual relations should (i) be restricted and (ii) take into consideration theparticularities of the case when assessing the (un)foreseeability and the disproportion
between the obligation of the parties, as well as any other circumstances which require
their interference. This understanding has gained significant support with the enaction ofProvisional Measure No. 881/2019 (“Economic Freedom Act”) in May 2019, which was thenconverted into Federal Law No. 13,874/2019 (“Economic Freedom Law”) later in October ofthe same year.
Article 421 and Article 421-A of the Brazilian Civil Code, as amended by the Economic
Freedom Law provide that:(i) in private contractual relations, there should be minimum State interference, andcontractual revision by external agents should be an exception;(ii) the allocation of risk agreed between the Parties should be preserved;(iii) in business relationships, the parties are presumed to be equally equipped.
Hence, although Brazilian civil law does allow for court interference to restore the balanceof the contract, in business transactions, such interference should be minimum and theparties, which are considered to be sophisticated entities with equal bargaining power,should have their agreements enforced as provided for in the contract.

18

Government measures in key jurisdictions

Brazil

Given that the Covid-19 pandemic (and its effects on contractual relations) is an
extraordinary and recent event, it is important to assess its impacts on each contract, as
well as other circumstances of any particular case and of the contract, in order todetermine whether or not Covid-19 can lead to the rebalance of a contract.
In this sense, to further regulate the matter, Federal Law No. 14,010/2020 (“Emergency
and Transitional Regime for Legal Relations of Private Law”) was enacted, aiming at
providing a higher degree of legal certainty to the private relations and upholding certain
general principles of private law. Among other provisions, the Emergency and Transitional
Regime for Legal Relations of Private Law established that: (i) certain statutory terms wereprevented or suspended, as the case may be, until last October 30, 2020; (ii) legal
consequences arising from the Covid-19 pandemic in the execution of contracts should
not retroact to circumstances previous to the pandemic; and (iii) the increase in inflation,
the variation of the exchange rate, the devaluation or replacement of the monetary
standard, solely for the purposes of Articles 317, 478, 479 and 480 of the Brazilian Civil
Code, shall not be deemed as unpredictable events. The Emergency and Transitional
Regime for Legal Relations of Private Law considers, for its purposes, March 20, 2020 as
the initial term for the events derived from the Covid-19 pandemic. Please note that that
the Emergency and Transitional Regime for Legal Relations of Private Law did not enforce
new legal provisions but, instead, it clarified how general principles of law (which were
enforceable even prior to the Covid-19 pandemic) would still apply vis-à-vis such
extraordinary circumstances, thus assuring greater legal certitude private parties.

During the Covid-19 pandemic, several bills of law were presented before the National
Congress in an effort to counterbalance adverse effects of the pandemic to lease
Have any changes agreements. Some of them aimed to rule suspension of rent enforcement as well as
reduction of rental values. None has been effectively approved, except for the measure thatbeen made to
the laws around prohibits the eviction of lessees in causes filed from March 20th, 2020, amending items ofproperty, rent and the Article 59, § 1º of the Law No. 8,245 of 1991 (the Lease Law), until October 30th, 2020.
enforcement?
There is no official understanding from the Brazilian courts about the adverse effects of thepandemic to lease agreements. Courts are ruling the matters taking into consideration theparticularities of each specific contractual relationship.

Property

There is an effort of the Courts to protect both the lessor and the lessee, assuming that bothparties have suffered the impacts of the Covid-19 pandemic, as well as to prevent
opportunistic behaviors from the parties.
Upon the analysis of approximately 160 decisions of the Courts of São Paulo and Rio deJaneiro, it is possible to verify that, in cases which Courts decided to reduce the rental
values, the discount varied from 30 up to 70 percent for a certain period of time (usually forthe period of the lockdown). Most common decisions granted 50 percent discount in therental values

Government measures in key jurisdictions

19

Brazil

Litigation
Are the courts
operating?

Tax
Has any new
legislation been
introduced in lightof Covid-19?

Most Brazilian Courts are operating through remote work and virtual proceedings, including theSupreme Court and the Superior Court of Justice. The virtual operation of Brazilian Courts isworking really well: according to data provided by the Brazilian National Council of Justice,
Brazilian Courts are not only maintaining their activities during the pandemic, but are also
improving their productivity. This was possible because proceedings that were filed in the past
few years in most Brazilian Courts have digital case records, that can be accessed by court staff,
lawyers and parties through a website, in which lawyers can also file the petitions. The contact
with most judges and Clerk’s offices can be made by telephone, e-mail or videoconference
during the pandemic and many trials are being held online. Thus, the closure of courthouses overthe country due to the pandemic mainly affected (i) the proceedings that do not have digital caserecords, that have their deadlines suspended and (ii) some acts that cannot be performed
virtually (for example, appraisal of real estate, some trials, some attachment orders).

The pandemic outbreak triggered tax measures to attend the private sector in different
spheres. It is worth pointing out the following measures adopted by Brazilian Federal
Government mostly for the year 2020:(i) Throughout 2020 the government reduced to a zero rate several import taxes such asfederal value-added tax on industrialized products (IPI), taxes on gross revenues (PIS/COFINS)
and on gross revenues on importation (PIS/COFINS-Importation) mostly related to goods
aiming at combating the pandemic resulted from the Covid-19. Most of the temporary benefits
were valid only until the beginning of 2021, when the government re-established the previous
tax treatment. (ii) Zero rated the tax on financial transactions (IOF) on loans of any nature
contracted until December 31st, 2020. (iii) Rates of social security tax destined to associations(Sesi, Senai, Senac among others) were reduced. (iv) Deferral of payment for certain federal
taxes (e.g., employee’s severance fees (FGTS), PIS/COFINS, social security taxes, and taxes ontelecommunications services), payment deferral for pending tax instalments andpostponement of deadlines to submit certain tax returns by individuals & corporations. (v)Suspension of procedural deadlines at the Federal Revenue Service (RFB) and at federal
administrative tax court. Recently, it was ruled procedures enabling online/remote voting for
judgment of federal tax proceedings in specific situations. (vi) Simplification of some customs
clearance procedures and ancillary obligations (e.g. the validation of tax clearance certificatesfor ninety days). (vii) Suspension of acts by the General Attorney’s office. (viii) Approval of newrules encouraging renegotiation of federal tax debts.
Specific local measures were also introduced by some States and municipalities. However,there are glaring disparities between the measures from twenty-seven States and being evenless uniform among the more than 5,000 Brazilian cities. In this sense, it is worth pointing out
the following:(i) Some states granted exemption or reduction of State Value Added Tax (ICMS) on importand internal transactions with goods aiming at combating the pandemic resulted from theCovid-19 (e.g. Rio de Janeiro, Santa Catarina, Maranhão). (ii) Regarding donations transactions:(i) most of Brazilian States granted exemption of ICMS on the remittance of goods aiming at
combating the pandemic resulted from the Covid-19 to the public administration or to nonprofit assistance entities, and (ii) a few states granted exemption of tax levied on donations(ITCMD) to the public administration (e.g. Ceará and Espírito Santo) or to hospitals (e.g. Minas
Gerais). (iii) Deferral of payment for certain taxes in some states and municipalities (e.g. ITCMD
in Rio de Janeiro and Amazonas; municipal tax levied on services for specific activities in
Recife and Cuiabá). (iv) Payment deferral for pending tax instalments (e.g. Rio de Janeiro) andpostponement of deadlines to submit certain tax ancillary obligations (e.g. ITCMD in Goiás). (v)Suspension of certain tax executions registered as an overdue liability (dívida ativa), e.g. São
Paulo. (vi) Suspension of procedural deadlines at state and municipal administrative tax
courts. Recently, in some states and municipalities, it was ruled procedures enabling
online/remote judgment.

20

Government measures in key jurisdictions

BrazilCompany
law matters

Law No. 14.030, issued by the Federal Government on July 28th 2020 (Law No. 14.030),
converted into definitive regulations most of the measures that had previously been set
forth by Provisional Measure No. 931, issued on March 30th 2020 (“Provisional Measure No.
931”). The law confirmed some amendments to the Brazilian Civil Code and to the Brazilian
Corporations Law, among other laws.

Have anymeasures been put
One of the rules established by Law No.14.030 is that all corporate meetings may be heldin place todigitally.
It also determined that shareholders should be able to participate and vote via
accommodateanyelectronicalmeans that are appointed by the management, as long as it is secure andsocial distancing
enables the identification of the shareholder.
(such as remote
general meetings)? Such rules had previously been established by Provisional Measure No. 931 and by Law No.
14.010, issued by the Federal Government on June 10th 2020 to set forth transitional
regulations in case the provisional measure wasn’t converted to Law before the two-monthdeadline (Law No. 14.010). But law 14.030 came with news: the possibility of digitallyheld general meetings no longer has an expiration date, it is now a permanent alteration to
the previous regimen, as is the possibility that shareholders participate remotely.
With respect to publicly held corporations, since the issuance of the Brazilian Securities
and Exchange Commission (“CVM”) Instruction 561/15, which also introduced the distancevoting instrument, publicly held companies have already been able to hold "hybrid"meetings, in which there is a face-to-face meeting (similar to a traditional meeting), butwith the possibility for shareholders to participate and vote remotely, via electronicsystem.
As a result of the Covid-19 pandemic, CVM took a further initiative and issued theNormative Instruction No. 622/2020, which allows publicly held companies to hold general
meetings exclusively virtually.
Additionally, by relaxing the rule that obliges companies to hold meetings in theheadquarters building or, in case of force majeure, in another location in the same
Municipality as its headquarters, the CVM now allows, in exceptional situations, thatgeneral meetings partially held in digital mode have their “in person portion” held outside
the company's headquarters building, and may even occur in another Municipality.
For privately held corporations (“sociedades por ações”), and limited liability companies(“sociedades limitadas”), the National Department of Business Registration and Integration(“Departamento Nacional de Registro Empresarial e Integração”) had issued, in April 2020,
Normative Instruction No. 79, in order to regulate the digital general meetings with remoteparticipants. Later, Normative Instruction No.81, issued on July 1st 2020 by the samedepartment, revoked Normative Instruction No. 79, and established, detailed rules on theway digital or hybrid general meetings should be summoned and held, as well as how
participants can take part in the meeting and vote, either participating remotely or via a
voting form.
Specifically, regarding the general meetings that were scheduled to be in locu but could
not be held due to the Covid-19 pandemic, Normative Instruction No.81 established thatthey can be replaced by a digital meeting, as long as all shareholders are present or
expressly agree to the new format.
There are certain requirements the electronic system used to broadcast the meetingsmust comply with, such as insurance of transparency, confidentiality and security of themeetings, mechanisms to register the attendance of the shareholders, possibility ofshareholders to manifest themselves during the meetings; full recording of the meetingsand storage of recordings, possibility to access documents presented during themeetings, among others.

Government measures in key jurisdictions

21

BrazilTo reinforce the above mentioned requirements and give proper attention to thematter, IBGC (Brazilian Institute of Corporate Governance) issued a best practices
measures guideline, which could guide companies’ management whilst putting in placeremote meetings. The overall message is that technology should be used in such waythat the remote experience is as close as possible to an in locu meeting – taking allnecessary measures to ensure that all available mechanisms that may facilitate thedigital meeting are being duly employed.
Other measures have been put in place to accommodate social distancing and thecurrent scenario caused by Covid-19. Among others, Law 14.030 suspended the thirtyday period to file corporate documents with the competent Board of Trade, which will
resume once services are regularly re-established.
Furthermore, Covid-19 pandemic has accelerated the digitalization process regarding
the registry of corporate documents within boards of trade all over the country. The
Normative Instruction No. 81 established that the Boards of Trade may adopt digital
registration exclusively or in coexistence with traditional methods. Thus, several Boardsof Trade throughout Brazil have been, since mid-2020, taking the appropriate actions inorder to digitalize their systems, as it can be verified, for instance, at the Boards of Tradeof the States of Paraná, Rio de Janeiro and São Paulo. For instance, while in São Paulo it
is expected that the systems will be ready to be entirely digital in the 2nd trimester of2021, in Rio de Janeiro and Paraná, the Boards of Trade do no longer accept hard-copy
registration procedures - procedures regarding the incorporation, transformation andcancelation of companies, for instance, can only be held digitally.
Alongside with the development within the registry of corporate documents, as
abovementioned, procedures regarding the authenticity and veracity of digitalized
documents have been standardized. According to the Ministry of Economy Circular
Letter No. 2.563/2020, directed to the Boards of Trade, an electronically signed
document must guarantee proof of the authorship and integrity of the document – inother words, it must be possible to identify the document’s signatory, as well as that the
document has not undergone any subsequent change.
In addition, any assessment to be conducted by the Boards of Trade with respect to theauthenticity and integrity of the documents should be limited to verifying that the
document was validly signed and has not been altered.

22

Government measures in key jurisdictions

Government measures in key jurisdictions

17

British VirginIslands
Contributor: Mourant

Loans andfinancialsupportHas thegovernment put inplace any new bankfunding schemes?

Employment

Rachael McDonald | rachael.mcdonald@mourant.com | +1 284 8521722
Eleanor Morgan | eleanor.morgan@mourant.com | +1 284 8521712
Tony Pursall | tony.pursall@mourant.com | +44 (0)20 7796 7603•

All of the six major lending institutions in the BVI extended loan moratoriums to theircustomers experiencing hardship at the outset of the Covid-19 pandemic.
Banks offered deferred payments, special loan financing and other concessions.
Arrangements are currently made on a case by case basis.

•

The BVI Government implemented a phased economic stimulus response plan
which included the allocation of USD 62.9 million to provide assistance to the local
economy across various areas including grants to businesses generally, and tosupport the hospitality industry and BVI infrastructure.

•

What financial support
is the government•
providing tobusinesses and toindividuals on
employment issues?
••

The BVI Government has set up an unemployment fund through the Social Security
Board called the Covid-19 Unemployment Relief Fund in the sum of USD 10 million.
Local businesses experiencing challenges can qualify for a grant in order to keep
their staff employed.
On 3 February 2021, Cabinet approved the Unemployment/Underemployment
Benefit Programme Policy via the Covid-19 Phase II Economic Response Stimulus
Package in the amount of ten million dollars which will come from the $40 million
grant from the Social Security Board.
The employee lay off period was extended to 28 February 2021.
The BVI Government has granted stimulus cheques to over 1,039 businesses with
grants ranging from USD1,592 to USD7,955.

•

The legislation has not been changed as a result of the pandemic but theCharging Orders Act 2020, which was published in the Government Gazette on 26
March 2020, confers jurisdiction on the High Court to make orders imposing a charge
for securing the payment of money due under judgments or orders of the High Court.
As at 15 February 2021, the Act is not yet in force.

Contractual •IssuesWe are not aware of any intervention into the workings of contracts governed by BVI law
and the normal rules apply.

•

The majority of commercial contracts under BVI law will have force majeure clauses
providing for situations when a party may terminate the contract and/or be excused for
failure or delay in complying with the terms of the contract due to a specified event. The
contract will usually list force majeure events. The question of whether Covid-19 as apandemic is a force majeure event will depend on the drafting of the clause in each case.

•On 3 February 2021, Cabinet decided that a period of amnesty of interests
accrued on property tax be granted through 31 August 2021.

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

What measures
have been taken
to reinforce
contracts?

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

24

Government measures in key jurisdictions

British Virgin Islands

Litigation•

Yes, the Eastern Caribbean Supreme Court remains open and fully operational.
Measures and practice directions have been put in place to ensure the continuationof court proceedings while protecting the health and safety of the court employees
and other court users. These measures include provision for electronic service andfiling and remote hearings via video conferencing technology.

•

See legal update here.

Are the courts
operating?

Tax

•

No.

Has any new
legislation been
introduced in lightof Covid-19?

•

See below regarding economic substance.

Company
law matters•

The BVI Registry of Corporate Affairs is operating as usual with some minor changes toadapt to the Covid-19 pandemic.

•
Have any measures•been put in place
to accommodatesocial distancing(such as remote
general meetings)? •There is no requirement for BVI companies to hold annual general meetings.
There is also no requirement for board meetings to take place in the BVI or for board
members to be in the same physical location. Meetings by telephone or videoconference are acceptable, provided that all of the directors participating in themeeting can hear each other clearly.
The Covid-19 global pandemic has been declared an exceptional circumstance under
the Financial Services (Exceptional Circumstances) Act 2020, which provides aframework for stability of financial services operations conducted in and from the BVI
during exceptional circumstances. The Act allows regulated persons to relocate outsideand elsewhere within the BVI during or after any period of occurrence of an exceptional
circumstance and outlines how outstanding regulatory obligations and liabilities are tobe applied or modified.

•

In relation to economic substance requirements, the BVI International Tax
Authority (ITA) has confirmed that only those board meetings relating to a BVI
company’s “core income generating activities” are required to be physically held in the
BVI. Alternate directors based in the BVI may be appointed to attend physical board
meetings whilst regular travel is restricted. All directors do not have to attend
board meetings in the BVI; only as many as required to make the meeting quorate.
Virtual meetings may be preferred to assist with social distancing. If it is still notpossible to have a board meeting in the BVI or to meet some other economic substancerequirement due to restrictions resulting from the Covid-19 outbreak, BVI entities
should retain documentary evidence for the applicable periods of time
affected. Individual requests should be made to the ITA for any extension of time within
which to comply with notices, along with any supporting evidence.

•

Please see our update on Overcoming barriers to completion of corporatetransactions amidst Covid-19 challenges and our Caribbean Regulatory Update.

•

All the most recent Mourant updates relating to Covid-19 are available at Mourant
Covid-19 Updates.

Government measures in key jurisdictions

25

CanadaContributor: Cassels

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Frank Arnone | farnone@cassels.com | +1 416 860 6895
Shane Hardy | shardy@cassels.com | +1 416 869 5384
Michael Britton | mbritton@cassels.com | +1 416 869 5358

In Canada, the federal government introduced the Covid-19 Economic Response Plan
(CERP), which includes a comprehensive set of economic measures to help combat theeconomic effects of the Covid-19 pandemic.
The Business Development Bank of Canada and Export Development Canada iscommitted to provide more than $65 billion of support to ensure businesses have credit
through the Business Credit Availability Program (BCAP), largely targeting small andmedium-sized businesses. These entities are also working with private sector lenders tocoordinate solutions for individual businesses. The objective of the BCAP is to improveaccess to financing for credit-worthy Canadian businesses with viable business models
whose access to financing would otherwise be restricted.
To access the BCAP, businesses should first contact their financial institutions, which willcontact Business Development Bank of Canada and/or Export Development Canada,
where appropriate. The BCAP includes:•

Canada Emergency Business Account: Under this program, financial institutions are able
to provide loans of up to $64,000 (previously $40,000) to small businesses and nonprofits, which will be guaranteed by the federal government and interest free for the firstyear. Applicants who received the $40,000 loan may apply for the expansion which
provides eligible businesses with up to an additional $20,000 in financing. To qualify forthese loans, small businesses and non-profits need to have paid between $20,000 and$1.5 million in total payroll in 2019 and need to have been operating as of March 1, 2020.
Businesses will be forgiven for up to 25% of the loan, up to $10,000, if the balance of theloan is repaid on or before December 31, 2022. If the loan is not repaid by December 21,
2022, the remaining balance will be converted to a three-year term loan at 5% interest. The
funds from this loan can only be used to pay non-deferrable operating expenses, including
payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. This
program is now available at various financial institutions and credit unions.

•

Loan Guarantee to Small and Medium-Sized Enterprises (SMEs): Export Development
Canada is working with financial institutions to help them issue new operating credit andcash flow term loans up to $6.25 million to existing SME clients, with 80% guaranteed byExport Development Canada. Export Development Canada is also supporting certain
businesses by offering banks a guarantee on loans up to US$10 million, per business, toensure these businesses can access cash immediately.

•

Co-Lending Program for SMEs: The Business Development Bank of Canada is working
with financial institutions to co-lend term loans to SMEs to help meet their operational cash
flow requirements. The loans available under this program are as follows: (i) loans of up to$312,500 for businesses with under $1 million in revenue; (ii) loans of up to $3.125 million
for businesses with revenues between $1 million and $50 million; and (iii) loans of up to$6.25 million for businesses with revenues exceeding $50 million. The loans under thisprogram are interest-only for the first 12 months, with a 10-year repayment period.

Further discussion on the government funds available for businesses can be found here.

26

Government measures in key jurisdictions

CanadaEmployment

As part of the CERP, the federal government originally introduced the Canada Emergency
Wage Subsidy (CEWS) program on April 11, 2020, which provided a 75% wage subsidy toeligible employers for up to 12 weeks, beginning on March 15, 2020. The program was
subsequently extended by regulation until August 29, 2020.

What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

New legislation (Bill C-9) came into force on November 19, 2020 to not only extend, but toredesign CEWS, making it available to a broader group of employers and extending the
program until July 2021. More information on the original CEWS program can be found here.
An overview of the key changes to CEWS, including, most importantly, as it relates todeterminations of eligibility and the calculation of subsidy entitlements, can be found here.
On August 20, 2020, the federal government announced further actions to help support
workers through the next phase of the Covid-19 pandemic. Those actions include anextension of the Canada Emergency Response Benefit (CERB), temporary changes to theemployment insurance program, and three new income support programs. Further details
on these programs can be found here.
The federal government also amended the Canada Labour Code by creating a new jobprotected leave of absence of up to 16 weeks for employees in federally-regulated
workplaces who are unable or unavailable to work for reasons related to Covid-19. Several
Canadian provinces have similarly amended the applicable provincial employment
standards legislation to create job-protected leaves of absence for employees who areunable to work due to Covid-19.
For more information regarding the amendments to the Canada Labour Code andprovincial employment standards legislation, please visit the Cassels Comments locatedhere and here.
The Ontario government also published resources for employers on its website, including
sector-specific workplace safety guidelines and posters. At present, guidelines and posters
have been published for the construction, food processing, restaurant and food services,
agriculture, manufacturing, and long-term care sectors, suggesting that these will be thefirst “select workplaces” permitted to reopen.
Further information on the Ontario workplace safety guidelines can be found here.

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

While Canada’s main insolvency statutes, the Bankruptcy and Insolvency Act (BIA)
and Companies’ Creditors Arrangement Act (CCAA) have not been amended at thetime of writing, new legislation and amendments to existing legislation do impact theinsolvency process. In addition, guidance from other participants in the insolvency
regulatory process will affect insolvency practice and procedures. The following aresome examples:•

As part of the federal government’s CERB program, the income support benefit
provided will not be subject to the operation of any law relating tobankruptcy and insolvency.

•

Several provinces have enacted legislation to temporarily suspend limitation
periods, which apply to the insolvency process.

Government measures in key jurisdictions

27

Canada•Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

The Office of the Superintendent of Bankruptcy Canada, which regulates Licensed
Insolvency Trustees (LITs) and is the regulator under the BIA and CCAA, hasrecommended that LITs work with debtors and third parties to ensure that they
are handling insolvencies in a flexible manner that is
the least prejudicial to individuals in financial distress. Under
the BIA, the courts have broad authority to allow bankruptcy cases tomove forward in irregular circumstances if the courts believe it is appropriate.

Each Canadian province has its own legislation outlining the requirements fordoing business electronically and using eSignatures. In Ontario, British Columbia andAlberta, barring a few important exceptions, eSignatures may be utilized for closing
transactions to create binding obligations.
Documents requiring a traditional “wet ink” signature include:•
wills, codicils and trusts created by wills or codicils,•

powers of attorney regarding an individual’s financial affairs or personal care,•negotiable instruments (such as certificated securities and negotiable promissory
notes),•

beneficiary designations (such as for life insurance),•certain real estate matters, and•documents that are from time to time prescribed or that belong to a prescribed class.

With regard to real estate matters, parties may use eSignatures to sign documents thatcreate or transfer an interest in land. However, it is important to note that certain
restrictions may apply depending on the applicable province.
For a more detailed explanation, see the Cassels Comment located here.
Other contractual matters, including material adverse effect and material adverse change
provisions and Force Majeure clauses, have been impacted by the effects of Covid-19.
For more information, see additional Cassels Comments located here and here.

28

Government measures in key jurisdictions

CanadaApplications for the federal government program, Canada Emergency Commercial Rent
Assistance (CECRA) have closed. This program is structured as a forgivable loan for
Have any changes qualifying commercial landlords and is intended to create a mechanism whereby 50% ofcommercial rent that would otherwise be owed by eligible tenants will be paid throughbeen made to
the laws around CECRA.
property, rent and
The financial assistance provided by CECRA for small businesses is forgivable as ofenforcement?
December 31, 2020, if participation has been and remains in compliance with all program
requirements.

Property

As November 2, 2020, the CECRA program has been replaced by a new program, Canada
Emergency Rent Subsidy (CERS). This program aims to implement targeted support to help
businesses that have experienced reduced revenues and increased costs due to thepandemic. The CERS program will provide support to eligible organizations by subsidizing
up to a maximum of 65% of eligible expenses. For more information on the CERS program,see additional Cassels Comment here.
Provinces and municipalities across Canada have implemented various measures providing
relief for both landlords and tenants in residential and commercial leasing matters,
including:•municipal property tax relief measures;•suspension of eviction orders and hearings related to eviction applications for nonurgent issues;•
temporary rental supplements;•
rent freezes;•
deferral of late fees on late rental payments; and•commercial rent deferral programs.
In British Columbia (BC), the provincial government has introduced its $5 billion Covid-19
Action Plan, which includes a real estate tax reduction for businesses. It is anticipated that
this reduction will provide $500 million in immediate relief for businesses that own theirproperty and will allow commercial landlords to pass these savings onto their tenants in
triple-net leases.
Further details on the relief measures implemented in BC can be found here.
In Ontario, the provincial government has introduced the Coronavirus (Covid-19) Support
and Protection Act, which includes amendments to the Planning Act authorizing the Ministerto make regulations respecting the calculation of time for development applications inconnection with the emergency declared under the Emergency Management and Civil
Protection Act (EMCPA).
On 12 December, 2020, an omnibus budget bill, Bill 229, Protect, Support and Recover from
Covid-19 Act (Budget Measures), 2020, was passed by the government of Ontario. Schedule
5 of the Act will provide protection for commercial tenants under Part IV of the Commercial
Tenancies Act by establishing a Non-Enforcement Period in respect of certain commercial
tenancies. Further details on protections for commercial tenancies can be found here.
Regulations have been released to provide municipalities with additional flexibility during theCovid-19 emergency to process and advance development applications, particularly where
there is no dispute, without concern that appeals may be filed on the basis of non-decision.
This should also come as welcome news to applicants and new homebuyers, who have
faced technical challenges to project delivery and new home closings during thisemergency. More information on the provincial legislation in Ontario can be found here.

Government measures in key jurisdictions

29

CanadaLitigation
Are the courts
operating?

Most courts across Canada have adopted an essential services model and have limited themanner and types of hearings that can proceed before them, focusing on urgent and essential
matters. Many categories of cases have been adjourned indefinitely.
However, as the pandemic has continued, there has been a gradual re-opening of courts andincrease of the categories of cases, in particular, non-urgent matters, that can proceed. Courts
have implemented email filing measures (with some courts requiring original paper filing tofollow) and holding hearings by video or teleconference. But when the courts re-open, they arelikely to prioritize criminal cases, because of the constitutional obligation to resolve
criminal cases within a reasonable period of time. Access to the court will have to beassessed on a court-by-court basis. Accordingly, you should consult with your legal counsel
to assess your options.
Many commercial disputes are well-suited to being resolved through arbitration. Arbitration’s
traditional advantages of greater speed, lower costs, and greater flexibility as compared tolitigation give it an even greater edge when courts are closed.
In Ontario, no new jury selections will take place during the lockdown, as all jury trials are
suspended until May 3, 2021. More information can be found here.
As a result of the pandemic, various governments in Canada issued orders suspending
limitation periods, which are generally the deadlines by which a person must commence a
proceeding in respect of a claim or forever lose their right to do so, and procedural periods inwhich a litigant must take a step in a proceeding or intended proceeding.
The Ontario government announced that all limitation and procedural time periods that werepreviously suspended have resumed running as of September 14, 2020. For more information
on limitation and procedural timelines in Ontario, see here. Further details on the status oflimitation and procedural periods in other provinces can be found here and here.

Tax
Has any new
legislation been
introduced in lightof Covid-19?

The Canadian Revenue Agency implemented a number of administrative concessions,
including:•extension of filing deadlines,•
tax audit deferral,•sales tax and customs duty payment deferrals,•
income tax deferrals, and•objections and appeals extension.
A summary of the key income tax measures can be found here and further details regarding
GST/HST relief and provincial income tax measures are discussed here.

Company
law matters•

Have any measures•been put in place
to accommodatesocial distancing(such as remote
general meetings)?

30

Certain Canadian provinces, including Ontario, have temporarily extended the timeframe in which public companies are required to hold annual meetings ofshareholders and provided an exemption for corporations to hold virtual meetings
despite any restrictions in the articles or by-laws.
More information related to the extension and the relief for companies to holdvirtual meetings can be found here and commentary on virtual annual general
meetings can be found here.

Government measures in key jurisdictions

Cayman Islands

Hayden Isbister | hayden.isbister@mourant.com | +1 345 814 9125
Hector Robinson | hector.robinson@mourant.com | +1 345 814 9114
Ramesh Maharaj | ramesh.maharaj@mourant.com | +1 345 814 9170
Tony Pursall | tony.pursall@mourant.com | +44 (0)20 7796 7603

Contributor: Mourant

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Employment•

A Cayman Islands Government Guaranteed Loan Scheme was announced in
December 2020. Five local Class-A licensed banks will participate in offering loans of
up to KYD750,000 and KYD3,000,000 to 60% Caymanian-owned medium and large
businesses respectively to meet their operating and capital expenditure. The
maximum interest rate on the Loans will be the prevailing Cl Dollar or US Dollar Prime
Rate plus, a margin of up to 1.50%. Stamp Duty that may be applicable to any charges
placed over assets to provide security for the loans will be waived. There is a one year
moratorium period on interest payments for the first year of any loan. The maximum
repayment period is seven years.

•

The Cayman Islands Development Bank, offers a Low Interest Loans Programme with afully-backed government guarantee to 100% Caymanian-owned micro and small
businesses with loans up to a maximum of KYD50,000 for a small business and
KYD20,000 for a micro business. Over KYD1,000,000 has been invested to assist
businesses under this programme.

•

Whatfinancial support isthe government
providing to•individuals on
employment issues?

The Ministry of Commerce, Planning and Infrastructure has implemented a numberof relief measures to support micro and small businesses, including a Micro andSmall Business Grant Programme, a Low Interest Loan Programme (as detailed
above), a Technical Assistance Programme and a government funded Training
Programme.
In February 2021, the Cayman Islands Government approved a one-time payment of
KYD3,000 under their Micro and Small Business Grant Programme as a stipend tobusiness owners who were unsuccessful in receiving funds under previous phasesof the programme. Under Phase I of the programme 1,432 businesses benefitted
from KYD4,300,000 and under Phase II 370 businesses benefitted from
KYD4,500,000.

•

The Technical Assistance Programme offers qualified accountants and otherprofessionals to provide technical guidance and coaching to micro and small
businesses to help them navigate this difficult period and keep their financial
obligations to financial institutions.

•

The Government has enacted regulations to extend the period of temporary layoff
before which severance pay is payable. This extension enables employers tocontinue to employ staff rather than terminate their employment and ensures that
employees retain more of their earnings while accruing other employee benefits
under the Cayman Labour Law.

•

The Cayman Islands Needs Assessment Unit is providing financial assistance toindividuals in need on a case by case basis.

•

From 24 March 2021, a business incubator will house start-ups and business owners
who do not currently have a work space from which to operate. The businessincubator is a residential space, including laptops and office equipment and accessto legal and accountancy services, which will be free of charge for 2 years.

Government measures in key jurisdictions

31

Cayman Islands

Insolvency•

Has thegovernment madeany changes•
to insolvency
legislation?

Contractual
IssuesWe are not aware of any intervention into the workings of contracts governed
by Cayman Islands law and the normal rules apply.

•

The majority of commercial contracts under Cayman law will have force
majeure clauses providing for situations when a party may terminate the contract
and/or be excused for failure or delay in complying with the terms of the contract
due to a specified event. The contract will usually list force majeure events. The
question of whether Covid-19 as a pandemic is a force majeure event will dependon the drafting of the clause in each case.

•No laws have been amended.

Have any changes •been made to
the laws aroundproperty, rent andenforcement?

Litigation

The Cayman Islands Government is urging landlords to be flexible with tenants.
As detailed above, most Cayman banks have also offered mortgage relief as aresult of the pandemic.

•

Yes, the Cayman Courts and Judicial Administration remain fully operational. Measuresand practice directions have been put in place to ensure the continued administrationof justice while protecting the health and safety of the court employees and othercourt users, including provision for electronic filing and remote hearings via videoconferencing technology.

•

See our legal update Litigating in the Cayman Islands during these unprecedentedtimes.

Are the courts
operating?

32

The introduction of a dedicated restructuring regime in the Cayman Islands has beenin the pipeline for some time and is not a direct result of the Covid-19pandemic.

•

What measures
have been taken
to reinforce
contracts?

Property

Not yet. However, a draft bill to amend the Companies Law with theintroduction of a dedicated restructuring regime and restructuring officer, iscurrently in circulation for industry consultation. This has not yet been passed by
the Cayman Islands Parliament.

Government measures in key jurisdictions

Cayman Islands

Tax•

No. The Cayman Islands does not have any direct taxation.

Has any new
legislation been
introduced in lightof Covid-19?

•

See below regarding economic substance.

Company
law matters•

The Cayman Islands Registrar of Companies is operating as usual with someminor changes to adapt to the Covid-19 pandemic such as accepting affidavits orother documents that have been notarised/certified online or utilising audio-video
technology during this time.

Have any measuresbeen put in place•
to accommodate•social distancing(such as remote
general meetings)?

Cayman Islands exempted companies are not obliged to hold annual general meetings.
Where board meetings are required to be held virtually during this period, theCayman Islands Department for International Tax Cooperation will take that
into consideration, on a case-by-case basis, when determining whether an entity
has passed or failed the economic substance test in its reporting which is due in
2021.

•

Please see our update on Overcoming barriers to completion of corporatetransactions amidst Covid-19 challenges and our Caribbean Regulatory Update.

•

All the most recent Mourant updates relating to Covid-19 are available at Mourant
Covid-19 Updates.

Government measures in key jurisdictions

33

ChinaContributor: JunHe LLP

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Che Hu | cheh@junhe.com | +86 10 8553 7662
Janet Hui | xurr@junhe.com | +86 10 8519 1280•

In February 2020, a government policy is announced to strengthen financial
support to enterprises. The central government will subsidize the interest
payment of key enterprises engaged in epidemic containment.

•

Financial institutions are asked to refrain from arbitrary withdrawing, cutting or delaying
loans that are issued to severely affected industries, (e.g., wholesale and retail) andenterprises that are otherwise performing well but are under temporary difficulties dueto the epidemic, and small and micro enterprises in particular.

•

For enterprises that cannot repay loans on time due to severe impact by the epidemic,loans can be extended or renewed. Meanwhile, measures are taken to lower lending
rates and increase unsecured loans and medium and long-term loans to help
enterprises handle the impact of the epidemic.

•

In 2021, some local governments have put in place financial support for certain
industries and enterprises. For instance, Jilin Province announced measures toincrease loans for enterprises in the tourism industry and support the loan extension
for certain micro and small-sized enterprises.

Standing Committee of the State Council on February 18, 2020 adopted national
Employment The
policies to reduce the financial impact of the epidemic on employers as well as to help
What financial
support isthe government
providing toindividuals on
employment
issues?

stabilize employment. Among the policies are the reduction of employer social insurance
contributions and the delay of housing fund contributions. The policies have gradually been
implemented by national and local notices and policies.
On February 20, 2020, the Ministry of Human Resources and Social Security, together with
the Ministry of Finance and the State Taxation Administration announced the following.
•

From February 2020, provinces may exempt small and medium-sized enterprises for up
to five months from paying the employer portion of contributions forpension, unemployment, and occupational injury insurance.

•

Provinces may reduce by 50% the employer contributions for pension, unemployment, andoccupational injury insurance for large enterprises for up to three months.

•

Hubei province may exempt all employers from paying the employer contributions forpension, unemployment, and occupational injury insurance for up to five months.

•

All employers that suffer serious difficulties in production and operation due to theoutbreak may apply for deferred payment of contributions for all five types of social
insurance for up to six months. Approved employers would not be liable for late payment
fees.

Further employment policies issued relating Covid-19 epidemic.
On June 22, 2020, the Ministry of Human Resources and Social Security, together with the
Ministry of Finance and the State Taxation Administration extended the policy announced on
February 20, 2020:

34•

Provinces may exempt small and medium-sized enterprises from paying the employer
portion of contributions for pension, unemployment, and occupational injury insurance
until the end of December 2020.

•

Provinces may reduce by 50% the employer contributions for pension, unemployment,
and occupational injury insurance for large enterprises till the end of June 2020.
Government measures in key jurisdictions

ChinaAll employers that suffer serious difficulties in production and operation due to the outbreak
may apply for deferred payment of contributions for all five types of social insurance until
the end of December 2020. Approved employers would not be liable for late payment fees.
On July 15, 2020, the Ministry of Human Resources and Social Security, together with the
Ministry of Education and the State Council Leading Group Office of Poverty Alleviation andDevelopment announced measures to help students from poor families who graduate fromcolleges this year secure employment. These measures include providing skill training andcareer development advice.

•During the Covid-19 outbreak, courts have allowed enterprises in bankruptcy
proceedings to take measures such as resumption of production and operation or
disposal of assets related to epidemic prevention and control, which has contributed
to fighting the epidemic as well as increasing the creditors' debt repayment ratio.

•

For additional information on measures taken related to enterprises in bankruptcy
proceedings during the Covid-19 epidemic in Chinese, please click here.

•

On April 15 2020, the Supreme People’s Court issued the opinions on promoting
lawful and efficient adjudication of bankruptcy cases, which provides various
measures to improve the efficiency and reduce the cost of bankruptcy proceedings.

•

On May 15 2020, the Supreme People’s Court issued the second guiding opinions inadjudicating civil cases involving the Covid-19 epidemic. The Supreme People’s Court
asks the courts at different levels to facilitate consultation between the debtor andcreditor if a creditor petitions for bankruptcy of an enterprise that fails to meet its debt
repayment obligation due to the Covid-19 epidemic. The courts are asked to avoid
initiating bankruptcy proceedings for enterprises that fail to meet debt repayment
obligation solely because of the impact of Covid-19 epidemic by evaluating the cash flow
and asset liability ratio of these enterprises during this special period of time only.

Contractual
Issues•Performance of contractual obligations could be delayed due to the Covid-19
Epidemic. Here is an analysis about if a developer can claim exemption from liability forthe breach of contract arising from a delay in delivering houses on schedule.

What measures
have been taken
to reinforce
contracts?

•

In practice, many developers see epidemics, major public health events, universal
epidemic diseases, governmental policies and decrees relating to construction as
force majeure events, or at least situations where developers are specifically entitled topostpone the time of delivery as agreed upon in their sales contracts. Thus, based on theprinciple of autonomy of will, sellers and purchasers can enjoy and undertake the rights andobligations to postpone the time of delivery as agreed upon in their contracts if it is valid.

•

If there is no valid agreement, developers can apply for a force majeure or use theprinciple of change of circumstances. However, the legal consequences and outcome ofsuch a declaration will be determined on a case-by-case basis.

•

Special Series regarding the Legal Impact of the Covid-19 Epidemic on the Real
Estate Industry. Topic One: the impact of the Covid-19 epidemic on the sale ofcommodity housing.

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

Government measures in key jurisdictions

35

ChinaProperty
Have anychanges been
made to thelaws aroundproperty,
rent andenforcement?

•

On May 15 2020, the Supreme People’s Court issued the second guiding opinions inadjudicating civil cases involving the Covid-19 epidemic. The Supreme People’s Court
states that the courts should not grant the petition of either party to terminate a sales
contract if the Covid-19 epidemic is making performance more costly or performance
will be later than the time specified in the contract as long as the purpose of thecontract is not frustrated. On the other hand, the courts may allow adjustment of priceor time of performance based on the actual circumstances of each case and theprinciple of equity.

•

On July 13 2020, the Supreme People's Court, the Ministry of Justice and the Ministry of
Culture and Tourism released the Circular about Lawfully and Properly Handling
Epidemic-related Travel Contract Disputes, which encourages modification of thecontracts such as change of travel dates or replacement of travel package and provides
that extra cost for safety measures should be borne by both service providers andtourists and increased lodging and food cost will be borne by stranded tourists.

Some local governments have introduced support and guidance policies for enterprises
affected by the Covid-19 Epidemic, which also include the adjustment of lease agreement
relationships. For instance, the Municipal Government of Beijing issued Several Measureson Dealing with the Impact of Covid-19 Epidemic and Promote the Sustainable and Healthy
Development of Medium, Small and Micro Enterprise on February 5, 2020.
According to those measures, for medium, small and micro enterprises which rent
properties from city-owned or district-owned enterprises:•

the rent in February 2020 shall be exempt if such enterprises (i) rent properties forthe purpose of manufacturing or operations; (ii) keep operating or stop operating inaccordance with the policies for the prevention and control of the Epidemic; and (iii)
do not lay off employees or only lay off few employees,•

the rent in February 2020 shall be reduced to 50% of the original amount if suchenterprises rent properties for office work,•

it is encouraged that landlords (property owners) reduce or exempt the rent of otherleased properties, which is subject to the negotiation of the contract parties, and•for landlords that reduce or exempt rent for medium, small and micro enterprises, themunicipal or district government would provide subsidies.

Although the policies above are only applicable to qualified “small, medium and microenterprises”, it may also act as a guide for other leasing parties.
Special Series regarding the Legal Impact of the Covid-19 Epidemic on the Real
Estate Industry. Topic Three: the impact of the Covid-19 epidemic on property leaseagreements.
On May 9 2020, the National Development and Reform Commission and seven othercentral government agencies jointly issued a policy to further support micro and smallsized enterprises and businesses owned by individuals in the service industry to ease theburden of rental payment for coping with the Covid-19 epidemic, including measures
such as:36

Government measures in key jurisdictions

ChinaLitigation•

exemption of rental payment for three months in the first half of the year for thosemicro and small-sized enterprises and businesses owned by individuals in distress inthe service industry if the property are owned by the state,•property owners other than the state are encouraged to exempt or delay
the collection of rent, and•local governments should establish and improve the mediation and resolution mechanism
for rental dispute and help the parties to resolve disputes through consultation.

•

A number of courts and arbitration institutions issued notice to encourage online
filing and submission of materials. For example, court in Shanghai encouraged
parties to initiate mediation and handle litigation related matters through online andmobile platforms. On January 28, 2020, the China International Economic and Trade
Arbitration Commission issued a notice encouraging parties to submit arbitration
applications and related documents through the online filing system.

•

For additional information on the development of diversified dispute resolution
mechanism to deal with emergencies in Chinese, please click here.

Are the courts
operating?

Tax•

The Ministry of Finance, the State Taxation Administration and the General
Administration of Customs have jointly issued several circulars to support the
epidemic’s prevention and control, prompt the relevant enterprises’ development andlighten the tax burden of the taxpayer affected by this epidemic. According to thecontents specified in the relevant circulars, the tax policies can be categorized into
the following five categories: 1. Corporate Income Tax (“CIT”); 2. Individual Income Tax(“IIT”); 3. Valued-Added Tax (“VAT’), Consumption Tax (“CT”) and other taxes; 4.
Imported Materials; and 5. Tax Administration and Collection. Below are selected
policies.

•(CIT) Enterprises significantly affected by the epidemic: for the tax loss incurred in
2020, the maximum carry forward period is increased from five to eight years.

•(IIT) Medical staff and anti-epidemic workers participating in epidemic prevention
and control: the temporary subsidies and bonuses obtained according to thestandards specified by governments are exempt from IIT.

•

(VAT) Revenue derived from providing public transportation services, consumer
services and collection and delivery services for residents’ daily necessities is
exempted from VAT.

•

(Tax Administration and Collection) Taxpayers and withholding agents subject tomonthly tax filing (Nationwide): the statutory time limit for tax filing in February2020 will be extended to February 24, 2020. Taxpayers and withholding agentsaffected by the epidemic who still face difficulties in filing tax returns after the said
time limit extension in February 2020, may apply for a further extension inaccordance with the law.

•

Summary of the RPC Tax Regulations issues in response to the Covid-19 Outbreak.

Has any new
legislation been
introduced in lightof Covid-19?

Government measures in key jurisdictions

37

ChinaCompany
law matters•

On May 29, 2020, the State Taxation Administration announced a policy that willallow small enterprises (as defined in the State Administration of Taxation
Announcement [2019] No. 2) and businesses owned by individuals to delay payment
of income tax for the time period from May 1, 2020 to December 31, 2020 until 2021.

•

On July 2, 2020, the State Taxation Administration announced Guidelines ofPreferential Tax Policies to Support Epidemic Control and Development of the
Economy and Society (3.0), which consolidates and updates all the relevant
preferential tax policies.

•

In 2021, some local governments have extended certain preferential tax policies. For
instance, enterprises in industries such as entertainment, transportation, and tourism
as well as certain micro and small-sized enterprises in Zhejiang Province do not haveto pay property tax and urban land use tax for property and land in use by theseenterprises in the first quarter of 2021 and pay 50% property tax and urban land use
tax in the second quarter of 2021.

•

Since the outbreak of Covid-19, China’s provinces, autonomous regions andprovince-level municipalities have successively launched public health emergency
plans in their respective administrative regions and taken actions to contain Covid19. Local governments in regions such as Zhejiang, Gansu, Anhui and Shanghai
have set out requirements that enterprises should prepare emergency plans for theprevention and control of Covid-19 in the form of notices on the prevention andcontrol of Covid-19 and the resumption of work. Some notices have emphasizedthat the responsible person in the enterprise should lead the preparation work
personally.

•

There are various factors to consider in drafting an emergency plan, namely, (i)regulatory requirements may differ depending on different regions (for instance,
we have noticed that some local governments have publicized templates of theemergency plans specifically for enterprises’ use, while other local governments
have not), (ii) regulatory requirements may vary among different industries, and (iii)business features and characteristics may differ among enterprises.

•

For enterprises that are resuming operations: how to prepare an emergency planfor the prevention and control of Novel Coronavirus Pneumonia.

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

38

Government measures in key jurisdictions

Government measures in key jurisdictions55

Czech Republic
Contributor: JSK

Loans andfinancialsupport•Yes, three waves of emergency loans have been handed to SMEs (small and medium
enterprises). The first by way of outright government’s bank loans, the second and thirdby way of guarantees for loans issued by the commercial banks.

•

The Czech Export Guarantee and Insurance Agency (EGAP) to guarantee for bankloans provided to businesses which employ more than 250 people including
companies operating in transport and tourism sector.

Has thegovernment put inplace any newbank funding
schemes?

Employment •What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

••••Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

40

HecWdAhWcWţarroman.kramarik@jsk.cz | +420 226 227 611
Tomá Dole il | tomas.dolezil@jsk.cz | +420 226 227 611

Kurzarbeit / furlough: employers may apply for compensation of payroll costs at a) 100%
(capped at approx. 1 900 EUR) if their business was mandated to close; b) 80% (capped
at approx. 1 500 EUR) if their employees are quarantined; c) 60%, (capped at approx. 1000 EUR) if they suffer indirectly (e.g. reduced orders). Aid to be provided until the endof April 2021.
From March 2021 the compensation will be provided only for the payroll costs of
employees that have been employed by the employer for at least 3 months.
Payments of social security premium and state employment policy contributions forJune, July and August 2020 waived for some employers with up to 50 employees.
The affected self-employed persons are entitled to financial support in the approximate
amount of 40 EUR per one day.
Closed businesses have also been provided with various kinds of financial support tocover their other costs.

•

The debtor’s duty to file for insolvency (and associated directors’ liability for notdoing so) is suspended. The suspension applies during the Covid-19 response
measures and 6 months after they are terminated, but in no event beyond the endof June 2021. The claw-back periods are not running during the suspension, so alonger period will be effectively available for clawing-back assets in future
insolvencies.

•

Creditors’ right to file for insolvency was suspended until the end of August 2020.

•

Extraordinary moratorium can be requested by debtors, until the end of June 2021.

•

NIL.

•

Borrowers could request deferral of their debts, which were falling due (butinterest continued to accrue) and lenders had to grant such deferral.

•

Exorbitant consumer interests were capped.

Government measures in key jurisdictions

Czech Republic

Property•

Tenants (both, commercial and residential) have been temporarily protected fromeviction for non-payment.
Payment of rent by the affected businesses and individuals could have been
temporarily deferred.
State to pay up to 50% of rent for closed business premises (as well as for someother affected business premises) for October, November and December 2020.
The landlord’s discount in no longer required.

Have any changes •been made to
the laws around•property, rent andenforcement?

Litigation•

Missing of certain procedural deadlines could now be waived, if caused by Covid-19.

Are the courts
operating?

Tax
Has any new
legislation been
introduced in lightof Covid-19?

Company
law matters•

In 2020, deadlines for most tax fillings have been deferred, a tax loss could havebeen extraordinarily applied against income from previous years (and the resulting
tax overpayments claimed) and some social and health security payments havebeen waived and others deferred.

•

In 2021, deadlines for some tax fillings have been deferred so far.

•No new tax imposed and the government even indicated that it would not consider
any new taxes or increase of the existing taxes.

•

Tax on the acquisition of real estate has been abolished.

•

General meetings and other board meetings can be held remotely by all companies
until the end of June 2021.

•
Have any measuresbeen put in place•
to accommodatesocial distancing(such as remote
general meetings)?

Deadlines for approvals of accounts were extended based on individual
circumstances up until 31 December 2020.
According to prevailing opinion and contrary to the rules applicable until
the end of last year, directors’ terms of office are no longer automaticallyprolonged.

Government measures in key jurisdictions

41

Denmark

Camilla Collet | ccc@gorrissenfederspiel.com | +45 33 41 42 09

Contributor: Gorrissen Federspiel

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

The Danish government has introduced the following schemes:
i. a temporary compensation scheme to cover fixed costs of companies, which areparticularly affected by the Covid-19 crisis, financed by the Danish state. Previously,
all Danish companies with a decline in turnover (Danish turnover) of more than 35%
and of minimum 12.500 DKK in the period 9 March 2020 until 8 July 2020 due to
Covid-19 could apply for compensation for fixed costs. The compensation scheme
was extended until 31 October 2020 for companies subject to restrictions, if
the company had fixed costs of at least 8,000 DKK during the compensation period.
The compensation scheme has been further extended to 28 February 2021 and now
applies to companies with a decline in turnover of more than 30% (for somecompanies 35%), if the company has fixed costs of at least 4,000 DKK;
ii. a temporary compensation scheme aimed at self-employed and freelancers withmaximum 25 employees. In order to apply for compensation under this scheme, anumber of conditions must be met. The compensation will amount to 90% of the
expected revenue loss (which must be at least 30%) in the period compared to theaverage revenue in the last financial year, however, for self-employed andfreelancers who are forced to close down, the compensation will amount to 100%. In
any event, the compensation may not exceed DKK 23,000 per person per month foreach owner with an ownership of 25% or more of the business. This compensation
scheme was originally available to all self-employed and freelancers from 9 March
2020 until 8 July 2020 and was first extended to 31 October 2020 for self-employed
and freelancers, subject to certain restrictions, and is now extended to 28 February2021; andiii. a guarantee scheme to facilitate financing to small, medium-sized and large
companies affected by Covid-19, Under this scheme, the Danish Growth Fund (InDanish: Vækstfonden) provides a guarantee of 80-90% for new bank loans
to companies which have suffered or expect to suffer a turnover loss of at least 30%
as a result of Covid-19. The scheme was first available until 31 December 2020, but
has now been extended until 30 April 2021 (the application deadline is on 24 April
2021).
Companies utilising the scheme in item (iii) will be covered by certain restrictions in
respect of declaring dividends or initiating share buybacks for the financial years 2020
and 2021. We note that in addition to the above, the Danish government has adopted
certain schemes aimed at specific businesses, which are not covered here. Similarly,
special schemes aimed at seasonal companies and organizers of events with more than
350 participants have been adopted.
The Danish government has on 20 May 2020 adopted guidelines for a quick and safe
payment of the compensation schemes listed in items (i) and (ii). To ensure a quick
payment of the compensation, the guidelines introduce a fast track-solution for
payment, immediate handling of applications and a solution for applying a digital
auditor's statement for endorsement on applications. To ensure a safe payment of thecompensation, the guidelines introduce a whistleblower-scheme and increased use of
external experts.
Furthermore, the Danish Export Credit Agency has introduced a liquidity
guarantee scheme for Danish exporters impacted by Covid-19. The Danish Export Credit
Agency provides a guarantee of 80-90% of any loss incurred by banks on new lines ofcredit. The scheme is available until 26 April 2021.
Similarly, the Danish Travel Guarantee Fund has established a guarantee scheme, whichallows affected tour operators to cover cancelled package trips in order to be able torepay customers. The scheme is available until 28 February 2021.

42

Government measures in key jurisdictions

Denmark

Employment •What financial
support is thegovernment
providing tobusinesses and toindividuals on
employment
issues?

As many Covid-19 related restrictions have been reintroduced during the autumn andwinter of 2020, the Danish government has reintroduced various wage compensation
schemes. Currently the following four wage compensation schemes are available:• All companies can apply for wage compensation for the period from 9 December
2020 to 7 March 2021, regardless whether the company is affected by the
restrictions.
• Companies that are prohibited from opening can apply for wage compensation forthe period from 9 December 2020 to 28 February 2021.
• Companies that have been prohibited from opening since 6 November 2020 to 28
February 2021 can apply for wage compensation for this period; this mainly applies
for nightclubs, music venues etc.
• Companies that were affected by the specific restrictions in Northern Jutland in
the period 6 November 2020 to 26 November 2020 can apply for wage
compensation for this period.

•

The compensation scheme applies to all private Danish companies regardless of size,
however, it is a requirement that the company is facing having to lay-off at least 30 per
cent of its employees or more than 50 employees. If this is the case, the company canapply for state salary compensation whereby the Danish state will compensate 75 percent of the salaries of the employees concerned, but a maximum of DKK 30,000 per
employee per month. For hourly wage earners, the state wage compensation amounts
to 90 per cent of the salaries of the employees concerned, but a maximum of DKK
30,000 per employee per month.

•

It is a condition for receiving compensation under this scheme that the employees aresent home with full salary and that they do not work during the period forwhich compensation is received.

•

Companies receiving compensation under this scheme undertake not to lay-off
employees due to financial reasons during the period in which they receive thecompensation. If employees are laid-off during the compensation
period, compensation of wages will cease as per the date of the dismissals.

•

In addition to the compensation scheme, the Danish government has adopted
amendments to the Danish Act on Active Social Policy, the Danish Act on
Unemployment Insurance and the Danish Act on Sickness Benefit due to Covid19. Pursuant to the amendments, certain periods are extended for the benefit of
the persons covered by the acts, i.e. the period under which the persons covered by
the Danish Act on Sickness Benefit are entitled to sickness benefits.

•

Furthermore, the Danish government has on 20 May 2020 adopted anotheramendment to the Danish Act on Sickness Benefit, which entitles employees whothemselves are, or who has relatives that are, significantly at risk of getting infectedwith Covid-19, to remain home from work and receive sickness benefit. The Danish
government firstly agreed to prolong the amendment until 31 December 2020, but
has now agreed to prolong the amendment until 31 March 2021. In order to receive
sickness benefits, the employee must fulfil certain criteria in relation to health, andthe workplace must be incapable of arranging the workspace to accommodate theneeds of the employee. The employer is from the first day of the employee’s absence
entitled to get a refund of the sickness benefit.

•

Parents whose children are sent home from school or day-care centres due tobeing positive of Covid-19 or due to being a close contract to someone who istested positive for Covid-19, can receive 10 days of maternity allowance, if theparents have challenges in staying home from work. The option is available in the
period from 1 January 2021 to 31 March 2021.

Government measures in key jurisdictions

43

Denmark

Insolvency•

On 21 October 2020, the Danish government proposed a bill amending the Danish
Bankruptcy Act. The bill aims to improve the ability for companies to continue
their business instead of being declared bankrupt, e.g. in the case of temporary
financial difficulties, while at the same time protecting the legal position of thecreditors. The draft bill is being proposed due to Covid-19 but will also apply tocompanies that are facing financial difficulties for other reasons that Covid-19,
and the bill will also apply after Covid-19. The bill is expected to enter into force inMarch 2021.

•

The Danish government has not implemented any specific measures to reinforce
contracts.

•

However, part of the legislation adopted by the Danish government, as aconsequence of Covid-19, directly or indirectly affects contracts. As an example,
the Danish government has implemented two Executive Orders under which theDanish Medicines Agency has a right to order Danish manufacturers, importers anddistributors to supply certain types of medical devices, personal protective equipment
and disinfectants to regions and municipalities against payment from the region or
the municipality. As the Danish Medicines Agency has a right to decide the terms of
payment and delivery, this may potentially have an impact on the companies’ ability toenter into other contracts or fulfil existing contracts. Similarly, the Danish government
has implemented an Executive Order which gives the Danish Medicines Agency
authority to i.e. decide that prices on medicine may not rise. The Executive Orders willremain in force until 28 February 2021.

•

The Danish government has not introduced any changes to the laws around property,
rent and enforcement•

However, the Danish government had implemented a temporary ban on the openingof shopping malls, department stores, arcades, bazaars etc. and places where food,beverages or tobacco are served. These bans raised a number of issues for bothlessors and lessees related to business leaseholds in the retail, catering and tourist
industries, i.e. whether the government actions constitute force majeure. It is likelythat the government actions can constitute force majeure in relation to some of bothlessor’s and lessee’s obligations under a lease agreement as (i) the fulfillment ofterms of the lease agreement can be impossible due to the extraordinary
situation created by the outbreak of Covid-19 virus and the bans imposed by thegovernment, and (ii) the extraordinary situation – at least for the lease agreements
drafted prior to the outbreak of Covid-19 virus – must be assumed to have been
unpredictable for the parties.

•

In December 2020, a new temporary ban on the opening of shopping malls,
department stores, arcades, bazaars etc. and places where food, beverages andtobacco are served was reintroduced. These restrictions are still in force and willremain in force until 28 February 2021 unless further prolonged.

Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

44

Government measures in key jurisdictions

Denmark

Litigation•

The Danish courts are open, however, the Danish government has recommended
that the Danish courts follow certain guidelines due to Covid-19. Each court has theauthority to decide whether they wish to follow the guidelines issued by the Danish
government.

•

Amongst other things, it is recommended that the courts only handle cases, where
they at all times are able to keep a distance of two metres. As it is difficult to handle
the same amount of cases when following the guidelines issued by the Danish
government, it is generally recommended that the courts limit the handling of nonurgent cases.

Are the courts
operating?

The Danish government has within the tax area adopted several measures to help
secure small, medium and large companies’ liquidity. Many of the measures implemented
as an early response to Covid-19 has either been phased out, or the deadline forapplication has expired. However, new measures have been implemented continuously.
The following measures are in force at the moment:

Tax
Has any new
legislation been
introduced in lightof Covid-19?

i.

The following postponements of the deadline for payment of A-tax and labour market
contributions (in Danish: AM-bidrag) (postponements regarding the payment of VAT are also
applicable):
Salary period

Payment date forsmall and medium
sized businesses

Payment date forlarge businesses

August 2020

29 January 2021

15 January 2021

September 2020

31 March 2021

16 March 2021

October 2020

31 May 2021

17 May 2021

November 2020

10 December 2020

30 November 2020

December 2020

18 January 2021

30 December 2020

January 2021

10 February 2021

29 January 2021

February 2021

10 March 2021

26 February 2021

March 2021

12 April 2021

31 March 2021

April 2021

10 May 2021

29 April 2021

ii. Interest free loan scheme for loans to small and medium-sized businesses
corresponding to the A-tax and labour market contributions (in Danish: AM-bidrag)the businesses reported on time for August and December 2020. The application
period is from 3 February to 31 March 2021.
iii. The deadline for tax return filing has been extended to 31 January 2021 forcompanies with a tax return filing deadline in October 2020.
•

As 1 March 2021 is the deadline for several extended VAT deadlines from 2020, a new
VAT loan scheme has been proposed by the Danish government. The scheme (ifadopted) will enable small and medium-sized businesses to obtain interest-free loans
corresponding to the amount of VAT that they have to file on their VAT return and pay
on 1 March 2021.

Government measures in key jurisdictions

45

Denmark

Company
law matters•

The Danish Tax Administration has emphasized that some businesses must pay tax forthe contributions they received in relation to the compensation schemes. This is
assumed to apply for the following compensation schemes, but is currently being
clarified by the Danish Tax Administration:- Compensation for loss of turnover (self-employed, freelancers, artists andcultural institutions),- Compensation for cancelled events (event organizers),- Compensation for expected fixed costs (i.e. rent),- Salary compensation for employees,- Compensation for freelancers with B-income, and- Compensation for freelancers with mixed A- and B-income.

•As a response to Covid-19, the Danish government has multiple times introduced
restrictions on large gatherings. As per 6 January 2021, the restrictions on large
gatherings has decreased from ten to five people, which until further notice remains inforce until 5 April 2021.

Have any measuresbeen put in place•
to accommodatesocial distancing(such as remote
general meetings)?

46

A new Executive Order applicable throughout 2021 has been implemented, which
prolongs the possibility introduced in 2020 to hold general meetings partially orcompletely electronically, irrespective of the fact that the company’s articles ofassociation may not provide for this.

•The Executive Order does not postpone the deadline for submitting the annual reportof 2020, as was the case for the annual report of 2019.

•

Earlier, general meetings was exempted from the restrictions of large gatherings due
to it being an activity where people are mostly seated. However, as per 6 January
2021, this exemption no longer applies, which means that general meetings mustcomply with the restrictions on gatherings of a maximum of five people..

•

For additional information about the company law related measures put in place toaccommodate social distancing see (in Danish), please view here.

Government measures in key jurisdictions

FinlandContributor: Hannes Snellman

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Annika Schauman | annika.schauman@hannessnellman.com |+358 9 2288 4330
Sanna Boow | sanna.boow@hannessnellman.com | +358 9 2288
4420

The Finnish Government has introduced a range of financial schemes for impacted
businesses who are experiencing financial difficulties during the Covid-19 pandemic. Several
schemes introduced in the beginning of the pandemic have already closed. However, as the
spread of the pandemic has in the previous months increased and the financial difficulties
caused by the Covid-19 pandemic are expected to continue, the Finnish Government has
prolonged some of its measures, particularly the restrictions for consumer credit.
The support schemes that are still available include the following:•

Finnvera guarantees - the state guarantees for bank loans, which can be used for working
capital needs caused by the Covid-19 pandemic. Guarantees are granted by Finnvera (astate-owned specialised financing company) for up to 80% of the bank loan and no
collateral is required. As of 11 September 2020, financiers have been able to apply for the
Finnvera guarantee on behalf of the company.

•

Stabilisation programme to support Mid-cap companies - a funding program to support
MidCap companies who are in temporary financial difficulties due to the Covid-19
pandemic. Finnish Industry Investment Ltd (a state-owned investment company) will makecapital investments of EUR 1-10 million into companies with a minimum of EUR 10 million
turnover and over 50 employees. The company must have the ability to survive thefinancial difficulties caused by the crisis and the investment is subject to standard due
diligence.

•

Support for restaurants and catering businesses - direct support consisting of twoparts:
Compensation for restrictions for business: the application for the compensation ended
on 31 August 2020.
Support for re-employment: EUR 1,000 per employee. The application period for the
support ended 31 October 2020.

•

Commercial paper purchase schemes - both the Bank of Finland and the State Pension
Fund of Finland have agreed to increase their investment in domestic corporate papers.

•

Temporary interest-only payments periods - Finnish banks have agreed to give interestonly payment periods (of up to one year) on mortgages and other loans for individuals andcompanies in financial difficulties due to the Covid-19 pandemic.

•

Restrictions for consumer credit – additional temporary restrictions pertaining toconsumer credits and direct marketing entered into force on 1 January 2021 and remain inforce until 30 September 2021. These restrictions include a temporary interest rate cap of
10% per annum, a prohibition to increase credit costs and certain marketing restrictions.
Direct marketing (e.g. marketing by telephone or emails) of consumer credits is
temporarily prohibited. The current restrictions apply, in principle, to new consumer credit
and new withdrawals made between 1 January 2021 and 30 September 2021.

•

Postponement of certain statutory payments - In addition to the above financial
support, certain payment arrangements have been agreed by the Tax Administration andbetween the Government and the Pension Insurance Companies. These include measures
such as postponement of payments deadlines, extension of tax return deadlines, removalof late payment penalties and temporary reductions of pension insurance payments. The
application period for some of these payment arrangements have already ended.

In addition to the above, there are a number of smaller support packages put in place,including support for sole entrepreneurs, for small agricultural businesses and for the primary
agricultural sector and fisheries section. Most of these smaller support schemes closed in
September 2020.

Government measures in key jurisdictions

47

Finland

Employment •What financial
support is thegovernment•
providing tobusinesses and toindividuals on
employment issues? •Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesEmployers’ statutory pension contribution, which was temporarily reduced from 1 May
to 31 December 2020, has now been restored to the level before Covid-19 pandemic.
The temporary reduction will be compensated by increasing the employer’s statutory
pension contribution in 2022-2025.
Entrepreneurs are temporarily entitled to unemployment security. The temporary
amendment is expected to remain in force until 31 March 2021. The temporary
improvements on employees’ unemployment security expired on 31 December 2020.
During 2020, the government made several temporary amendments to the
Employment Contracts Act and the Act on Co-operation within Undertakings to
support businesses and employees, but all the amendments expired on 31 December
2020.

•

A temporary Bankruptcy Act came into force in May 2020 and its purpose was toprevent bankruptcies of debtors that had got into payment difficulties due to thecoronavirus pandemic. The temporary Act expired at the end of January 2021. To
prevent a wave of bankruptcies from February onwards, a second temporary
Bankruptcy Act was brought in. This Act will be in force from the start of February until
the end of September 2021.

•

The new temporary law grants debtors a long period to negotiate their debts with their
creditors. Although the so-called insolvency assumption in the event of payment
default was reinstated, debtors have up to 30 days from a payment reminder tonegotiate payment of their debts. Pursuant to the normal Bankruptcy Act, a debtor isdeemed insolvent by the court if the debtor has not repaid a clear and undisputed
claim that has fallen due within one week of the receipt of a payment reminder.

•

In addition to the above, there have been some temporary amendments to the
Enforcement Code in such way that the exceptional circumstances arising from thecoronavirus pandemic and the financial difficulties resulting from it could be taken into
account in the enforcement proceedings. These temporary amendments are in force
until 30 April 2021.

•

The Finnish government has not introduced new legislation due to the Covid-19
pandemic that would specifically reinforce contracts between commercial
entities and the normal contractual rules apply.

What measures
have been taken
to reinforce
contracts?

48

Government measures in key jurisdictions

Finland•No particular changes have been made to the laws around property or leasing.
However, below we have listed some elements worth considering.

•Some tenants, especially within restaurant and hospitality industries, haverequested a temporary adjustment to the rent payable under their leases,
including rent holidays or deferment. Some of such requests have also been
approved by the landlords.

•

Construction agreements typically include specific provisions regarding
possible delays caused by Covid-19.

Litigation•

In general, courts are operating normally in Finland. However, some court hearings
may be postponed due to the corona crisis.

Are the courts
operating?

•With the consent of both parties, hearings may also be held via video conference.

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Tax
Has any new
legislation been
introduced in lightof Covid-19?

During the Spring of 2020, the Finnish Government introduced several measures within
the tax area, especially in the field of VAT, the purpose of which was to help thecompanies to retain their liquidity.
The following measures have already ended at the latest on 31 August 2020 and thus, canno longer be applied for:••

The Tax Administration refunds VAT already paid by a company between January andMarch 2020 upon the company’s request. These refunds are treated as loans as thecompanies must repay the amount of the VAT added with interest.
The late-payment interest and penalty interest on the taxes in the scope of a payment
arrangement or extended payment terms was reduced from 7% to 2,5%. The terms of
the payment arrangement are also eased.

With reference to the following measure, the Government has decided that the term ofvalidity will be extended until 30 April 2021:•

The VAT Act has been temporarily amended to the domestic sales of goods used forthe prevention, testing and treatment of covid-19 infection and these type ofacquisitions from other EU member states. The amendment applies to sales to
producers of public health and medical care and social welfare services, as well as toorganisations approved by Customs. The VAT rate for the sales has been amended to0%, i.e. sales are considered so-called zero-rated sales. Consequently, VAT included in
the purchases made for these sales is deductible.

Government measures in key jurisdictions

49

FinlandIn addition to the legislative level measures above, the Finnish Tax Administration hase.g. extended filing deadlines of tax returns and outlined that the employees can deduct
the expenses for the face masks in taxation and the employers can offer face masks andcorona-tests (if relevant for conducting work) for the employees without tax
income implications. These expenses are also considered tax-deductible. The employer
can also provide food for employees in virtually organised recreational events.
If the company’s income has decreased due to Covid-19, the advance tax can now
exceptionally be reduced by self-declaration without interim financial statements or otherwritten explanations.

Company
law matters•

Have any measuresbeen put in place
to accommodatesocial distancing•(such as remote
general meetings)?

50

On 2 October 2020, the Finnish Parliament adopted a temporary act to extend theprovisions allowing listed companies to deviate from certain provisions of the Finnish
Companies Act relating to the holding of a general meeting of shareholders, in orderto prevent the spread of the Covid-19 pandemic. The legislation corresponds to theprovisions set out in the previous temporary act adopted on 24 April 2020, which was
in force between 1 May 2020 to 30 September 2020. The amended temporary act
entered into force on 3 October 2020 and is valid until 30 June 2021.
The amended temporary act makes it possible for listed companies to hold theirannual general meetings remotely so that shareholders may participate in the general
meeting only by way of a proxy. The board of directors of the company may appoint
one or more proxy representatives for the use of shareholders. Alternatively, an annual
general meeting of a listed company can be held remotely so that shareholders may
participate in the general meeting only by technical means. A remote meeting canalso be held as a combination of a proxy meeting and participation by technical means
in which case also shareholders’ proxy representatives can participate in the meeting
only by technical means.

•

Regardless of whether a general meeting is organised by using one of the above
options or as a combination of them, a physical general meeting must be held. At least
the chairman of the meeting and the person appointed as scrutiniser of minutes must
attend the meeting in person.

•

As deviation from the previous temporary act in force from 1 May 2020 to 30
September 2020, the amended temporary act does not include provisions on theextension of the deadline buy which annual general meetings must be organised.

•

As deviation from the previous temporary act in force from 1 May 2020 to 30
September 2020, the amended temporary act does not include provisions on theextension of the deadline by which limited liability companies must prepare theirfinancial statements and annual reports, and no other exceptions to the said deadline
are currently in place.

Government measures in key jurisdictions

France

Contributor: Aramis Societe D’Avocats

Loans andfinancialsupport•Has thegovernment put inplace any new bankfunding schemes?

Aurélien Condomines condomines@aramis-law.com |+33 (0) 1 53 30 77 00
Anne-Hélène Le Troccquer letrocquer@aramis-law.com |+33 (0) 1 53 30 77 00

The Government has provided for a guarantee scheme to support bankfinancing for businesses. Until December 31, 2020, companies (with the exceptionof property companies & banks) may apply for State-guaranteed bank loans which
represent up to 25% of 2019 revenues (or two years of payroll for so-called“innovative” companies or companies created since 1 January 2019). No repayment
will be required during the first year of the loan. For companies or groups ofcompanies of important size (>5000 employees or >1.5 billion EUR revenues inFrance), this loan implies renouncing to distributing dividends in 2020. A decree of 6
May 2020 from the Ministry of the Economy and Finance extended the beneficiariesof this scheme to certain non-trading real estate companies, companies in difficulty
since 1 January 2020, “Young Innovative Companies” and loans granted throughcrowdfunding/ participatory financing platforms.

The mechanism of “partial unemployment” has been facilitated for companies whose
employees cannot work because of the Covid situation. Employers get a
What financial support reimbursement of 60% of the employee’s gross salaries up to a (relatively high)monthly threshold. Employers which must stop their activities because ofis the government
governmental decision (i.e. restaurant or large shopping centres) get a
providing toreimbursement of 70% of the employees gross salaries up to a (relatively high)businesses andmonthly threshold.
to individuals on
employment issues?

Employment

Insolvency•

No substantial rules were enacted on insolvency. Deadlines have been extended to take
into account the lockdown situation and commercial courts, who are in chargeof insolvency proceedings, have put in place specific emergency procedures in order tobe able to handle urgent matters. One specific rule presumes that the financial situationof companies filing for insolvency shall be assessed as it was on March 12, 2020.

•

Specific rules have been enacted to suspend or extend the effects of certain
contractual deadlines (except for financial obligations and guarantees listed in art. L21136 of the French Financial and Monetary Code). The principle is that periodic penalty
payments, penalty clauses, termination clauses sanctioning the failure to fulfil an
obligation within a specified period shall be deemed not to have commenced or tohave taken effect if that period has expired during the “lockdown period” (as defined by
the government as a period ending on June 23). They shall take effect from the expiry ofa period of one month after the end of that period if the debtor has not performed his
obligation before that time. The ending date of the protection period has been set toJune 23, 2020. In addition, when an agreement may be terminated only during a
specified period or when it is renewed if no termination is notified within a specified
period, that period shall be extended, if it expires during the “lockdown period”, by twomonths after the end of the “lockdown period”. Further, for agreement which can only
be terminated in a defined schedule or which are automatically renewed in the absenceof denunciation within a limited period: those periods or deadlines are extended if they
expire between 12 March and 2 months after the expiry of the “lockdown period”.
No longer applicable.

Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

•

Government measures in key jurisdictions

51

France

Property•

A specific rule has been enacted for companies or businesses that are
below certain thresholds: they cannot be held liable for not paying rent and building
charges that are due from March 12 to the end of a period of 2 months after the endof the “lockdown period”. The thresholds are relatively low and should only benefit
small businesses that are strongly impacted. In particular, they require (i) either
that the business activity was stopped by the authorities or that it suffered a loss of
70% of revenues, as well as (ii) various thresholds linked to the size of the business(e.g. less than 10 employees, less than 1 million EUR annual revenues). A tax
incentive has been created for landlords in the form of a specific deductibility of rent
waivers granted by lessors between 15 April 2020 and 31 December 2020.

•

Courts are operating and emergency regulation has made it easier to holdproceedings remotely, but in practice most courts had simply postponed all
hearings and deadlines until further notice and focussed on extremely urgent
matters. On a case by case basis, most courts are now organising hearings with orwithout oral hearing (when the parties agree to it) and sometimes via
videoconference.

Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation
Are the courts
operating?

Tax•

Various measures have been adopted to postpone the payment of both taxes andsocial contributions, in principle for a limited period of a few months (but individual
solutions can usually be negotiated with the authorities) without penalties. It has
also been announced that the reimbursement of various tax credits would beaccelerated. There are no general measures of tax exemption at this stage but such
exemptions can be negotiated on a case by case basis in circumstances of severe
financial distress.

•

Various legal deadlines applicable under company law have been extended by: (i) 3months for the approval of accounts when accounts have not been approved before
12 March, (ii) 2 months for the documents to be submitted to the supervisory board
per art. L225-68 of the French Commercial Code if the statutory auditor has not
submitted his report before 12 March, (iii) 3 months for the liquidator to set theaccounts of a company undergoing a liquidation, (iv) 3 months for submission of thefinancial report by companies who have benefitting from a public subsidiary, and (v)2 months for companies who have to produce an assessment of assets andliabilities/a cash flow statement/a forecast estimated cash flow statement/a forecast
estimated results accounts.
The decree No. 2020-925 of July 29, 2020 provides that these measures areappliable retroactively since March 12 until November 30, 2020.
Rules have been enacted in order to facilitate shareholder meetings and board
meetings, in particular by allowing the use of written decision, videoconference
systems, even when the bylaws do not provide for that possibility.
The ordinance No. 2020-1497 of December 2, 2020 provides that these measuresare extended until April 1, 2021.
Limitation of payment of dividends: large companies who have benefited from State
aids (taxa, social, etc.) as a result of Covid-19 shall commit not to pay dividends
unless required by law.

Has any new
legislation been
introduced in lightof Covid-19?

Company
law matters
Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

•
•

•
•

52

Government measures in key jurisdictions

Germany

Contributor: HeukingKühn LüerWojtek

Loans andfinancialsupport•Bodo Dehne | b.dehne@heuking.de | +49 211 600 55 268
Michael Pauli | m.pauli@heuking.de | +49 221 20 52 421

Lending is available under a number of new schemes that have been introduced inGermany. These range from schemes for large corporations to schemes for SMEs, startups, micro-enterprises and self-employed individuals. Some of the most relevant schemes
are:–The “KfW Instant Loan” – this scheme provides funding to medium-sized enterprises
with more than 10 employees if the enterprise showed profits in 2019 or on average overthe last three years. The credit volume per company is up to 25% of the 2019 turnover
per business group but max. EUR 800,000 for companies with more than 50
employees, and max. EUR 500,000 for companies with up to 50 employees and amaximum of EUR 300,000 for companies with up to 10 employees. The company must
not have been in difficulty as of 31 December 2019 and must have been in orderly
financial circumstances at that time. Since 9 November 2020, the "KfW Instant Loan" isalso available for self employed individuals and companies with up to 10 employees. Via
the companies’ principal banks, the companies can apply for these KfW loans with anamount of up to EUR 300,000 depending on the turnover achieved in 2019. The federal
government assumes the full risk for this and releases the house banks from liability. The
KfW Instant Loan scheme is (currently) limited until 30 June 2021.
–The “KfW Special Programme” – this scheme was designed for medium-sizedenterprises and large companies and is now also available to companies of all sizes. It
aims at mobilizing the willingness of companies’ principal banks to grant substantial
amounts of loans to strengthen liquidity. Under this scheme, the German state-owned
development bank KfW assumes up to 80% of the risk, but no more than 50% of thetotal debt for large-volume financing. KfW offers 90% risk assumption (indemnification)
for small and medium-sized enterprises (up to 50 million annual sales, fewer than 250
employees) and 80% assumption (indemnification) for all enterprises above this limit.
The indemnifications are backed by a full federal guarantee. The KfW risk shareamounts to at least EUR 25 million and is limited to 25% of the annual turnover in 2019or double the wage costs in 2019 or the current financing requirements for the next 12months for large companies or for the next 18 months for small and medium-sizedcompanies. The KfW Special Programme is (currently) limited until 30 June 2021.
–The “KfW Entrepreneur Loan” – this scheme aims at companies that have been on themarket for more than five years. The scheme shall increase their chances of being
granted a loan commitment. If they apply for a loan for investments and working capital,
the German state-owned development bank KfW assumes up to 80% of the bank’s risk
for large companies and up to 90% of the bank’s risk for SMEs. Companies can apply for
up to EUR 1 billion per company group. A similar
program exists for companies that have been on the market for less than five years.

Has thegovernment put
in place any newbank funding
schemes?

•State-owned banks also offer to guarantee loans provided to companies by their principal
banks if the company has not been in financial difficulties. Guarantees may cover max.
90% of the loan risk, i.e., the companies’ respective principal bank must assume at least
10% of exposure.

•

In addition to the programs of the federal government, each federal state has put inplace accompanying programs to support regional businesses.

•

To stabilise the real economy in times of the Covid-19 pandemic, the German parliament
has established an Economic Stabilisation Fund (“WSF”) as a special fund. The WSF shallovercome liquidity bottlenecks and strengthen the equity base of companies. Instrumentsof the WSF are (i) guarantees for debt instruments in the amount of EUR 400 billion tobridge liquidity bottlenecks and support the refinancing of companies, (ii) EUR 100 billion
to strengthen capital through equity investments in companies (recapitalisation measures)and (iii) EUR 100 billion to refinance KfW special programmes. Stabilisation measures
under the WSF are possible until the end of 2021 and shall be the last resort.

•

Establishing an economic stabilization fund for the real economy.

Government measures in key jurisdictions

53

Germany

Employment•

Whatfinancial support
is the government
providing tobusinesses and toindividuals on
employment
issues?

Employers may choose to temporarily reduce the working time of their employees if
the company is affected by the corona crisis (e.g. if a company is closed down or if
there are difficulties in the company due to missing orders or supplies). The
remuneration of the employees will be reduced correspondingly. This measure shall
avoid layoffs and enable companies to keep qualified workers during the crisis.

•

Affected employees can receive so-called "short-time working allowance". This benefit
must be applied for by the employer. If granted, the government will generally refund
60% (employees without children) or 67% (employees with children) of the difference
between the regular net income and the reduced net income. The German
government has introduced legislation to increase the short-time working allowance to
70% or 77% starting from the fourth month and to 80% or 87% starting from theseventh month. Due to new legislation, it is sufficient if at least 10% of the workforce
are affected by short-time work.

•

FAQ short time work by corona.

•

The German government has passed legislation to facilitate access to the short-timeworking allowance. Also, the additional income opportunities during short-time work
have been extended.

•

Coronavirus: FAQ Employment Law Part 3.

•

In case the government orders a (regional) quarantine, the employer pays the regularsalary and the regional government will refund the money. After six weeks, theemployees will receive sick pay by the government.

•

Coronavirus: FAQ Employment Law.

•

The statutory obligation to file for insolvency within three weeks, after a state ofinsolvency has been reached, has been suspended for certain companies until
30 April 2021. The legislature’s goal is to ensure that disadvantages are avoided
for creditors who generously granted deferrals during the Covid-19 pandemic.

Insolvency

Has thegovernment madeany changes
to insolvency•
legislation?

54

The temporary suspension shall assist companies that have applied forfinancial aid but have not received it yet. An application for financial aid musthave been filed between 1 November 2020 to 28 February 2021. In certain
cases, the suspension also applies to companies if the application for financial
aid has not been possible in the aforementioned period for legal or factual
reasons. In addition, the application must have some prospect for success andthe financial aid must be suitable for eliminating insolvency. Also, insolvency
proceedings may not have been initiated up to 31 January 2021.

•

Payments made by the debtor under the above conditions shall be deemed not
to be detrimental to creditors.

•

Suspension of the obligation to file for insolvency until the end of April 2021 if
government aid is requested until the end of February 2021; protection against
contestation in the event of deferrals.

Government measures in key jurisdictions

Germany

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

•

The German government introduced legislation that grants consumers andsmall companies the right to refuse performance of a contract (in particular
payment) in order to protect them from financial hardship resulting from themeasures taken to prevent the spread of infections. Small companies are thosewith less than 10 employees and less than EUR 2 million annual turnover.

•

These measures generally require that it concerns claims from a continuing
obligation established before 8 March 2020 which debtors are not able to fulfil dueto the Covid-19 pandemic or, due to the Covid-19 pandemic, the fulfilment of suchclaims would endanger their means of subsistence or the economic basis of theirbusiness. At the same time, the creditor must not be unreasonably affected as aconsequence. The right to refuse performance for consumers and microentrepreneurs, which affects, among other things, essential basic service
contracts, was limited to the period from 1 April to 30 June 2020. This means that
as of 1 July 2020, the addresses of regulation will no longer be able to defer their
payments due to the Covid-19 pandemic and, in the event of non-payment, will bein default and may incur interest on arrears.

•

The provisions do not apply to employment contracts, tenancy agreements andloan agreements.

•

For consumer loan agreements concluded before 15 March 2020, lenders’ claims
for interest or repayment of instalments due between April and June 2020 weredeferred for a period of three months from the due date if the borrower suffers aloss of income due to extraordinary circumstances caused by the spread of theCovid-19 pandemic which makes it inappropriate for the borrowers to fulfil their
obligations. After expiry of this moratorium, the payment obligation will resume. Asof 1 July 2020, the deferred monthly loan instalments must therefore be paid again
unless consumers have agreed on a different solution with The individual payment
dates as well as the end of the term of the loan will be postponed by three months
in each case, unless the parties agree otherwise. The regulations are to apply to
consumer loan agreements only. However, there is the possibility of extending thescope of application of the law by means of a statutory instrument to small
companies as well.

•Corona info – the legislator acts – we summarize for you•

The Covid-19 pandemic will have a significant influence on how to draft
force majeure clauses in the future. For more information, see here.

•

Contracts on the acquisition of German companies may in future not be closed
anymore while investment control proceedings are still pending if the company isactive in a certain sectors (e.g. health care) and a non-EU investor (directly or
indirectly) acquires more than 10% of the voting rights. For more information, see
our article ‘Upcoming changes to German foreign investment control regime’.

•For merger control filings, the review periods have been temporarily extended.
For more information, see here.

Government measures in key jurisdictions

55

Germany•

The German government had passed legislation that excludes terminations of tenancy
agreements in the event of late payment of rent for the period from 1 April 2020 to 30
June 2020 if the failure to pay was due to the effects of the Covid-19 pandemic. The
correlation between the failure to pay and the Covid-19 pandemic was not assumed
but had to be shown credibly by the tenant. As of 1 July 2020, this legislation expired
and is not applicable anymore. The German government did not make use of thepossibility to extend the relevant period until 30 September 2020.

•

The exclusion of termination ends on 30 June 2022, i.e. by this date the rent in arrears(including default interest) must be paid to avoid a termination. Other termination rights
remain unaffected, i.e. the ordinary termination right for unlimited rental contracts aswell as the extraordinary termination. For more information, please see here.

•

In general, the courts are operating normally. Despite of social distancing andtravel bans, court deadlines must be met and court hearings have to be attended.

•

Currently, court hearings are often postponed due to the corona crisis. With the consent
of both parties, the court may switch to written procedure in appropriate proceedings.
Alternatively, if the necessary technical equipment is available, hearings may also be
permitted via video conference without the consent of the parties. This is seen inpractice more and more often.

•

Dispute resolution before state courts and arbitral tribunals in times of the Covid19 pandemic

Tax•

Has any new
legislation been
introduced in lightof Covid-19?

The German Federal Ministry of Finance and the supreme tax authorities of the federal
states have issued decrees containing new guidance in light of the corona crisis.

•

The tax authorities are instructed to make straightforward and quick adjustments ofassessed tax advances upon request (trade tax, corporate income tax, income tax and
VAT). On 22 April 2020, it was decided that, with immediate effect, small and mediumsized enterprises can apply to their competent tax office for a refund of amounts paid for
2019, in addition to advance payments already made for 2020, on the basis of a flat-rate
loss for the current year. Until 31 December 2021, taxpayers may submit applications foradjustment of advance payments for 2021 income tax and corporate income tax, settingout their circumstances.

•Upon application and to the extent that tax payments cannot be made due to the effects of
the Covid-19 pandemic, tax payments due are generally supposed to be deferred without
interest until 31 December 2020. There are no tax deferrals for withholding taxes, inparticular wage tax and capital gains tax. Companies could submit the application to theirtax office until 31 December 2020. For 2021, further relief will be granted in principle with
an application by 31 March 2021, and deferrals until 30 June 2021, as well as further
extensions for follow-up deferrals. Deferral interest is not charged.

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation
Are the courts
operating?

56

Government measures in key jurisdictions

GermanyCompany
law matters•

The tax authorities have been instructed to suspend the enforcement of overdue tax debts(corporate income tax and income tax). Enforcement and late payment penalties for taxes
due by 31 March 2021 will be waived until 30 June 2021 if the debtor of a due tax payment
is directly and not insignificantly affected by the impact of the Corona pandemic. This
relates to income tax, corporate income tax and sales tax. Late payment surcharges
incurred as a matter of law shall be waived.

•

The regular German VAT rate was cut from 19% to 16% for the period starting from 1 July
2020 until 31 December 2020. The reduced VAT rate was cut from 7% to 5%.for the same
period.

•VAT on restaurant meals and other food in the catering industry is reduced from 19% to 7%
since 1 July 2020 for a limited period until 30 June 2021.

•

SMEs may offset expected losses against advance tax payments already made for 2019.

•

Measures under German tax law to create or preserve liquidity.

•

For stock corporations, the German government has passed legislation that allows
Annual General Meetings (AGMs) to be held electronically in 2020 and 2021. Numerous
small and large stock corporations are already using thispossibility.

Have any measures •been put in place
to accommodatesocial distancing(such as remote
general meetings)?

There are two options for this: Either a physical meeting can be held with the option ofshareholders attending electronically and casting their votes electronically or by letter.
Alternatively, a completely virtual AGM can be convened without any shareholders
being present. For more information, see our articles "Special provisions for thecurrent crisis: emergency legislation for general meetings 2020“ and “The extensionof the COVID-19 regulations for virtual shareholders/general meetings until the end of2021 is certain”.

•

For limited liability companies, the German government has introduced legislation tofacilitate the adoption of shareholder resolutions by way of circular resolution. In
deviation from the previous position, the possibility is created for the limited liability
company to enable a resolution to be adopted in writing even without the consent of
all shareholders. Online shareholders' meetings continue to be possible only if allshareholders agree.

•

Facilitations for circular resolutions in the GMBH by the Covid Mitigation Act –overview and open questions.

Government measures in key jurisdictions

57

Guernsey

Contributor: Mourant

Loans andfinancialsupportHas thegovernment put inplace any new bankfunding schemes?

•

In the first lockdown period, the States of Guernsey agreed to underwrite 80% of
any qualifying loan made by participating banks to any trading business with lessthan GBP 10 million turnover. This scheme closed on 31 December 2020 and there isno suggestion it will be reopened.

•

Businesses regulated by the Guernsey Financial Services Commission(GFSC) were excluded.

Employment
What financial
support is thegovernment
providing tobusinesses and toindividuals on
employment
issues?

Insolvency•

The initial payroll co-funding scheme was similar to the UK's and gave employers andthe self-employed in certain sectors co-funding payments where they could show
their turnover had fallen below certain thresholds. This scheme has been reintroduced in respect of the latest lockdown.

•

Other measures to support business include small business grants and the deferral ofSocial Insurance contributions, local business rates and rent owed to States entities.

•

There are also measures to support individuals such as a hardship fund.

•

Please follow these links for the most up to date information on financial and businesssupport:• Business support and guidance.
• Financial support for individuals.

•

No changes are likely to be made to Guernsey’s insolvency laws, in particular regarding
wrongful trading. It should be noted that Guernsey’s wrongful trading provisions are
somewhat more relaxed than the UK equivalent in any event. Once a director
concludes (or ought to have concluded) that there was no reasonable prospect of thecompany avoiding insolvency winding up, the director has a duty to take every step tominimise losses to creditors “he ought reasonably have taken”. The Guernsey test
introduces a reasonableness qualification on the every step test not expressed in the
UK statute.

•Significant amendments to the insolvency laws were passed by the States of Guernsey
in January 2020 and are expected to come into effect shortly.

•

Changes to Guernsey’s Insolvency Regime.

Has thegovernment madeany changes
to insolvency
legislation?

58

Matthew Guthrie | matthew.guthrie@mourant.com | +44 1481 731 424
Abel Lyall | abel.lyall@mourant.com | +44 1481 739 364
Robert Shepherd | robert.shepherd@mourant.com | +44 1481 731 418

Government measures in key jurisdictions

Guernsey

Contractual
Issues•The Guernsey government has not introduced any legislative measures to deal
specifically with contractual issues caused by the Covid-19 pandemic.
Any contractual concerns will be dealt with according to Guernsey contract law.

What measures
have been taken
to reinforce
contracts?

•

The main contractual provision which governs the enforceability of a contract
upon the existence of an unforeseen event is the force majeure clause. In generalterms, the force majeure clause seeks to list the situations in which the parties to acontract may suspend or terminate the contractual relationship due to the occurrenceof certain events that are outside the control of the parties.

•

Depending on the construction of the force majeure clause in individual
contracts, the Covid-19 pandemic may cause the contract to be suspended or
terminated.

•

Businesses should review their existing contractual relationships and seek legal advice
to ensure they are aware and fully understand their ongoing legal obligations andidentify any areas of uncertainty.

•

No.

•

Royal Court trials and similar matters are being considered on a case by casebasis and more urgent matters can be heard virtually.

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation
Are the courts
operating?

Tax

•

No.

Has any new
legislation been
introduced in lightof Covid-19?

•

See below regarding economic substance.

Government measures in key jurisdictions

59

Guernsey

Company
law matters

60•

The Guernsey Corporate Registry is operating entirely by email and therefore response
times and some services are restricted.

•
Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)? •The GFSC has simplified some of its measures to reflect the changed environment
including allowing more time (in addition to the extension granted in the first lockdown)
for certain regulatory returns – see 'Commission allows more time for Firms tocomplete Key Financial Returns' and more flexibility on verifying client identities
remotely – see 'Can video calling be used to verify the identity of individuals’.
In addition, the GFSC has issued guidance on what considerations it would expect
licensees to have regard to if their business model were to place greater focus on
working from home either temporarily or permanently. See the Remote working
business model.

•

The Data Protection Commissioner has assured business that it will respondpragmatically to the new challenges arising – see its update here.

•

The Guernsey Revenue Service has delayed the deadline for income tax returns until 31
March 2021 – this second extension was granted swiftly after the second lockdown
began.

•For guidance on corporate formalities in a world without face to face meetings, see our
updates on 'Overcoming Barriers to Completion of Transactions amidst Covid-19
Challenges' and 'ICSA Guidance on holding virtual board meetings'.

•

Mourant has produced a briefing regarding regulatory considerations for licensed
financial services businesses in the Channel Islands when responding to the Covid-19
outbreak.

•All the most recent Mourant updates relating to Covid-19 are available at Mourant
Covid-19 Updates.

Government measures in key jurisdictions

Ireland

Adrian Benson | adrian.benson@dilloneustace.i.e. | +353 1 673 1705

Contributor: Dillon Eustace

Loans andfinancialsupportYes. The Covid-19 crisis has prompted the Irish Government to announce a range of
supports for impacted businesses and individuals who are experiencing financial
difficulties during the Covid-19 pandemic. The range of measures introduced by the Irish
Government include the follows.

Has thegovernment put
in place any newbank funding
schemes?

•

The Strategic Banking Corporation of Ireland (“SBCI”) Covid-19 Working Capital Loan
Scheme (the “Irish Liquidity Scheme”) – the Irish Liquidity Scheme is designed to support
lending to Irish small and medium enterprises (“SMEs”) only and is not available to larger
firms. Loans under the Irish Liquidity Scheme (the “Loans”) can be provided to
SME’s to fund future working capital requirements in order to mitigate the impact ofthe pandemic. The Loans will be available through Allied Irish Banks, p.l.c., Bank of Irelandand Ulster Bank in amounts of between Ä25,000 and Ä1.5 million per eligible enterprise,with a maturity of between one and three years. In addition, the Loans will bear a fixed
rate of interest negotiated with the lending bank, subject to a maximum of 4% per annum.
For Loans of up to Ä500,000, no security will be required, however any Loans in excessof this amount will require collateral to be posted. The SBCI has stated that a threemonth interest only option may be available for the initial period of the Loan (depending on
the lender’s assessment of the relevant application). For more information on the Irish
Liquidity Scheme, please see our recent article available here.

•

Future Growth Loan Scheme (“FGLS”) – the FGLS was originally established in June 2019
via the SBCI to support the development of SMEs and businesses in the agri sector. In lightof the pandemic, the FGLS has recently received a boost of Ä500 million in funding
from the Department of Business Enterprise and Innovation which will be released intranches to provide long-term loans to businesses impacted by Covid-19. Loan amounts will
range from Ä25,000 to a maximum of Ä3 million per applicant. In addition, loan
terms will range from seven to ten years and loans of up to Ä500,000 can be unsecured. Int
erest-only repayments may be available at the start of the loan and interest rates will becapped at 4.5%. Close Brothers and KBC Bank are currently accepting loan applications for
the FGLS from businesses meeting SBCI eligibility.

•

The Covid-19 Credit Guarantee Scheme (the “Covid-19 CGS”) – the Irish
Government has repurposed an existing SME Credit Guarantee Scheme which has
been in place in various forms since 2012. Under the Covid-19 CGS, the Irish
Government will guarantee up to Ä2 billion of loans provided by Irish banks to SMEs
whose businesses have been impacted by the pandemic. The Covid-19 CGS will
be available to certain SMEs established and operating in Ireland through a range offinancial providers in the form of a State guarantee to the relevant bank against 80% oflosses. Loans of Ä10,000 up to Ä1 million will be made available for terms of up to fiveand-a-half years. It may also be possible to avail of a three to six month interest only
period. The Covid-19 CGS has now been brought into law through the enactment of
The Credit Guarantee (Amendment) Act 2020. The Covid-19 CGS will be available until
the end of June 2021 on a first-come, first-served basis.

•

Microfinance Ireland Covid-19 Business Loan (the “MFI Business Loan”) – the MFIBusiness Loan is a Government initiative to support small businesses throughthe current period of uncertainty and to protect job creation or sustainment in Ireland.
The maximum MFI Business Loan available from Microfinance Ireland has been
reduced back down to Ä25,000 from the previously increased amount of Ä50,000 by
the Government for this phase of the fund. It is still available to specifically deal withexceptional circumstances that micro-enterprises – (sole traders and firms with up to
9 employees) – are facing in order to alleviate the financial pressures arising from
Covid-19. In addition, the terms of the MFI Business Loan include a six-month interest
free period and a repayment moratorium of up to six months, with the loan thenrepayable over the remaining 30 months of the 36-month loan period at an interest
rate of between 4.5% and 5.5%.

Government measures in key jurisdictions

61

Ireland

•

•

•

•

•

•

•

62

Enterprise Ireland Supports – the Department of Business, Enterprise and Innovation
has implemented a Ä200m package for Enterprise Supports including a Rescue
and Restructuring Scheme available through Enterprise Ireland for vulnerable but viablefirms that need to restructure or transform their business. In addition, Enterprise Ireland has
created a new Ä180m Sustaining Enterprise Fund (“SEF”) in order to provide manufacturing
and internationally traded services companies with capital to help stabilise and rebuild theirbusinesses. The Irish Government has recently approved an additional Ä90m funding for
the SEF, which offers funding of up to Ä800,000, with Ä200,000 or 50% in nonrepayable grants to eligible manufacturing and internationally traded services companies.
Covid-19 Business Aid Scheme (“CBAS”) – the CBAS was recently launched by the Irish
Government in February 2021 and provides grants to self-employed, sole traders,
partnerships and companies with a minimum annual turnover of Ä50,000. In order toqualify for the CBAS, applicants must be ineligible for the Covid-19 Restrictions Support
Scheme and the Fáilte Ireland Business Continuity Scheme and have a reduction in
turnover of at least 75%. For example, wholesalers, caterers and event suppliers who
operate from a building, or similar fixed physical structure on which business rates arepayable but which are not open to the public are eligible;
Covid-19 Restrictions Support Scheme (“CRSS”) – the CRSS was introduced to support
businesses significantly affected by restrictions introduced to combat the Covid-19
pandemic and applies when Level 3 or higher restrictions are in place. In order to qualify
for the CRSS, the relevant business must have been required to prohibit or considerably
restrict customers from accessing their business premises. Eligible businesses can make aclaim to Revenue for a payment known as an Advance Credit for Trading Expenses(“ACTE”). The ACTE is equal to 10% of the average weekly turnover of the business in 2019
up to a Ä20,000 limit, plus 5% on turnover over Ä20,000. The ACTE is payable for eachweek a business is affected by the restrictions and is subject to a maximum weekly
payment of Ä5,000. The CRSS is expected to be in place until the end of June 2021;
Pandemic Stabilisation and Recovery Fund (“PSRF”) – the PSRF is a Ä2 billion fundadministered by the Irish Strategic Investment Fund to support medium and large
enterprises in Ireland "materially impacted" by Covid-19. The PSRF will focus on investment
in large and medium enterprises employing more than 250 employees or with an annual
turnover in excess of Ä50 million. Aside from material impact, enterprises must be able todemonstrate that their business was commercially viable prior to Covid-19, and they
can return to viability and contribute to the Irish economy.
Restart Grant Plus (the “Scheme”) – the Scheme provides grants between Ä4,000 andÄ25,000 to businesses to aid them with costs associated with reopening and reemploying
workers following Covid-19 closures. The Scheme replaces and supersedes the existing
restart grant schemes (which previously provided grants between Ä2,000 and Ä10,000).
The Scheme will be available to businesses with a turnover of up to Ä25 million, with a capof Ä100,000 turnover per employee, and employing 250 people or less, which were closed
or impacted by at least a 25% reduction in turnover. The Scheme is a contribution towards
the cost of reopening or keeping a business operational following the pandemic. In addition,
eligible businesses in Kildare, Laois and Offaly affected by the previous increase in Covid-19
restrictions that are eligiable for the scheme will be entitled to a 20% top-up with businesses
in Kildare to receive a further 20% top-up, equivalent to a 40% uplift overall. This 40%
increase will also be available for pubs, bars and nightclubs who have had to remain closedwith eligible businesses in Dublin being entitled to a 30% top-up. The Scheme has now been
made available to previously precluded ratable sports businesses, trading charity shops, thehospitality sector and tourist attractions, as well as non-rated B&Bs being eligible for theminimum grant of Ä4,000. Applications for the Scheme closed on 31st October 2020.
A 6-month VAT reduction – there will be a temporary reduction to the standard rate of VAT
in Ireland from 23% to 21%. This 2% temporary reduction in the standard rate of VAT iseffective from 1 September 2020 for a six month period to 28 February 2021.
In addition to the above, a range of measures have also been agreed between the Irish
retail banks and the Irish Government as follows:

Government measures in key jurisdictions

Ireland•••A 6-month payment moratorium – banks, credit unions, retail credit firms and credit
servicing firms will grant payment breaks on mortgages, personal loans and business loans
for those businesses and individuals experiencing financial difficulties caused by Covid-19.
Following ongoing discussions with the Central Bank of Ireland ("CBI"), the Banking &Payments Federation Ireland have extended the original 3-month payment moratorium tosix months, which coincides with the majority of the EU and the EBA guidelines. On 8thJune, 2020, the CBI sent a ‘Dear CEO’ letter to CEOs of regulated firms that previously
granted payment breaks of up to six months to borrowers affected by the pandemic. The‘Dear CEO’ letter outlines the CBI’s expectations of regulated firms when dealing withborrowers in respect of Covid-19 payment breaks. It also includes the information thatshould be provided to borrowers regarding Covid-19 payment breaks. As of now, Irish banks
are not offering a system- wide right to payment moratoriums, although borrower can beoffered breaks according to their individual circumstances.
Extensive supports for SME customers – banks are working to ensure that a wide range ofmeasures are made available to businesses who are trying to manage the financial pressuresarising from Covid-19. The measures include the provision of cash flow and credit facilities
as well as supply chain supports.
A customer focused approach – banks have committed to providing suitable tailoredsupports for business including the extension of credit lines, risk guarantees and tradefinance.

These supports are intended to complement the range of Government supports, including the
Irish Liquidity Scheme detailed above. For more information, please see our recent articles
listed here: The ABC and DE of Emergency Liquidity Solutions (available here), Covid-19: Range ofBanking Measures announced due to the Pandemic (available here), Government Funding
Supports for Businesses Impacted by the Covid-19 Pandemic (available here), and Update:
Additional Government Funding Supports for Businesses impacted by Covid-19 (available here).

Employment Employment Wage Subsidy Scheme: The Employment Wage Subsidy Scheme (EWSS) provides
What financial
support is thegovernment
providing tobusinesses andto individuals on
employment
issues?

a flat-rate subsidy to qualifying employers based on the numbers of eligible employees on theemployer’s payroll and is expected to continue until 31 March 2021. Detailed information in
relation to the operation of the scheme can be found on the Revenue website here.

Covid-19 Pandemic Unemployment Payment (PUP): This is a payment which is available toemployees who either lost their job entirely or were temporarily laid-off, on or after 13 March
2020, as a result of the Covid-19 pandemic. The PUP is also available to self-employed individuals
whose trading income has ceased due to Covid-19. From 16 October 2020, the PUP has been
divided into 3 categories depending on the amount that the employee used to get paid. The
scheme is expected to remain in place until 30 June 2021. Further information can be found on
the Revenue website here.
Return to Work Safely Protocol: The government has issued a set of guidelines or protocols toenable people to return to work. These are available here. The Health and Safety Authority has
also published various templates and checklists to assist employers in complying with theProtocol. Those are available here. Employers need to be aware that they will continue to bebound by their usual obligations as regards the safety and health of their employees (or othervisitors to their premises).
The Workplace Relations Commission, which is the forum of first instance for most employment
law matters, has postponed all face-to-face Adjudication Hearings, Conciliation Meetings andMediations for the foreseeable future in response to the reintroduction by the Government oflevel 5 restrictions for Covid-19. Where in-person services had been scheduled for a future dateparties will be offered a virtual service, including remote hearing of adjudications using theWebex platform. Virtual services that were already scheduled will continue to proceed. In themeantime, the WRC remains open - complaints can be submitted electronically or by post and atelephone mediation service is operating. See the WRC’s visitors’ guidance notes here.

Government measures in key jurisdictions

63

IrelandInsolvency•

Lay-Offs and Short Time: The Government suspension of redundancy provisions in relation totemporary lay-offs and short time during the Covid-19 emergency period has been extended until
31 March 2021. This suspension means that an employee who has been laid off or kept on shorttime due to the effects of measures required to be taken by his or her employer in order to comply
with government policy to prevent, limit, minimise or slow the spread of infection of Covid-19
cannot give notice of his intention to claim redundancy during that period.

•

Enhanced Illness Benefit: Employees or unemployed people who receive medical certificationthat they are unable to work due to a diagnosis of Covid-19, or that they have been instructed toself-isolate, may avail of an enhanced illness benefit of Ä350 per week. Further information in
relation to this benefit can be found here.

The Companies (Miscellaneous Provisions) (Covid-19) Act 2020, which came into effect on 21
August 2020, has implemented the following changes in the area of insolvency during the“interim period” (which is currently until 9 June 2021):

Has thegovernment made anychanges to insolvency •legislation?

(i) Insolvency: A company will be deemed to be unable to pay its debts during the interim
period, if it fails after 21 days’ notice to pay a debt of Ä50,000. (In the ordinary course of
events, a single debt of Ä10,000, or aggregate debts of Ä20,000 would be sufficient).

•(ii) Examinership: The duration of the examinership process has been extended by anadditional 50 days during the interim period if the examiner has been unable to make his
report within the usual 100 days and if “exceptional circumstances exist in respect of thecompany”.

•(iii) Meetings of Creditors: much like virtual board meetings, the liquidator of an
insolvent company is given discretion to conduct a meeting of creditors at a physicalvenue or wholly or in part as an electronic meeting, provided that all attendees have theability to participate in the meeting. The Act sets down specific information that must be
provided to shareholders in the notice of the meeting.

There have also been some changes to legislation in other areas such as, for example,
landlord / tenant or employment law that will impact on insolvency practitioners,
particularly receivers and liquidators, during this emergency period.

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

There has been no recent legislative intervention in respect of the reinforcement ofcontracts and the usual contractual rules apply.
Due to the disruption caused by the Covid-19 outbreak and the extensive Government
restrictions, many businesses, as a precautionary measure, may wish to review theircurrent contracts in order to determine whether they are protected or can avail of someform of relief, in case they are unable to perform their obligations. Such relief may takethe form of a force majeure clause within a contract or relying on the doctrine offrustration if the circumstances permit.
Force majeure clauses are interpreted strictly by the Irish courts, so businesses should
evaluate the contents of their clauses in key contracts with their legal advisor in order toascertain whether they cover the current Covid-19 crisis.

64

Government measures in key jurisdictions

IrelandIn the absence of a force majeure clause, parties may wish to consider the doctrine offrustration as a possible form of relief, however, the threshold for frustration isextremely high in Ireland and the scope of events which may trigger the doctrine are
extremely narrow. Seeking legal advice is recommended.
While a force majeure clause or the doctrine of frustration may, in certain
circumstances, be relied upon, we would recommend that businesses first discuss
potential commercial workarounds with their contracting partners before attempting torely on any such forms of relief. For more information, please view here.

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation
Are the courts
operating?

The outbreak of Covid-19 has resulted in the introduction of the Health (Preservation andProtection and Other Emergency Measures in the Public Interest Act) 2020 Act in Irelandwhich together with other emergency legislation has had a wide ranging effect on Real
Estate transactions in Ireland. We consider certain elements below.
•

In Ireland many commercial tenants are no longer able to operate,
however leases continue and the obligations of tenantsremain. Many tenants have requested a temporary adjustment to the rent
payable under their leases, including rent holidays or deferment. A commentary on
the current position regarding the collaborative approach required and the possibilityof tenants extracting themselves from commercial leases is here.

•

The main statutory interventions in the context of real estate have been in relation
to residential property which arise primarily from the enactment of the Emergency
Measures in the Public Interest (Covid-19) Act 2020. A commentary on the current
position for Residential Leases and the legislative amendments is here.

•

The construction industry has been severely affected and all construction sites, savethose associated with the provision of essential services, have been closed since 27
March 2020. The following article reviews the impact and considerations, from theperspective of the construction sector, arising from the Health (Preservation
and Protection and Other Emergency Measures in the Public Interest Act) 2020 Act:
Construction contracts – Covid-19 impacts and considerations.

After a period of gradual re-opening up to January 2021, the Irish Courts have again
introduced enhanced Level 5 protocols in response to Covid-19 which are expected toremain in place until at least 15 March 2021. The following is a broad summary of thecurrent position:•

Remote hearings will continue and be extended across the various courts.

•

Urgent civil applications will continue to be dealt with subject to strict compliancewith all applicable health and safety protocols including physical distancing andwearing face masks. Persons who are required to physically attend court or a court
office are regarded as travelling for essential purposes and may travel beyond thecurrently mandated 5km for that purpose.

•

No civil jury actions will take place prior to 12 April 2021.

Government measures in key jurisdictions

65

Ireland•Criminal trials due to commence in the Central and Circuit Courts will not start, withthe exception of single person trials in the Special Criminal Court which may
commence from 1 March 2021. Priority will be given to urgent matters.

•

Court offices will continue to accept documents by post, DX, drop-box and e-filingdepending on the jurisdiction. An appointment is required to physically attend at court
offices.

The situation is very fluid and will continue to be reviewed on a week-by-week and courtby-court basis. Updates may be found on the Courts Service website here.

Tax•

Irish Revenue introduced an employment wage subsidy scheme (“EWSS”) from 1 July
2020 which ran alongside the temporary wage subsidy scheme (“TWSS”), discussed
below, until 31 August 2020. From 1 September 2020, the EWSS replaced the TWSS.
The EWSS was expected to run until 31 March 2021 but it was announced that theemployer supports would continue until the end of 2021. To qualify, employers must
be able to demonstrate that their business will experience a 30% reduction in turnoveror customer orders between 1 January and 31 July 2021 and this disruption is caused
by Covid-19. This reduction is relative to the same period for 2019 where the business
operated for the whole of the comparative period in 2019, the date of commencement
to 30 June 2019 where trading commenced between 1 January and 1 May 2019 orwhere a business commenced after 1 May 2019, the projected turnover or customer
orders. The scheme also previously applied to the same 30% reduction between 1 July
2020 and 31 December 2020. Under the scheme, a subsidy can be claimed in respectof eligible employees of an impacted business on the payroll. The scheme provides aflat-rate subsidy to qualifying employers based on the numbers of eligible employeeson the employer’s payroll. Employees are eligible if they are in receipt of weekly grosswages between Ä151.50 and Ä1,462. New hires and seasonal workers are eligible andclaims can be backdated to 1 July 2020. The scheme will operate on a self-assessment
basis with income tax being deducted at payroll. As at 18 February 2021, 48,600
employers are registered for the EWSS and over 526,800 employees had received atleast one payment under the EWSS.

•The TWSS enabled certain employers to retain certain staff while at the same time
paying staff nothing or a top-up on the Revenue subsidy paid by the Irish Revenue.
The scheme operated until 31 August and from 4 May was based on each
employee’s normal net weekly pay. The subsidy payment is not subject to income
tax through payroll but is taxed at year end. In total, 69,500 employers registered
for the TWSS and over 663,100 employees had received at least one payment
under the TWSS.

•

Irish Revenue have introduced temporary income tax relief for self-employedindividuals including claims to have their 2020 losses and certain unused capitalallowances carried back and deducted from their profits for the year of assessment
2019, subject to a Ä25,000 limit. There is also an acceleration of the relief allowing
self-employed individuals to make interim claims based on the estimated amountof relief available to them.

Has any new
legislation been
introduced in lightof Covid-19?

66

Government measures in key jurisdictions

Ireland•Irish Revenue have also introduced a COVID Restrictions Support Scheme (“CRSS”) aimed atbusinesses impacted by Covid-19 restrictions, such that the business is required to prohibit orconsiderably restrict customers from accessing its premises. Businesses can make a claim to
Revenue for a payment equal to 10% of their average weekly turnover in 2019 up to Ä20,000 and
5% thereafter, subject to a maximum weekly payment of Ä5,000, for each week that it is affectedby the restrictions. As at 18 February 2021, 20,200 businesses have registered for CRSS.

•

The standard VAT rate in Ireland will be reduced from 23% to 21% from 1 September 2020 with therate reverting back to 23% from 1 March 2021.

•

SMEs experiencing cash flow and/or trading difficulties can defer payment of March/April
2020 and May/June 2020 VAT returns (due on 23 May 2020 and 23 July 2020, respectively)
and April, May and June 2020 payroll taxes. Non-SMEs are being encouraged to talk to
Revenue with a view to similar deferments if experiencing similar cash flow issues. All debt
enforcement activity in respect of SMEs is suspended until further notice.

•

Irish Revenue will warehouse unpaid VAT, payroll taxes, self-assessed income tax amounts
and TWSS overpayments arising from the Covid-19 crisis. These tax debts will be parked for
12 months after a business resumes normal trading. A lower interest rate of 3% (normally10%) will apply on the repayment of such debts after this period. The arrangements will ringfence the debts for the period during which the business is unable to trade or is trading at
significantly reduced levels and includes a 2 month period after the business returns tonormal trading levels. No interest or debt enforcement will occur with respect to thewarehoused debts. The legislation enacting this measure is now in place. As at 13 January
2021, approximately 70,000 businesses are availing of the scheme.

•

Revenue has suspended tax audit and other compliance intervention activity on taxpayers'
premises until further notice.

•

Revenue has indicated that it will continue to prioritise the approval and processing of tax
repayments and refunds to taxpayers.

•

For income tax purposes, an individual will not be regarded as resident in Ireland where they
spend additional days in Ireland due to the pandemic.

•

For corporation tax purposes, an individual will not be regarded as resident in or outside of
Ireland for a company of which they are an employee, director, service provider or agent
where they spend additional days in or outside of Ireland due to the pandemic. See more
information here.

•

Revenue have subsequently updated the above concession to exclude anyone who travelled
to Ireland on or after 6 May 2020 as the occurrence must not have been reasonably
foreseen and would not be considered a force majeure circumstance from this date.

•

Corporation tax returns for accounting periods ending 30 June 2019 onwards (i.e. due by 23
March 2020 onwards) will not be subject to a late filing surcharge until further notice andlate filing due to Covid-19 will not result in the usual restriction of reliefs, such as loss andgroup relief. In addition, various other tax filing deadlines have been extended, in particular
in respect of employer returns regarding certain benefits supplied to employees (such as
employee share schemes).

•

Irish Revenue have introduced a temporary acceleration of corporation tax loss relief foraccounting periods affected by Covid-19. It allows companies to estimate their trading
losses for certain accounting periods and to carry back up to 50% of those losses against
chargeable profits of the preceding accounting period on an accelerated basis.

•

Close companies with accounting periods ending from 30 September 2018 onwards are
required to make distributions by 31 March 2020 onwards to avoid a close company
surcharge. These companies can apply to extend the 18-month distribution period by 9months where the company is affected by Covid-19 and needs to retain cash to support thebusiness.

Government measures in key jurisdictions

67

Ireland•The reporting deadline for DAC2, CRS and FATCA returns has been extended by 3months to 30 September 2020 for the 2019 period.

•

Irish Revenue have confirmed that Ireland has opted-in to Council Directive 2020/876
to defer the reporting and exchange of information deadlines under DAC6 by 6 months.

•

Employers can pay remote workers up to Ä3.20 per day without deducting income tax
to cover electricity, heating and broadband costs. Employees working from home canclaim Remote Working Relief to cover a portion of such costs where their employer does
not make the above payment.

•

A benefit-in-kind will not arise for employees where employers:– provide employees with equipment to allow them to work remotely,– reimburse flight or holiday cancellations for employees integral to the business until
30 December 2020, or– Supply temporary accommodation to employees to mitigate the risk of transmission.
Due to Covid-19 circumstances, some private healthcare providers may issue a fund ofhealthcare insurance premiums to an employer/employee and individual policy holders
who have personally paid for the policy. The amount taxed as a benefit-in-kind will be
reduced to reflect the reduced policy amount.

•Company
law matters
Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

In an effort to address the practical difficulties arising from the Covid-19 pandemic, the Irish
Government has passed the Companies (Miscellaneous Provisions) (Covid-19) Act 2020(“Act”), which was commenced by the Minister for Business, Enterprise and Innovation on the
21st August 2020. The Act is in force for an “interim period”, initially ending on 31 December
2020, but has been extended by S.I. No. 672/2020, Companies Act 2014 (Section 12A(1))(Covid-19) Order 2020 to 9 June 2021. The provisions of the Act complement the Covid-19
Workplace Protection and Improvement Guide, which provides recommended practices
for the use of technology for video/ virtual meetings and limiting the number of meetings
including length and proximity of gathering of employees and others.
Virtual Meetings:•

A company may hold a general meeting remotely through the use of any
technology provided the members can vote and participate in the meeting. However,there is no longer a need for a physical location to be specified in order to hold a meeting.
All general meetings for the interim period can be conducted wholly or partially remotely
provided attendees have the ability to vote and otherwise participate in the meeting.

•Board meetings are also capable of being convened through electronic means or bypassing a written resolution.

Proxies: Members are also allowed to appoint another person to vote on their behalf as a proxy.
The use of these methods is subject to the provisions found in the company’s constitution.
Some constitutions may expressly forbid their use. Notwithstanding anything in the company’s
constitution, each member and proxy who participates in a general meeting by electronicmeans will be counted in the quorum.

68

Government measures in key jurisdictions

IrelandTime Restrictions: Another change introduced by the Act is the requirement to hold ageneral meeting within 15 months of the previous AGM (as was required under theCompanies Act 2014). The Act provided that an AGM that was due to be held in the interim
period may be held on any date up to 31 December 2020, regardless of whether the AGM falls
outside the 15 month requirement. Importantly however, this deadline has not been extended
to 9 June 2021 and so companies must comply with the statutory requirement to hold an
AGM within 15 months of the last one and not later than nine months after the company’s
financial year end.
Cancel/Postpone: Directors of a company can (i) cancel, (ii) change the date or venue, or (iii)change the meeting from a physical to virtual setting (or vice versa), up to the day before theschedule date of the meeting. In exceptional and unexpected circumstances, the meeting
may be cancelled at any time prior to holding the meeting. Where it is not possible to givenotice of a cancelled/rescheduled meeting, the company may give notice on (i) its website,(ii) by email and (iii) by advertising in a national newspaper. Single member companies andprivate companies limited by shares may also dispense with the need to hold a general
meeting by passing a written resolution.
Notices:•

While notice periods for general meetings remain 21 days, where it is being heldelectronically the notice is required to include details of (i) the electronic platform being
used, (ii) the procedure for asking questions during the meeting, (iii) restrictions in place
to identify attendees at the meeting, and (iv) procedure for voting.

•

Other changes introduced by the Act include:- Financial statements - The requirement that financial statements be made to up to a dateno earlier than 9 months before the AGM will not apply to an AGM held within the interim
period, meaning that the AGM may be held more than 9 months later than a company’s
financial year end.
- Dividends - The Act further provides that where a company has previously
recommended a dividend, such recommendation may be withdrawn or amended by the
directors if after convening the meeting they believe that the consequences or fallout of
Covid-19 on the affairs of the Company, would justify such actions.

For more information click here.

Government measures in key jurisdictions

69

IsraelSimon Jaffa | sjaffa@barlaw.co.il | +3 640 0600

Contributor: Barnea

Loans andfinancialsupportFollowing the initial outbreak of the pandemic, the Israeli government has declared several
support initiatives in an aggregate amount exceeding NIS 100 billion. These support initiatives
included government-backed loans, governmental grants to businesses implementing social
distancing and innovative communication technologies, deferral of tax payments, andcancellation of municipal and other taxes.

Has thegovernment put
in place any newbank funding
schemes?

Specifically, the government had initially allocated up to NIS 22 billion, which later increased to
NIS 40.3 billion, to support loans for businesses by providing funding entities with a guarantee for
95% of any loan amount provided. These monies were and continue to be provided through thegovernment’s already existing fund for supporting small-medium businesses, operated by the
Ministry of Finance, and are not time-limited.
The funding scheme is divided into two main routes (with a slight overlap between the two). The
first route is designated for small-medium entities (SMEs) whose turnover did not exceed NIS 400
million in the previous year. The second route is designated for large entities (LEs) whose turnoverexceeded NIS 200 million in the previous year. By December 2020, of the NIS 40.3 billion morethan NIS 23 billion had already been approved for more than 57 thousand loan applications.
Under the SME route, each SME may request a loan of up to 40% of its previous year’s turnover,limited to up to NIS 20 million. Under the LE route, each LE may request a loan of up to 8% of its
previous year’s turnover, limited to up to NIS 100 million (while for hi-tech companies the 8% may
be based on the company’s costs, other than financing costs). The loans for SME’s are provided
with attractive interest for a period of 10 years, while the loans for LE’s are provided with attractive
interest for a period of up to five years, with each entity also allowed a 12-month grace period on
loan repayment. The government further undertook to finance for SMEs any interest due on theloan during the first 12 months. The loans are also made available to new businesses, who canreceive up to the lower of NIS 500 thousand or 16% of their costs.
As a precondition to receipt of the loans, all borrowing entities are required to demonstrate thatthey experienced cash-flow difficulties due to the Covid-19 pandemic, as well as to provide thefinancing entities with a deposit equal to 5% of the loan.
The government has also increased the funding of several government aided programs andagencies, such as the Israeli Innovation Authority, aimed at the advancement of advanced
technologies to help stimulate the hi-tech industry, and to address the shortage of skilled
manpower therein.
Another manner in which the government has provided financial support was through easing of
regulations on the banks as well as grant of loans at low interest rates by the Bank of Israel to thebanks. One such change in regulation included allowing the banks to reduce their leverage ratio
by 0.5%, thereby allowing the banks more freedom in granting loans.

Employment
What financial
support is thegovernment
providing tobusinesses andto individuals on
employment
issues?

70

Encouragement Grant Law, 2020 was passed, enabling employers who recruited or returned towork a "qualifying employee" to be eligible for a grant. A grant of NIS 3,500 will be paid (inmonthly installments of NIS 875) if the "qualifying employee" returned to work or was recruited
before June 1, 2020. A grant of NIS 7,500 will be paid (in monthly installments of NIS 1,875) if
the "qualifying employee" returned to work or was recruited after June 1, 2020.
A "qualifying employee" is an Israeli resident whose monthly salary is at least NIS 3,300 and towhom one of the following applies:• he/she is between 18 years old and 67 years old,
• one of the following applies:- he/she was discharged to unpaid leave between March 1, 2020, and April 30, 2020, or wason parental leave during the aforementioned period, or- he/she was eligible for an adjustment grant or income security benefit or unemployment
benefit for May 2020.

Government measures in key jurisdictions

IsraelThere have been no extensions of or additions to this law, and the window for placing
requests for such grants closed on January 31, 2021.
Eligibility for unemployment benefits has been extended to 30.6.2021 for individuals who
were furloughed or dismissed, and who fall into one of the following categories:•
Individuals whose eligibility for unemployment ended on or after 1.3.2020, or•Individuals whose eligibility for unemployment ended before 1.3.2020, and who
stopped working between 1.3.2020-30.6.2021, or•Individuals whose eligibility for unemployment ended in January or February 2020.
The National Insurance Institute is providing grants to individuals that return to work after
having been furloughed or dismissed. Those who return to work for their previous employer
or begin working for a new employer for a salary lower than their salary prior to furlough or
dismissal are eligible for the grant. So long as they remain employed, individuals may receive
the grant for a period of up to four months, from the date of return to work and no later thanJune 30, 2021.
The grant is calculated per day of work (up to a cap of NIS 200 per day). The size of the grant
is determined by an individual's previous salary and their new salary upon return to work.
There are separate calculation schemes for those under age 28 and those age 28 and above.
To be eligible for the grant, an individual must meet all of the following criteria:•
The individual was not employed between the dates August 8, 2020 to October 31,
2020 (inclusive);•
The individual received at least 75 days of unemployment insurance, between the
March 1, 2020 and October 31, 2020 (whether paid consecutively or not);•The date the individual returned to work was between November 1, 2020 and
February 28, 2021.
•
The individual returned to work as an employee for at least 14 days (consecutive or not).
Additionally, the National Insurance Institute has paid one-time grants in an amount of NIS
2,000 to lower-income individuals who received unemployment insurance based on low
income for an extended period of time. Individuals were eligible for said grants if thefollowing two criteria were met:•
The individual received unemployment insurance for at least 100 days (consecutively ornot), between the March 1, 2020 and October 31, 2020;•
The individual's average daily wage was less than NIS 422.04.
The grants were to have been automatically transferred to eligible individuals by the middleof December, 2020. Additional grants of this type have not been administered.
Finally, although not immediately in the realm of employment, it is important to note that thispast summer the government issued one-time grants to all citizens and residents of Israel, as
follows:•
750 NIS to all adults•
An additional grant paid to parents of minors:- 500 NIS for each child, up to and including the fourth child- 300 NIS for each additional child after the fourth•Those who are eligible for national insurance benefits (such as supplemental security
income or alimony) are eligible for an increased grant of 1,500 NIS•
Individuals whose yearly income in 2019 was above 649,560 NIS (gross) are ineligible
for the grant
While there are currently government-level discussions concerning another grant payment,
no decision has been made regarding additional individual grants.

Government measures in key jurisdictions

71

IsraelInsolvency
Has thegovernment
made anychanges
to insolvency
legislation?

Israel’s insolvency legislation has not changed during the Covid-19 pandemic. However,during the month of July 2020, the Israeli Ministry of Justice introduced a draft bill for new
regulations, allowing a company additional time to reach an agreement with its creditors.
Under the proposed new regulations, courts will have the option to order a stay ofproceedings for a period of up to three months for a company experiencing difficulties, prior
to declaring such company insolvent. This three-month period will allow the company toreach an agreement with its creditors, while simultaneously prohibiting the withdrawal offunds and assets from the company. However, the new regulations have yet to be adopted,
and it is unclear if and when they will be.
Furthermore, additional reliefs were introduced during this period, such as a reduction of themonthly payments due by debtors under receivership and temporary exemptions from thesepayment obligations. However, all such reliefs were provided on a case-by-case basis, and not as achange to legislation.

Contractual
IssuesThe Israeli government has not implemented any specific measures to reinforce contracts.
In Israel, the "freedom of contract" principle is very dominant. Thus, any enforcement ofcontracts is considered a commercial issue between the parties.

What measures
have been taken
to reinforce
contracts?

However, a special inter-office governmental team has issued a legislation proposal withrespect to specific arrangements regarding certain industries including the entertainment
industry, event halls as well as private kindergartens, while noting that they do not believethat they should interfere with all other industries. They recommended that all parties inother industries apply the “good faith” principle when looking to enforce or amend acontract.
Furthermore, while the force majeure principle exists under Israeli contract law, it has been
greatly minimized by the courts, and is even deemed by some as a dead letter. A recent
decision of the Tel Aviv district court has reinforced this position, as the court failed to see
the Covid-19 pandemic as a force majeure event. However, a separate decision by the same
court in a different matter did recognize that the Covid-19 pandemic could be deemed aforce majeure event in certain circumstances, creating more uncertainty, which shall only
be resolved if and when such questions reach the Israeli Supreme Court. That said,
the parties are free to agree on any force majeure provisions between themselves, and insuch event the contractual agreement would prevail.

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

An inter-ministerial committee has been set up to examine the impact of the Covid-19
pandemic on general contract law. In particular, the committee considered if the pandemic
constitutes a force majeure event that justifies the breach or cancellation of a contract by one
party without the payment of compensation to the other.
According to the committee’s report from July 2020, the epidemic and especially its
consequences could not have been foreseen and it created exceptional circumstances,which materially impaired the possibility of fulfilling contracts as the parties agreed upon.
However, the committee determines this does not allow the parties to a contract to waive
their contractual obligations and they must make every effort to continue to abide by thecontracts they have entered into, and negotiate with good faith in order adapt the contract’s
terms to the current circumstances.

72

Government measures in key jurisdictions

IsraelFurthermore, the committee recommends to legislate individual arrangements for contracts
in the field of shows, banquet halls and private kindergartens, and on the other hand it
recommends to not interfere with such legislation for complex markets, such as the business
rental market.
In due course and according to the committee’s conclusions and recommendations, thelaws relevant to property and rent may be amended according to the conclusions andrecommendations of the committee.
In addition, according to the Israeli Rent Law, tenants might be exempted from rent
payment, provided their premises cannot be used due to a reason related to the premises orthe access to it. Nevertheless, these provisions are not mandatory for non-residential leaseagreements. Many rental agreements for premises serving retail or leisure purposes (whichwere completely closed due to government orders) do not apply the Rent Law, but even if
the Rent Law does apply, most Israeli courts’ rulings so far, do not tend to approve such
exemption under the Rent Law because of the Covid-19 pandemic and its consequences.

Litigation
Are the courts
operating?

On March 15, 2020, the Minister of Justice (MOJ) signed and issued emergency orders
affecting most civil and criminal procedures in Israeli courts. Pursuant to these emergency
orders, most hearings in civil cases were halted, except for special cases such as hearings remotions for temporary and interim remedies.
Moreover, the submission of court papers was also postponed, except if a contradicting andoverruling decision in a specific case was handed down by the relevant court or if a specificdate was given to submit such court papers.
Most of the limitations imposed by the MOJ's emergency orders were lifted on May 10, 2020,
thus resuming any submissions halted due to these emergency orders and allowing mostprocedural matters to return to normal, including the holding of court hearings.
On 7 January 2021, the Court's Administration announced, in light of Israel's third quarantine,during the month of January 2021, the courts will act proactively to postpone hearings, andwill be considerate while reaching a decision concerning motion to postpone hearing or
motion to postpone submission of court documents.

Tax
Has any new
legislation been
introduced in lightof Covid-19?

Temporary emergency regulations were published to provide extensions for certain taxrelated deadlines as a relief measure due to the Covid-19 pandemic. These include:• Extensions of the deadlines for reporting and payment of VAT for the months January,
April and November-December 2020, with respect to dealers reporting on a monthly andbi-monthly basis;• Extensions of the deadlines for filing 2018 and 2019 income tax returns forindividuals/corporations;• Extensions of the validity of 2019 withholding tax certificates;• Extensions of the validity of 2019 tax coordination certificates; and• Mechanism of double depreciated for assets purchased between 1 September 2020 and
30 June 2021.

Government measures in key jurisdictions

73

IsraelIn addition, the period between March 22, 2020, and May 31, 2020 (with respect to Israeli Real
Estate Taxation Law the period has been extended until June 30, 2021), shall not be counted
as calendar days when determining the tax-related deadlines detailed under certain sectionsof various Israeli tax laws, such as the Israeli Income Tax Ordinance, the Israeli Value Added
Tax Law, the Israeli Real Estate Taxation Law etc.
Moreover, according to a new legislations, reimbursement of income tax advances paid forthe months of January and February 2020 is now available, if it was proved to the assessing
officer that the tax which the taxpayer may owe for 2020 will be less than the amount ofadvances he owes for that year.
Monetary grants not subject to VAT were also provided to businesses hurt by the Covid-19
pandemic. The grants were doled out in three rounds:
Round #1 – This grant is for self-employed individuals with at least a 25% decrease inrevenues during March-April 2020 compared to those months in 2019, subject to certain
additional conditions. The grant amount is up to NIS 6,000, and the application for the grant
must be submitted by no later than July 1, 2020.
Round #2 – This grant is for self-employed individuals and salaried business owners with atleast a 25% decrease in revenues during March-June 2020 compared to those months in
2019, subject to certain additional conditions. The grant amount is up to NIS 10,500, and theapplication for the grant must be submitted by no later than August 17, 2020.
Round #3 – This grant is for self-employed individuals and corporations for help with fixed
expenses and is granted to businesses with an annual turnover of up to NIS 20 million andwhose profits were affected by Covid-19 (at least a 25% decrease in revenues during MarchApril/June 2020 compared with those months in 2019). The grant amount is up to NIS
400,000, and the application for the grant must be submitted by no later than November 15,
2020 (and for “Amendment for existing grant application" intended for cash-based reporters,
no later than January 31, 2021).
Furthermore, temporary emergency regulations were published to provide the following
additional grants:
1. A special grant for every family; 500 NIS for every child up to the fourth child (and NIS
300 for each additional child), and NIS 750 for each senior citizen above 18. Such grants
will not be deemed as income in the hands of the individuals.
2. A special adaption grant to those who have reached the age of 67 and who weredismissed or sent on unpaid leave by their employer between 1.3.2020 and 15.8.2020 for
a period of at least 30 days, if they meet the conditions of entitlement. The grantamounts range from NIS 1,000 to NIS 4,000 per month, depending on the level of theemployees' income from the pension. The grant does not affect entitlement to an old-age
pension.
3. Small business expense bi-monthly grant for self-employed individuals with turnover ofup to NIS 300,000 in 2019, whose turnover was affected by the Covid-19 (at least a 40%
decrease in revenues during the months May to August 2020 and 25% decrease inrevenues during September 2020 to June 2021 (the decrease is determined incomparison with those months in 2019)). The grant amount is up to NIS 6,000 and theapplication for the grant must be submitted by no later than February 15, 2021 (withrespect to September-October 2020 grant).
4. Bi-monthly grants for self-employed individuals and salaried business owners with atleast a 40% decrease in revenues during each couple of months between May-December
2020 compared to those months in 2019, subject to certain additional conditions. In
addition, there are eligibility periods between January-June 2021 that have not yet been
finally approved. The Bi-monthly grant amount is up to NIS 15,000, and the application
for the grant must be submitted no later than April 15, 2021 (with respect to NovemberDecember 2020).

74

Government measures in key jurisdictions

Israel5.

6.
7.

Special bi-monthly grants for self-employed individuals and corporations for help with
fixed expenses that have not been spared, despite the decrease in the volume of activityof the business due to Covid-19, such as rent, electricity, water and etc. The grants are
granted to businesses with an annual turnover of up to NIS 400 million in 2019 andwhose turnover was decreased due to the Covid-19 (25-80% decrease in revenues on abi-monthly basis during the months May 2020 to June 2021 compared to those in 2019).
The grant amount is up to NIS 500,000.
Entitlement to tax-free withdrawal of funds from a study fund up to a ceiling of NIS 7,500
per month (even if 6 years have not yet passed since the first deposit to the fund).
A one-time grant for self-employed individuals and corporations with turnover up to NIS
400 million and whose turnover was decreased during 2020, due to the prolonged
affection by the Covid-19, in at least 25%, compared to the turnover in 2019, subject tocertain additional conditions. The grant amount of up to NIS 50,000.

In addition, as part of the government's efforts to strengthen the real estate and constructionindustry in light of the Covid-19, a reduction of purchase tax brackets for an additional
residential apartment (a residential apartment that is not the buyer's single apartment) wasapproved in order to motivate the real estate market.

Company
law matters

Other than for certain regulatory documents, Israeli law makes no requirements for documents
to be signed or submitted in person, and most documents may be executed electronically or
by scanned version.

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

The Israeli Companies Law does not require any corporate meetings to be held in person, andunless specifically noted otherwise in a company’s bylaws, all such meetings may be held
remotely by means of telecommunication, provided all participants are be able to speak andhear one another in parallel.
Furthermore, all regulatory authorities (such as the Israeli Registrar of Companies) have madeefforts to accommodate social distancing, by allowing companies and entities to submit
reports and documents through the internet or by email. An additional temporary relief
includes the ability to verify the signatures of individuals located in Israel remotely by means oftelecommunication, instead of in face-to-face meetings.

Government measures in key jurisdictions

75

Government measures in key jurisdictions

7
6

55

ItalyMarco Gubitosi | mgubitosi@legance.it | 353 1 673 1705
Lorenzo Gentiloni Silveri | lgentiloni@legance.it | +39 069318271

Contributor: Legance

Loans andfinancialsupportFinancial assistance is available under several schemes that have been introduced in Italy:•

Central SME Guarantee Fund (“CSGF”): the SME guarantee scheme, already existing prior
to the Covid-19 outbreak, has been extended by the Italian Government until 30 June 2021
(saved for those companies with a total number of employees not inferior than 250 and no
more than 499 for which the CSGF is extended until 28 February 2021). The guarantees will
now be issued free of charge and not subject to any credit risk assessment and the
maximum guarantee per SME will be increased to Ä5 million. The guarantee percentage
shall be equal to the 90% of the loan for financial transaction with a duration up to six
years. In case of loans up to Ä30k, with a maximum duration of fifteen years, which
provides the repayment not early than 24 months, the guarantee percentage shall be equal
to the 100%. Such scheme is available to SMEs with fewer than 250 employees and annual
turnover below Ä50 million or an annual balance sheet of up to Ä43 million. SMEs with“unlikely to pay” debt exposures or “in difficulty” can benefit from this scheme. The
guarantee may also be issued on transactions already executed. However, this possibility
only applies if the loan has been disbursed no more than 3 months before the application
to the Guarantee Fund and, in any case, no earlier than 31 January 2020.

•

Support by way of Guarantee by SACE S.p.A. (“SACE”): the Italian Government has
introduced the possibility for SACE to grant guarantees over new financing granted bybanks, financial intermediaries and any other authorised financial entities to Italiancompanies negatively affected by the Covid-19 outbreak (the “SACE Guarantee”). The totalcommitment of SACE in relation to the SACE Guarantee will be equal to a maximum
amount of Ä200,000,000,000 (of which, at least Ä30,000,000,000 is allocated tosupport SMEs (including self-employed persons and VAT-registered professionals as wellas to professional associations and/or professional organisations (associazioni professionali
e alle società tra professionisti)) provided they have already made full use of the CSGF). The
obligations of SACE arising from the granting of the SACE Guarantee are counterguaranteed by the Italian State. Such scheme is available in relation to financings, granted
to companies only after the entry into force of the Law Decree No. 23/2020 and within 30
June 2021:

Has thegovernment put
in place any newbank funding
schemes?

i. with maturity no longer than 6 (six) years (with the possibility to set a pre-amortisation
period of up to 36 (thirty-six) months) and, in any case, falling no later than 30 June 2027.
ii. which do not exceed the higher of (a) 25% of the turnover (fatturato) made by therelevant company during the financial year 2019, as resulting from the relevant approved
financial statements or tax declaration and (b) twice as much as the relevant personnel
costs (costi del personale) incurred during the financial year 2019. In case the same
company (or another company belonging to the same group) has already received otherfinancings secured by the SACE Guarantee (or other public guarantee) (the “Additional
Financings”), the amount of such Additional Financings shall be taken into account for the
purposes of the calculation of the abovementioned maximum threshold.
iii. whose proceeds will be applied (1) to cover (a) personnel costs (costi del personale), (b)investments or (c) working capital, employed in manufacturing facilities (stabilimenti
produttivi) and business activities (attività imprenditoriali) which are located in Italy or (2) torepay an existing financing, provided that (a) the principal amount of the new financing is
at least 25% higher than the principal amount of the existing financing to be paid and (b)due to the granting of the SACE Guarantee the new financing benefits from lower costs ora longer maturity than the existing financing to be repaid.
•Companies which benefit from the SACE Guarantee (and any other company of therelevant group, if any) cannot (i) distribute any dividends and/or (ii) repurchase their sharesfor the 12 months following the granting of the relevant financing (in case the payment of
the dividends or the performance of share buyback has already occurred as at the date ofrequest of the financing, such restriction will apply in relation to the 12 months following
the abovementioned request). Such companies benefit from the SACE guarantee also inthe context of assignment of receivables, either pro soluto or pro solvendo to banks,financial intermediaries and any other authorized financial entities made after 7 June 2020.

Government measures in key jurisdictions

77

Italy•For the avoidance of doubt, the SACE’s guarantee is not available to companies which
directly or indirectly control (or are controlled by), pursuant to Article 2359 of the Italian
Civil Code, a company resident in a country or territory that is not cooperative for tax
purposes (as identified in the conclusions of the Council of European Union dated 18
February 2020). Companies with “deteriorated” debt exposures, or “in difficulty” cannot
benefit from this scheme.
Loan repayment suspension: SMEs may postpone payment of principal and interest
on any loans. Revocable credit lines and factoring facilities cannot be revoked until 30
June 2021 if the SME sends relevant notice to creditors. As to the applicability criteria,
the same criteria as per the CSGF paragraph above will apply.

Employment The Italian Government introduced the following schemes to support businesses:
What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

•A. Social programs: if an employer must suspend employees from work since
the business activity is suspended or reduced due to the Covid-19 emergency, it canapply for the following social funds (wage subsidy schemes):
1.Cassa Integrazione Guadagni Ordinaria (CIGO): available to industrial companies
staffed with more than 15 employees.
2.Fondo d’Integrazione Salariale (FIS): available to non-industrial employers
enrolled with FIS that are staffed, as an average, with more than 5 employees.
3.Cassa Integrazione Guadagni in deroga (CIGD): available to all businesses, even verysmall ones, that are not covered by CIGO/FIS.

Under the above schemes, which normally imply a consultation with the Trade Unions
before being implemented, employees who are suspended from work receive an allowancefrom the social security authority (“INPS”) equal to 80% of the lost salary with a cap of
Ä1,129 net per month. These schemes initially covered a period of 18 weeks until 12 July
2020, were then repeatedly extended and are currently expected to last until 30 June 2021
(31 March 2021 for the CIGO).
As an alternative to the use of the above schemes, an exemption from social security
contribution obligations has been introduced in favour of employers that have previously
used social plans. So employers that used social plans in May/June 2020 but did not apply
for social plans in the period from January to March/June 2021 may request this exemption
for 2 months.
In parallel with this new range of Covid-19 related social plans, the Italian Government
introduced a firing ban which was initially intended to last until 17 August 2020. The ban
regards both collective and individual dismissals for redundancy reasons (somecategories are excluded, such as executives or domestic employees, and disciplinary
dismissals remain of course feasible).
This ban has been repeatedly extended and is currently expected to last until 31 March
2021 with a few exceptions. Indeed, dismissals are now allowed for (i) companies ceasing
their business activity and put under a liquidation procedure; (ii) companies which wentbankrupt; and (iii) companies which enter into a collective agreement with trade unions
providing for the payment of an incentive to leave to those redundant employees who
accept to mutually terminate their employment relationship. The possible extension of
the ban after 31 March 2021, maybe on a partial and more selected basis, is currently
under discussion.

78

Government measures in key jurisdictions

Italy•B. Review of working time by collective agreement: company-level or local collective
agreements entered into with the Trade Unions may define patterns for the remodulation of working time (a part of which is to be dedicated to training courses). A
special fund called “New Skills Fund”, with an endowment of Ä430 million for 2020and Ä300 million for 2021, will bear the cost for training hours (this measure needs tobe implemented by a ministerial decree). The agreement with the Trade Unions has to
be entered into before 30 June 2021.

•

C. Funds for the safeguard of occupation: a specific new fund with an endowment of
Ä300 million for 2020 has been established in order to support the rescue andrestructuring of, among others, companies with at least 250 employees that are ineconomic and financial difficulty.

•

D. Fixed-term employment contracts: until 31 March 2021 fixed-term employment
contracts can be renewed or extended, only once, for a period of 12 months, even
without the specific reasons (“causale”) that are generally required by law, subject toan overall duration that cannot exceed 24 months. Based on a reasonableinterpretation of the provision, the same exemption should apply also to existing
fixed-term staff-leasing contracts.

•

E. Other wage subsidies: regions, other territorial authorities and Chambers ofCommerce may adopt aid measures, using their own resources, in order to contributeto the salary and social security costs incurred by companies to avoid redundancies
during the Covid-19 pandemic. This subsidy may be granted for a maximum of 12months and up to 80% of the gross monthly salary (including the social security
contributions) and only if the staff benefiting from it continues to work throughout theperiod for which the aid is granted. It remains to be seen whether the regions andother entities will actually offer such measures, given the likely unavailability ofresources.

The Italian Government also introduced the following new and exceptional schemes tosupport individuals:
•

•

•

•

Paid Parental leave: in case of parents that live in highly affected geographical areas (socalled “red zones”) where schools children between 11-14 approx. are closed, one of theparents, if prevented from working remotely, can benefit from a parental leave paid by thesocial security administration at 50% of the salary.
Remote Working: in general, the Italian Government recommends maximizing the use ofhome work which until 31 March 2021 can be implemented without entering into individual
agreements which are otherwise required by law. Also other bureaucratic steps have beenlightened (including in terms of health and safety information obligations). In addition,
until 30 June 2021, parents of seriously disabled children are entitled to work remotely
only if their tasks can be reasonably carried out from home and provided that the otherparent is not a non-working parent.
Employees affected by Covid-19 or quarantined: in both cases employees must be
considered on sick leave. If Covid-19 has been contracted on the workplace, the periodsof quarantine and self-isolation are considered leaves due to accident at work and thus
indemnified by the competent public insurance authority (INAIL).
Vulnerable Employees: until 28 February 2021, disabled employees or employees
affected by serious diseases had the right to be absent from work and this absence istreated as hospitalization and so this period of absence will be indemnified as sickleave. Alternatively, they are entitled to work remotely for the same period (if possible,
their tasks should be changed to be compatible with remote working).

Government measures in key jurisdictions

79

ItalyInsolvency

The Italian Government has adopted – among others – the following measures:

Has the•government madeany changes
to insolvency•
legislation?

•••

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

the automatic extension by six months of the deadlines for performing/fulfillingcomposition with creditors plans and debt restructuring agreements already validated
by the competent Courts, if expiring after 23 February 2020,
the possibility to file a new composition with creditors plan/debt restructuringagreement before the validation hearing or to request an extension of the term forthe filing of the composition with creditors plan/debt restructuring agreement (if not
filed yet), if the procedure is pending as of 23 February 2020;
the postponement of the entry into force of the new Code of Crisis and Insolvency
from 1 September 2021, andthe disapplication, under certain circumstances, for losses arisen during the fiscal year
ending 31 December 2020, of the provisions that require: either the reinstatement of
the registered capital, when it has been reduced by more that 1/3rd as a consequenceof losses, or the winding up of the company. Particularly, the time limit to comply tothe obligations indicated and the non-application of the cause for winding up thecompany is postponed until the fifth year after the year in which the losses emerged,
Starting from 4 December 2020, the Court can validate the composition with creditors
plan and debt restructuring agreement even in absence of a vote by the financial
administration or by the bodies that manage compulsory forms of social security or
assistance when their approval is decisive for the achievement of the majorities andwhen the proposal to satisfy the administration or the bodies is convenient withrespect to the bankruptcy procedure.

Under a general provision, any action taken to ensure compliance with the measures
adopted by the Italian Government to contain Covid-19 emergency should be taken into
account for the purposes of excluding debtor’s liability – pursuant to the Italian Civil
Code – for delayed or omitted performance, also in relation to the application of any
related forfeiture terms or penalties.
Besides the above, all contractual remedies provided for under Italian civil law shall apply.

A tax credit equal to 60% of the rents due in March, April and May 2020 is granted totenants of shops and similar properties falling within the C/1 properties category. Such
Have any changes tax credit can be used to offset future liabilities and cannot be claimed for refund.
been made to
The statute of limitations for natural persons willing to enjoy the “first home” registration
the laws aroundtax
regime is suspended between 23 February and 31 December 2020.
property, rent andenforcement?
As to enforcement of Court measures for the release of properties also for non-residential

Property

use are suspended until 30 June 2021 in case of (i) release for failure to pay the rent at thedue dates or (ii) release due to transfer of foreclosed properties inhabited by the debtor
and its family members. All other measures for the release of properties also for nonresidential use were resumed starting from 1 January 2021.
Garnishments proceedings over “first home” properties are suspended until 30 June 2021.

80

Government measures in key jurisdictions

ItalyFurther, with reference gyms, swimming pools and sports facilities lease agreements,
the sport activities suspension set forth during the emergency shall be assessed asfactor of “unbalance” between the interests under the agreement, so triggering therelevant remedies provided for under the Italian Civil Code (such as fee reduction).

Courts resumed the ordinary course of business starting from 12 May 2020. At least until
the end of the state of emergency (currently set for 30 April 2021) the activity of the
judiciary is still managed mainly though virtual and written hearings and remote judicial
activities.

Litigation
Are the courts
operating?

In addition, starting from 30 June 2020 parties are required to engage in compulsory
mediation as a pre-condition to commencing Court proceedings for contractual disputes
where the compliance with the emergency regulations issued in relation to the Covid-19
pandemic is at stake as a reason for the non-fulfilment of contractual obligations.

Tax•

Tax credit for rental fees: A tax credit equal to 60% of monthly rental fees paid in
March, April, May and June 2020 (or until 30 April 2021 for entities active in the touristic
sector) is granted to enterprises and self-employed workers in connection with rentalof real estate assets. This tax credit is available subject to the following conditions: (i)the taxpayer had a total turnover in 2019 not higher than Ä5 million, (ii) the taxpayer
suffered a turnover reduction of at least 50% compared to the relevant months in 2019,(iii) such monthly fees have been fully paid in 2020. This tax credit is limited to 30% if
the real estate is available by means of a going concern lease agreement or similar
mixed contracts. A tax credit equal to 20% of the rental fees is also granted to entities
exceeding the Ä5 million threshold (in such case, the tax credit is limited to 10% in caseof going concern lease). The tax credit can be used to set off tax liabilities, can be
assigned to third-parties or can be transferred to the lessor as consideration for therental fee. For certain entities affected by Covid-19 restrictions (such as restaurants,
bars, etc.) such tax credit is also available for the period between October andDecember 2020, regardless of the aforementioned total turnover threshold mentioned.

•

Revaluation of real estate assets for hotelier activities: taxpayers that carry out
hotelier activities can step-up to the fair market value the tax costs of real estate assets
used in their business activity. No substitutive tax is due. This measure allows tominimize the taxable capital gain upon disposal of the above assets.

•

Tax credit for capital increase of medium-size enterprises: Taxpayers can benefit
from a tax credit equal to 20% of any capital increase (up to Ä2 million) in certain
qualified Italian-based companies. In addition to the above, the qualifying Italian-based
companies increasing their capital are also themselves entitled to a tax credit (up to a
maximum of 30% of the capital increase or to 50% in case of resolution and payment of
the capital increase in the first semester of 2021) equal to 50% of the net operating
losses exceeding 10% of their net equity. The total amount of benefits is capped
to overall Ä800,000 per company. The tax credit applies subject to the following
conditions: (i) the capital increase is resolved and fully paid between 20 May 2020 and

Has any new
legislation been
introduced in lightof Covid-19?

Government measures in key jurisdictions81

Italy31 December 2020 (or in the first semester of 2021, but in this case only the beneficiarycompany is entitled to receive the tax credit), (ii) the companies resolving the capitalincrease had, in 2019, a turnover between Ä5 million and Ä50 million (on a groupconsolidated basis) and suffered a turnover reduction during March and April 2020 ofat least 33% compared to the same months of 2019 (on a group consolidated basis).
A recapture mechanism will apply if, before January 2024 (or January 2025 for capitalincreases occurred in 2021), one of the following cases occurs: (i) transfer of the shares or
quotas received upon the capital increase, (ii) distribution of reserves. The
implementation of this provision is subject to the authorization of the European
Commission.

Company
law matters
Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

82•

Tax allowance for investment in innovative start-ups: Individuals investing in one ormore innovative start-ups or in innovative small-medium enterprises starting from 19
May 2020 can benefit from an allowance for personal income tax (so-called “IRPEF”)
purposes equal to 50% of the investment made. This benefit is capped at Ä300,000
for each tax year. The investment is subject to a lock-up period of 3 years (otherwise arecapture mechanism will apply).

•Tax allowance for qualified renovation works: Individuals can set off in 5 yearly
instalments an amount equal to 110% of certain qualified renovation expenses (aimed
at either increasing the energy efficiency, reducing the seismic risk, installingphotovoltaic systems or devices for charging electric vehicles) incurred between 1 July
2020 and 30 June 2022. The tax benefit can be used for either: (i) a discount by theservice provider on the agreed fee for the relevant work, since the service provider will
be entitled to enjoy a tax credit corresponding to the discount made or to assign for
consideration such credit to third parties, or (ii) the conversion of the tax allowance
into a tax credit, which could be either enjoyed or assigned for consideration to third
parties, including banks and financial intermediaries. The assignees of the tax credit
can use the relevant tax benefit to set it off against their own tax liabilities (in the same
residual yearly instalments available to the taxpayer prior to the transfer orassignment). Any yearly deductible instalment not used to set off tax liabilities cannot
be carried forward or claimed for refund. The benefit is capped to Ä50,000, Ä40,000
or to Ä30,000 per residential unit, depending on the type of buildings.

•

Non-refundable grants: Lastly, non-refundable cash grants will be paid by the Italian
Tax Agency to certain qualified business entities, especial in the retail business.

All companies are allowed to hold shareholders’ meetings (which are convened within theend of the state of emergency and, in any case, no later than 31 March 2021) by means oftelecommunication – even in case their by-laws do not set forth specific provisions for such
purpose – provided that identification of participants, their attendance and voting rights areguaranteed.
The requirement under which the chairman and the secretary of the meeting shall be in
the same location – even when expressly provided for in the company by-laws – is also
derogated.

Government measures in key jurisdictions

JapanContributor: Atsumi & Sakai

Loans andfinancialsupport•Has thegovernment put
in place any newbank funding
schemes?

i.

Ryuichi Nozaki | ryuichi.nozaki@aplaw.jp | +81 (0)3 5501 2138
Naoki Kanehisa | naoki.kanehisa@aplaw.jp | +44 (0)20 3696 6540
Akira Shimazaki | akira.shimazaki@aplaw.jp | +81 (0)3 5501 2195

The Japanese government declared a State of Emergency on 7 April 2020 and thesame day the Financial Services Agency (the “FSA”), Japan’s financial service
regulatory authority, requested financial institutions to support borrowers’ cashflow by:

actively providing new loans, and promptly and flexibly rescheduling repayment
terms of existing loans in light of changes to borrowers’ ability to repay,
ii. cooperating with public credit guarantee associations (funded by local
governments) to provide loans with zero interest and no collateral,iii. not automatically triggering acceleration of repayments when borrowers cannot
comply with financial covenants but instead promptly and sincerely discussing
relaxation of covenants if the borrower requests,
iv. closely cooperating with the Japan Finance Corporation (the “JFC”), a publicfinancial institution wholly owned by the Japanese government,
v. promptly and flexibly changing repayment terms of residential loans or loans forindividual borrowers, or guarantees for either of them, andvi. not recording borrowers’ delinquency information with credit information
institutions when any default is due to the impact of Covid-19.
•

Regarding (ii) and (iv) above, the necessary government funding to public credit
guarantee associations through local governments and to the JFC was included in
the Emergency Economic Stimulus Package approved by the Cabinet on 7 April
and in a budget passed by the Diet on 30 April 2020.

•

On 16 April 2020 the FSA requested financial institutions to be flexible and not
immediately trigger the suspension of transactions when borrowers fail to pay
checks or promissory notes.

•

On 17 April 2020 the FSA announced that it will delay raising the minimum
leverage ratio requirement for banks whilst also disregarding banks’ deposits withthe central bank from the calculation of gross assets as the denominator for
calculating a leverage ratio, thus making it easier for banks to provide new loans orreschedule repayment terms for borrowers impacted by Covid-19.

•

JFC and Shoko Chukin Bank (“SCB”) have been providing various financial support
programmes for SMEs and self-employed persons whose sales declined frombetween 0% to 20% including lending with either no or no preferential interest for
an initial 3 years.

•

Regarding (iv) above, on 21 April 2020 the FSA explained to private sector
financial institutions that the JFC will actively assume exposures to bridge loans
provided by them to borrowers for dealing with the impact of the Coronavirus
pandemic, and requested them to provide bridge loans to such borrowers withthe anticipation that the loan exposures can be assumed by the JFC.

•

Regarding (ii) above, on 27 April 2020 the FSA urged private sector financial
institutions to provide “zero interest, no collateral and no guarantee fee” financing
with guarantees by public credit guarantee institutions to borrowers as promptly
and flexibly as possible, with zero interest etc periods of up to 5 years, as one-stopshops to process all necessary procedures with borrowers, including the guarantee
application procedures. This financing support by private sector financial
institutions started on 1 May 2020 for SMEs and self-employed persons whose
sales declined by 5% or 15% compared to the same period in the preceding year.
On 8 December 2020, the Minister of Finance announced that the application
period for the financial support has been extended until 3 March 2021.

Government measures in key jurisdictions

83

JapanOn 8 May 2020 the FSA addressed the issue of property tenant SMEs and individuals facing
difficulties in paying rents and property related- business operators (e.g., hotels and otheraccommodation service providers, leisure facility businesses, owners of buildings for rent,etc.) facing cash-flow problems due to a decline in their incomes, by:a) requesting lender financial institutions to support the cash-flow of borrowers whoare such tenants or property related-business operators by:– promptly and flexibly implementing new or bridge loans, reducing principal
and/or interest payments or rescheduling repayment terms of existing loans,– ensuring such implementation above especially where the borrowers are landlords who
have granted their tenants rent reductions or rescheduled rent payment terms, and– considering not charging fees or penalties for changing terms of existing loans.
b) requesting managers of REITs (real estate investment trusts and investment
corporations) to take flexible measures such as rent reductions or rescheduling rent
payment terms with tenants of properties under their management.

84•

On 27 May 2020 the FSA addressed the importance of private sector financial
institutions’ loans (other than those guaranteed by public credit guarantee
associations) for supporting borrowers’ cash-flow, requesting lenders to make utmost
efforts to further ensure prompt and proper support measures for borrowers, such asdeferment of principal payments or relaxation of other loan conditions and provisionof new loans. The FSA also published the following matters to note:(i) if a financial institution had evaluated a borrower as being financially sound before
the pandemic, and the borrower is now facing a deterioration of businessconditions due to the pandemic, and the financial institution has now neverthelessdecided to maintain the evaluation as before in consideration of the likelihood of
their post-corona recovery and effects of the emergency economic package, the
FSA will respect such decisions made by the financial institution.
(ii) the FSA and Local Finance Bureaus will monitor the balances of private financial
institutions’ loans (other than those guaranteed by public credit guarantee
associations) and conduct hearings concerning the status of their support ofborrowers’ cash-flow to check whether loan balances are decreasing or not.
(iii) active use of borrowings recognisable as capital (borrowed money that isdeemed to have the nature of capital through the evaluation of borrowers andthat can be treated as capital) is recommended and the FSA will clarify this in its
Guidelines for Supervision.

•

Regarding (v) above, on 27 May 2020 the FSA requested financial institutions to
support borrowers by:(i) actively offering support to customers by deferring principal payments for a
sufficient period of time or otherwise modifying loan conditions promptly
depending on customers’ needs, and refraining from charging fees formodification of loan conditions;(ii) putting in place telephone services dedicated for home loans or establishingconsultation offices both to be available even on holidays and to disseminate
information on such services broadly to help customers use them more easily;(iii) responding to customers’ concerns on other personal loans and flexibly modify
loan conditions based on customers’ needs.

•

On 10 June 2020 the FSA requested financial institutions to support borrowers by:(i) responding appropriately to requests from borrowers as those who have alreadybeen provided with loans may want additional loans due to the prolonged impact
of Covid-19,

Government measures in key jurisdictions

Japan(ii) promptly and actively providing support having regard to the situation of borrowers,
including provision of funds as required until other government-funded support
become available to them, and(iii) not judging whether to support borrowers only based on pro forma checkpoints,
such as financial deficits, excess liabilities or downgrading borrower categorisation,
but instead giving utmost consideration to the real situation of the borrowers.
•

On 17 July 2020 the FSA announced that it will accept applications and filings made to it
by financial institutions via email and without seals or stamps, which had previously
been required on original copies before Covid-19.

•

On 8 December 2020, following the announcement of “Comprehensive Economic
Measures to Secure People’s Lives and Livelihoods toward Relief and Hope” by the
Cabinet, the FSA requested financial institutions to support borrowers by:(i) responding to borrower’s requests for financial support by combining various means
such as deferment of payments or alteration of other loan conditions, providing loans
and using credit guarantee associations so that borrowers will not face serious funding
difficulties at the end of the (financial) year.
(ii) offering support by utilising funds from the Regional Economy Vitalisation Corporationof Japan and JFC’s subordinated loans.
(iii) supporting business by closely collaborating with local governments, credit guarantee
associations, JFC, SCB and other governmental financial institutions, as well as the SME
Revitalisation Support Committee, tax accountants and local organisations.
On 8 January, 19 January and 5 February 2021, following the Declaration of State ofEmergency (7 January) and the extension of the Declaration (2 February), the FSA
requested financial institutions to support borrowers by simplifying lending process,providing loans, utilising subordinated loans, amending conditions of existing loans andothers.

•Employment
What financial
support isthe government
providingto businesses and toindividuals on
employment issues?

1. Employment Adjustment Subsidy System: Japan currently has an “Employment
Adjustment Subsidy” (Koyochosei-Joseikin) system; this system has been revised by theJapanese government to help businesses suffering as a result of Covid-19. The system isdesigned to help employers avoid termination by covering part or whole of the Leave
Allowance paid by employers to employees who were made to take leave (in Japan, the law
requires the employers to pay 60% or more of the average wage of the employees whenthe employers make its employees take leave (the “Leave Allowance”)) (up to a maximumof JPY15,000 per employee per day and a maximum of 100 days in any 12 months (butdisregarding days in the period 1st April 2020 to a month following the month which thestate of emergency has been lifted if the subsidy was requested in that period)) during theperiod the employees are furloughed. This revised system shall apply during the period
from 1st April 2020 to a month following the month which the state of emergency has been
lifted. The subsidy will cover up to 100% of the amount paid by employers to theiremployees for their leave allowance (which is 60 % of their salary) required by law; subject
to the satisfaction of the certain requirements. Application for the subsidy is made to thecompetent Prefectural Labour Bureau or Employment Service Center; it can also be done
online application.
2. Support other than the Employment Adjustment Subsidy System: The government isproviding special benefits to employers that provide extra paid leave for parents who havechildren affected by school closures relating to the Covid-19 situation for the period from27th February 2020 to the end of March 2021.
For a summary of issues on employment in the context Covid-19, please visit our
website here.

Government measures in key jurisdictions

85

JapanInsolvency

As of 15 February 2021, the government has not made any changes to insolvency
legislation.

Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesExecution of Contracts•

It is common in Japan for companies to execute contracts by signing and/or affixing acompany stamp on paper documents. In many cases, even before Covid-19, contract
parties sometimes (i) executed agreements separately and then exchanged PDF
copies on the contract date, and then (ii) sent the originals to be combined as a single
agreement. This approach is legally effective and would be helpful in the Covid-19
situation.

•

On 19 June 2020, the government issued a Q&A about contracts without a stamp on
paper documents, which suggests that certain approaches including (i) keeping email
exchange records, (ii) keeping a counterparty’s KYC information (if it is a new
counterparty) and (iii) using electronic signatures or electronic authorisation services
would be helpful as evidence of the execution of contracts.

•

An electronic contract with electronic signatures without any paper-based documents
is also permitted under Japanese law, save for certain exceptions, such as individual
guarantees for a third-party business. The Covid-19 pandemic should encourage thegreater use of electronic contracts by Japanese companies. On 17 July 2020, thegovernment issued a Q&A about electronic signatures to facilitate the use ofelectronic contracts.

What measures
have been taken
to reinforce
contracts?

Force Majeure•

For a summary of issues on force majeure and frustration in the context Covid-19,
please visit our website here.

Subcontractors

86•

On 10 March 2020, the Ministry of Economy, Trade and Industry (“METI”) announced it
had requested companies to take special care in transactions with mid- or small-size
subcontractors (see more here), including (i) refraining from actions delaying supplies
to them, (ii) bearing appropriate increased costs derived from price increases in raw
materials and/or extra work of subcontractors, (iii) making payments on their due date,and (iv) refraining from cancelling or changing purchase orders.

•

The Antimonopoly Act and Subcontractors Act also prohibit certain unfair tradepractices and would still apply anyhow.

Government measures in key jurisdictions

JapanProperty
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation•

As of 15 February 2021, there have been no changes to the laws that legally allow
tenants to defer rent payments.

•

On 14 July 2020, the government announced an office rent subsidy program for selfemployed individuals and small and medium enterprises (“SME”) with a capital of lessthan JPY 1 billion and, for which sales income during 1 May to 31 December had
decreased by 50% or more from the same month of the previous year or by 30 % ormore in a total of successive three months from the same period of the previous year.
The maximum amount of the subsidy is JPY 6 million for SMEs and JPY 3 million for
self-employed individuals. This subsidy program ended on 15 February 2021 and will
no longer accept new applications.

•

For the purpose of preventing the spread of Covid-19, there may be changes withrespect to some services available at courts so it is advisable to check with thecourt in charge of one’s case before visiting the court.

Are the courts
operating?

Tax

New tax legislation in relation to Covid-19 has been introduced, including the following measures.

Has any new•
legislation been
introduced in lightof Covid-19?
•

•

•
•
•
•
•

One year grace period for payment of national and local taxes, and social insurance
premiums (whose due date is before 1 February 2021) with no delinquent tax by business
operators whose revenues during any period of 1 month or longer commencing after 1
February 2020 have decreased by approximately 20% or more from the same period of theprevious year.
One year grace period for payment of national taxes (whose due date is after 1 February 2021)
with reduced delinquent tax by individuals or business operators who (i) will have a risk ofdifficulty in continuing business or maintaining livelihood doe to tax payment, (ii) have thesincere intention to pay the tax, (iii) have submitted their application within six months of thedue date and (iv) have no delinquency in payment of taxes other than the national taxes forwhich the deferment is sought.
One year grace period for payment of national taxes (whose due date is after 1 February 2021)
with no delinquent tax by individuals or business operators (i) who have disposed of theirequipment and inventories due to disinfection work conducted at their facility where a Covid
outbreak occurred, (ii) who either they themselves, or another family member who also
contributes to the household , was infected, (iii) whose business has been closed due tounavoidable circumstances or (iv) whose business has had significant loss due to a decreasein profits etc.
A tax refund system may be applied to firms capitalized at over 100 million yen but below 1
billion yen through tax loss carrybacks.
Tax regime for capital investment for teleworking.
Donation deductions apply to spectators, etc. who give up the right to claim a refund fromorganizers who cancel an event based on the government’s request for self-restraint.
Stamp tax shall be exempted for future special loan contracts made by financial institutions
to business operators whose business operations have been affected by Covid-19.
There are also several other minor tax measures implemented in relation to business
affected by Covid-19.

Government measures in key jurisdictions

87

JapanCompany
law matters

General Meetings:•
On 26 February 2020, METI issued a guideline for hybrid virtual general meetings.
•
Although the guideline did not originally target the Covid-19 pandemic, it is attracting
attention from companies seeking to accommodate social distancing for the peak
Have any measuresseason for annual general meetings in the coming June.
been put in place
It is impossible under the Corporate Code to conduct a purely virtual general meeting.
to accommodate •However, the following measures can be taken for social distancing:social distancing•- encourage shareholders not to attend the general meeting but to vote in advance (by a(such as remotevoting paper or online),
general meetings)?
– limit the number of attending shareholders, require pre-registration to attend, andreject attendance by shareholders with symptoms of Covid-19, and– hold a hybrid virtual general meeting (i.e., a real meeting with online streaming)
pursuant to the METI guideline in order to allow remote attendees to participate in
the meeting.
Board Meetings: The Corporate Code doesn’t require a company to hold a physical board
meeting; an online meeting and/or resolution in writing are commonly used
by Japanese companies.
Remote Working: The Japanese government has been encouraging remote
working in light of Covid-19 and it has rapidly developed across the country. There aresubsides for business operators who will introduce or have introduced a remote working
system, especially for mid- or small-size businesses.

88

Government measures in key jurisdictions

Jersey

Stephen Alexander | stephen.alexander@mourant.com | +44 1534 676 172
Edward Devenport | edward.devenport@mourant.com | +44 1534 676 366
Fred Milner | fred.milner@mourant.com | +44 1534 676 915

Contributor: Mourant

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Employment
What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

•Jersey has introduced a GBP 50 million business disruption loan guarantee scheme.
The Jersey government will guarantee 80% of loans granted under the scheme.
Businesses can borrow between GBP 5,000 and GBP 500,000.

•

Certain eligibility criteria must be satisfied. This includes the business meeting theviability test, the business engaging in a commercial activity in Jersey which will be thesubject of the loan, normal lending must not be available to the business and thebusiness’s annual turnover must not be more than GBP 10 million.

•

Certain business sectors were initially excluded from the schemebut the scheme hassince been expanded to allow all local businesses to apply regardless of their sector
and business activity.

•

More detailed information on the scheme is available here.

•

To assist the tourist sector the Jersey government has introduced the Visitor
Accommodation Support Scheme (VASS) and the Visitor Attractions and Events Scheme(VAES). VASS is aimed specifically to provide support for Jersey’s registeredaccommodation providers and VAES seeks to support Jersey’s events and attractions
providers. Both schemes provide support of up to 80% of designated fixed costs which
will be paid on a monthly basis in arrears and cover the period of October 2020 to April
2021. Further details on these schemes can be found here.

•

The Jersey government has also introduced the Fixed Costs Support Scheme whichmakes a financial contribution towards the fixed costs of a business where they have been
impacted by Covid-19 related public health measures, including 2 metre physicaldistancing. The scheme covers the period of January to April 2021. Certain eligibility
criteria must be satisfied and the scheme is restricted to certain business sectors. It is
possible to claim under the FCSS whilst also benefiting from the Government Co-Funded
Payroll Scheme and the Business Disruption Loan Guarantee Scheme. Where a claim has
been made under VASS or VAES, a business can opt out of these schemes in order toclaim, where eligible, under the FCSS. Further details on the scheme can be found here.

•

The Government of Jersey has launched a £50 million Fiscal Stimulus Fund. The funding is
aimed at smaller scale projects of up to £5 million per project which would be expected
to be completed by the end of 2021. Further details of the scheme can be found here.

•

Support to businesses: The Government of Jersey has launched the Government CoFunded Payroll Scheme, which will refund businesses adversely impacted by the Covid-19
pandemic a proportion of their wage bill. The scheme has been extended to provide
continuing financial support to employers and employees affected by Covid-19 and there
are now 4 phases of the scheme with Phase 4 covering the period of January to April 2021.

•

Mourant has outlined some key questions for employers to consider during the Covid-19
pandemic, which is available here.

•

Support to individuals: A Covid Related Emergency Support Scheme was previously set
up for workers who had lost their jobs due to Covid-19. This scheme was targeted atworkers who have not gained their five year residency, as this group would ordinarily not beable to access the pre-existing government income support scheme. The scheme provided
weekly payments of between GBP 70 to GBP 150 per person and an additional GBP 50 per
child. It was in place until 31 August 2020, when it ended.

•

The Government of Jersey has also made various sickness and short-term incapacity benefit
provisions for employees who are either sick or isolating due to Covid-19.

Government measures in key jurisdictions

89

Jersey

Insolvency

The Jersey government has worked with the Viscount (who is the executive officer of thecourt) and the Jersey Law Society to provide guidance and assistance for directors ofJersey companies in understanding wrongful trading and what directors should beconsidering when determining whether and how to carry on trading during thesefinancially challenging times.

•

Has thegovernment madeany changes
to insolvency•
legislation?

•

The Viscount has issued a Guidance Note and the Jersey Law Society has issued a
Practice Statement. Both publications give helpful guidance to the wrongful trading
provisions contained in Jersey legislation. In particular, both publications analyse what
constitutes “reasonable steps” and the Jersey Law Society publication also provides
practical considerations on the bringing of a claim against a director.

Contractual
Issues•The Jersey government has not introduced any legislative measures to deal
specifically with contractual issues caused by the Covid-19 pandemic. Any
contractual concerns will be dealt with according to Jersey contract law.

What measures
have been taken
to reinforce
contracts?

•

The main contractual provision which governs the enforceability of a contract upon theexistence of an unforeseen event is the force majeure clause. In general terms, the force
majeure clause seeks to list the situations in which the parties to a contract may suspendor terminate the contractual relationship due to the occurrence of certain events that areoutside the control of the parties.

•

Depending on the construction of the force majeure clause in individual contracts, theCovid-19 pandemic may cause the contract to be suspended or terminated.

•

It is also possible that in certain situations the occurrence of the Covid-19 pandemic
may have the effect of rendering a contract “frustrated” i.e. the changes incircumstances caused by the coronavirus pandemic has rendered the obligations
under the contract impossible to perform.

•

Businesses should review their existing contractual relationships and seek legal advice
to ensure they are aware and fully understand their ongoing legal obligations andidentify any areas of uncertainty.

•

Mourant has set out some of the contractual issues that arise from Covid-19 in Jersey.

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

90

Jersey's existing wrongful trading rules (which are more relaxed than the UK) provide thatonce a director concludes (or should have concluded) that there was no reasonable
prospect of the company avoiding a declaration of bankruptcy or an insolvent winding up,
the director has a duty to take reasonable steps with a view to minimising the potential loss
to the company's creditors (failing which the director may be made personally liable forthe company's debts). In the UK the equivalent test is that the director must take every stepwith a view to minimising the potential loss to the company's creditors.

•

Temporary amendments to residential and commercial tenancy legislation were passed
in Jersey. These made provisions to protect both tenants and landlords, taking into
account the possible effects of the Covid-19 pandemic. The regulations expired on 30
September 2020.

•

They included the suspension of variations to tenancy agreements, by way of an increase
in rent in the period up to 1st October 2020, even where the tenancy agreement allowed
for an increase at renewal.

Government measures in key jurisdictions

Jersey

Litigation•

Another amendment effected was that where a tenant had failed to pay rent
because of financial hardship, the breach would not constitute a breach whereby alandlord could have applied for a termination and eviction order.

•

The Government of Jersey has published guidance for residential and commercial
landlords and tenants and an update for landlords and tenants of commercial property
was published on 24 September 2020. The guidance outlines principles that must be
adhered to in agreeing concessions and making voluntary arrangements for rent andother payments.

•

The Jersey courts have remained open and directions were made for civil cases
during the Covid-19 pandemic. The courts continued to hear cases but urgent /public law / family law cases took precedence at the height of the pandemic.

•

The Royal Court has given directions on the remote execution of powers of attorney
and affidavits.

•

The Royal Court has now resumed hearing most cases in person and social distancing
is being adhered to.

Are the courts
operating?

Tax

Deferral of payment of Social Security contributions:Has any new
legislation been
introduced in lightof Covid-19?

•

•

•

•

Small businesses with less than 80 employees are automatically eligible to defer their
payments for two years for the first two quarters of 2020, which were due in April andJuly 2020.
Businesses with 80 or more employees may apply to defer their payments and willneed to show significant adverse impact on them as a result of the Covid-19
pandemic.
Certain employers and self-employed persons may also defer the payment of social
security contributions for the last quarter of 2020 until 15 January 2023 and for the
first quarter of 2021 until 15 April 2023.
A temporary 2% cut to the social security contributions paid by workers has been
approved by the Jersey government which means that between 1 October 2020 and
30 June 2021 the contribution will fall from 6% to 4%.

Deferral of payment of Goods and Service Tax:••

GST payments for periods ending between 31 March and 30 June 2020 may bedeferred. Businesses affected by the workplace restrictions introduced in December
2020 can also choose to defer GST payments for periods ending in the last quarter.
The repayment period is up to 2 years.
For individuals, in respect of residential tax status and days spentin Jersey, the Government of Jersey has advised that the local tax authority will
discount days spent in Jersey which are as a result of exceptional circumstances
related to Covid-19. This includes, for example, where prohibition of travel orders
have been made in response to the pandemic. See below
regarding economic substance.

Government measures in key jurisdictions

91

JerseyCompany
law matters•

Have any measuresbeen put in place•
to accommodatesocial distancing(such as remote
general meetings)?
•

92

The Jersey Companies Registry is fully operational and continues to provide a fullservice. It is demonstrating flexibility in its approach by accepting electronic
signatures and the submission of information electronically to assist users during thecurrent situation.
The Jersey Financial Services Commission has similarly demonstrated a flexible
approach in accepting electronic or scanned signatures with applications and filings
to help overcome the challenges caused by the travel and social distancing
restrictions imposed by the coronavirus pandemic.
Jersey’s Comptroller of Revenue issued guidance to confirm that wherecompanies’ operating practices have to be adjusted to compensate for the Covid19 pandemic, the Comptroller will not determine under Article 6 of the Taxation(Companies – Economic Substance) (Jersey) Law 2019 that a company has failed
the economic substance test. Due to the ongoing nature of Covid-19, further
guidance was issued in relation to the concession granted in relation to theeconomic substance test clarifying its application and scope. The further
guidance also stated that the concession was temporary in nature and would be
withdrawn as soon as circumstances permit.

•

Mourant has produced a briefing regarding regulatory considerations for licensed
financial services businesses in the Channel Islands when responding to the Covid-19
outbreak.

•

Mourant has also considered the ways companies can overcome barriers tocompleting transactions during the Covid-19 pandemic. All the most recent Mourant
updates relating to Covid-19 are available at Mourant Covid-19 Updates.

Government measures in key jurisdictions

Government measures in key jurisdictions

9
3

55

New ZealandContributor: Duncan Cotterill

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Richard Smith | richard.smith@duncancotterill.com | +64 21 905 510
Malcom Harrington | malcolm.harrington@duncancotterill.com | +64 21 274 0321

The Business Finance Guarantee Scheme is being offered by the Government alongsideprivate banks to help provide temporary financial support to businesses.
This scheme is available to small to medium-sized New Zealand business (those with annual
turnover of up to $200 million) facing temporary financial stress due to Covid-19, for a shortterm bridging loan from a bank. Originally available for loans of up to $500,000, from
August 2020 this was extended to permit loans up to $5 million. The Government will carry
80 percent of the credit risk for the scheme, to encourage lending. Loans are otherwise oncommercial terms. Loans may be applied for under the scheme until 30 June 2021. Detailsof the Business Finance Guarantee Scheme are available here.
In addition, the Government has established a Small Business Cashflow Loan Scheme, toprovide assistance of up to $100,000 to firms employing 50 or fewer full-time equivalent
employees. The scheme is also available to sole-traders and the self-employed. Applications
for a loan under this scheme may be made until 31 December 2023.
The Scheme provides loans of up to $10,000 to every firm and an additional $1,800 per
equivalent full-time employee. These loans will be interest free if they are paid back within
two years. After that the interest rate will be 3% for a maximum term of five years.
Repayments will not be required for the first two years of the loan. Details of the Small
Business Cashflow Loan Scheme are available here.

Employment The Government established a Wage Subsidy Scheme, providing payments for each
What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

employee for twelve weeks. Businesses would qualify for the payment if they experienced a30 percent loss of income attributable to Covid-19.
An employer also had to agree to use best endeavours to pay the employees named in theapplication at least 80 per cent of their usual wages or salary. If that isn’t possible, employers
need to pay at least the full amount of the subsidy to the employee. The original Wage
Subsidy Scheme ended in June 2020. Details of the Wage Subsidy Scheme are available here.
After the original scheme expired, the Government made a Wage Subsidy Extension available
to employers, including sole traders, who were still significantly effected by Covid-19 after theWage Subsidy Scheme ended in June 2020. The obligation to pass on the subsidy remained
the same, but to be entitled to the extension a business had to show that they suffered, or
expected to suffer, a revenue loss of at least 40% (reduced from an original 50%) for the 30days prior to the application date, compared to the closest period last year.
The Wage Subsidy Extension covered employee’s wages for eight weeks. Applications for thisscheme expired on 1 September 2020. Details of the Wage Subsidy Extension areavailable here.
As a result of a resurgence of Covid-19 in August 2020, an additional Resurgence Wage
Subsidy payment was made available for employers, including self-employed people, whowere financially effected. To qualify, a business must show that they have had, or expected tohave, a revenue drop of at least 40% because of Covid-19, for a 14 day period between
12 August to 10 September 2020.
Applications for the Resurgence Wage Subsidy were open from 21 August 2020 until 3
September 2020. Details of the Resurgence Wage Subsidy are available here.
The Government has confirmed that if New Zealand experiences a resurgence in Covid-19
cases, a new Wage Subsidy Scheme will be available if any part of the country moves to Alert
Level 3 or above for a week or more. To qualify, businesses and the self-employed will need toprove a 40% decline in predicted or actual revenue.

94

Government measures in key jurisdictions

New ZealandIn addition, a Resurgence Support Payment will be available if New Zealand is at Alert Level 2 orabove for a week or more. Businesses and the self-employed will be eligible if they have been inbusiness for at least six months and experience an actual decline in revenue of 30% over a 14-day
period. The decline in revenue must be as a result of the specific Alert Level escalation, not justCovid-19 in general.
Businesses may only receive one Covid-19 subsidy at any one time per employee.
A Short-Term Absence Payment is available at all Alert Levels to employers to pay workers who
follow public health guidance and stay home while waiting for a Covid-19 test result. To be
eligible, workers need to miss at least one shift of work, and be unable to work from home.
The payment is $350 for each worker. Employers or the self-employed can apply for any worker
once in any 30-day period.
Similarly, if workers are required by a health official to self-isolate and cannot work from home,
the Covid-19 Leave Support Scheme provides a payment for two weeks (which can bereapplied for, if required).
Businesses are not required to show an actual or predicted revenue drop or that their ability tosupport an employee was negatively impacted by Covid-19, to be eligible to access the payment.
Most visitor visas due to expire between 4 September and the end of October 2020 have been
extended by five months from the expiry date of their current visa. After that time, the usual rules
relating to visas and the right to visit and work in New Zealand apply. Visa holders must leave
New Zealand when their visas expire. However, Immigration New Zealand has recently
established a Covid-19 short-term visitor visa.
Applicants must show they:• hold a valid passport• are of good character• have a genuine reason for remaining in New Zealand• cannot leave New Zealand now but will make plans to leave at the end of their stay.
Unlike other visas, applicants for a Covid-19 short-term visitor visa do not need to show
they have:• enough money to support their stay in New Zealand• existing onward travel arrangements• good health• met any time-limits for how long they are able to stay in New Zealand on a visitor visa.
This visa will last for two months.
Emergency benefits may also be granted to people who need assistance but would nototherwise qualify for them, including temporary visa holders. More details about the changes forvisas are available here.
Since the end of the Covid-19 Alert Level Four lockdown, the New Zealand Government has beenencouraging the rebuilding of various industries. Part of this has included an Immigration
Border Exemption to allow critical workers an exemption to the border closure.
There are various criteria depending on whether the role is short term or long term. To date it has
been used to bring to New Zealand key workers for major infrastructure projects, and also
workers on projects which aim to boost the New Zealand economy, such as film and televisionprojects and the America’s Cup.
Details about the border exemptions are available here.

Government measures in key jurisdictions

95

New ZealandInsolvency
Has thegovernment madeany changes
to insolvency
legislation?

The Government made two key legislative changes to the Companies Act to prevent solvent
businesses facing temporary financial distress from being prematurely placed into
liquidation.
The first is the Business Debt Hibernation regime, which provides businesses with an option
to place existing debts on hold until they can start trading normally again, subject to creditor
agreement. This prevents creditors from taking legal action against the company to recover
their debt for a period of six months.
Applications to use the Business Debt Hibernation scheme can be made until 31 October
2021. The temporary Covid-19 Business Debt Hibernation provisions are scheduled to berepealed on 31 May 2022.
The second change was the Safe Harbour regime, which provided directors with security
against a legal claim for failing to meet their insolvency duties under the Companies Act as adirect result of the impact of the Covid-19 pandemic. Under the safe harbour regime, if a
director was accused of:••reckless trading, either by agreeing to the business of the company being carried on inany manner, or causing or allowing the business of the company to be carried on in any
manner, which is likely to create a substantial risk of serious loss to the company's
creditors; orincurring an obligation while being of the opinion that the company has, or in the next six
months is likely to have, significant liquidity problems;

she/he was able to invoke the safe harbour by showing that she or he was of the opinion that:••any significant liquidity problems over the next six months are, or will be, a result of theeffects of Covid-19 on the company, its debtors, or its creditors; andit is more likely than not that the company will be able to pay its due debts on and after 30
September 2021.

The safe harbour regime expired on 30 September 2020. However, the Government may reinstate the regime if there is a need to do so. The temporary Covid-19 safe harbour legislationis scheduled to be repealed on 31 May 2022. Details of these changes are available here.

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

There has been no Government intervention in contract law, and the usual rules apply.
However there has been an increased focus on contractual small print, including:•questioning whether the Covid-19 Alert Level Four lockdown period was excluded fromworking day provisions in a contract (not for most contracts, but for those that
determine a working day to be a day that a bank is open for business this was lessclear-cut); and•force majeure clauses, which will suspend the performance of the contract during theforce majeure event.
Details of how a Force Majeure Clause can affect the performance of a construction
contract is available here.
In addition, the Commerce Commission (New Zealand’s competition regulator) have recognised
the greater need for commercial cooperation during the Covid-19 pandemic.
The Commerce Commission is allowing more flexibility to enable businesses to work together,potentially share resources or otherwise cooperate to ensure consistency of supply of bothproducts and services required by New Zealanders. Detail of the permitted commercial
cooperation is available here.

96

Government measures in key jurisdictions

New Zealand

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Commercial property
Many commercial property leases include a clause providing for an abatement of a “fairproportion” of rent and outgoings if the property cannot be used during an emergency. The
Covid-19 pandemic is an emergency in terms of those leases, but the question of what is a fair
proportion is to be negotiated between the landlord and tenant depending on theirown particular circumstances.
The Government has established a commercial rent dispute service, which provides subsidised
mediation or arbitration for small businesses if an agreement cannot be reached on the amountof the abatement. A previously announced change to legislation to imply an abatement clause
will no longer happen. This service will be available until the end of March 2021.
Details of the operation of the standard lease clause are available here.
The Government has also made changes to the powers under the Property Law Act 2007 (PLA)
in respect of Landlords’ rights to terminate commercial leases and the powers for Mortgagees
to take possession or sell mortgaged land. The changes mean that a landlord now needs to wait
thirty working days (rather than the previous ten working days) before they can cancel a lease
for rental arrears. This change will be in place until six months after the Epidemic Preparedness(Covid-19) Notice 2020 expires or is revoked (this is currently due to expire on 22 March 2021,
unless it is renewed).
Residential property
Two significant changes were made to residential property rentals; restrictions on termination,and prohibitions on rental increases. For three months, residential tenancies could not beterminated unless:• the tenant terminates the tenancy;• the tenancy is terminated with the written agreement of both the landlord and the tenant;• the termination is in accordance with some specific provisions such as death of the soletenant, abandonment, or serious damage; or• an order is made by the Tenancy Tribunal terminating the tenancy for anti-social behaviour.
Fixed tenancies which expired during this time continued as periodic tenancies and werethen subject to the same termination restrictions. This provision ended on 25 June 2020. For six
months, rent could not be increased under a residential tenancy. In addition, any increase
notified before the commencement date, which had not yet taken effect, no longer applied. The
freeze was in effect from 26 March to 25 September 2020.
Overseas Investment
The Overseas Investments Act regulates the purchase of assets in New Zealand by
overseas people, including the purchase of any “sensitive land”. The Government has
introduced a temporary emergency notification regime designed to ensure that sales ofbusiness assets or business interests to overseas investors as part of the economic recovery
phase (particularly “distressed” sales) are in New Zealand’s national interest.
The emergency notification regime requires all share or business asset purchase transactions to
be notified to the OIO if an overseas person is: acquiring an ownership interest of more than25%; increasing an existing ownership interest to or beyond certain ownership thresholds (50%,75% or 100%); or acquiring business assets representing 25% or more of an existing business.
The wording of the change means that the sale of land and buildings could be captured by
the emergency notification regime where they are used as part of a business, even if therelevant land is not “sensitive land”.
Details on the changes to the overseas investment regime are available here.

Government measures in key jurisdictions

97

New Zealand

Litigation
Are the courts
operating?

New Zealand operates a Covid-19 Alert Level system, which has different measures at each level.
At the lowest level, Covid-19 Alert Level One, the country operates as normal except that borders
are closed. Even while New Zealand was at Covid-19 Alert Level Four, the highest level in the alert
system, the courts remained operational. During the Covid-19 Alert Level Four lockdown courtschanged their practices, to allow greater use of remote hearings, and to permit documents to be
filed electronically. During this time hearings were held only for urgent proceedings, as it tooktime for the necessary technology to be implemented. At Covid-19 Alert Level Three:• there will be no criminal jury trials;• the court will deal with other criminal work by remote means including first appearances, bailapplications and appeals, conviction and sentence appeals, case review hearings, sentenceindications, pre-trial matters and sentencings;• civil fixtures involving witnesses with upcoming hearing dates will be reviewed, and where
possible may continue using remote means of participation; and• the Court will conduct as much of its usual civil business as can be safely supported, including
habeas corpus, civil appeals, judicial review, summary judgments, caveats, interlocutory
applications, injunctions, and originating applications, with participation generally by remoteparticipation.
At Covid-19 Alert Level Two, the courts operate as usual. Courtrooms are used which are of asuitable size to allow physical distancing between all counsel, parties, and witnesses. To the extent
possible, most procedural matters will be dealt with using remote means of participation.
As New Zealand’s rates of Covid-19 are at very low levels, New Zealand is usually at Alert Level
One. When there are any instances of Covid-19 in the community, regions of New Zealand may beraised to either Level Two or Level Three.

Tax
Has any new
legislation been
introduced in lightof Covid-19?

The Government introduced a range of tax measures to provide relief to individuals andbusinesses. These include:
•

•

•

•

•

98

Restoring building depreciation. This supports businesses and encourages investment in
new and existing building by reinstating depreciation deductions for non-residentialbuildings. It provides business support by improving cashflow in the near-term, andassists with the broader economic recovery by stimulating business investment in newand existing buildings.
Increasing the provisional tax threshold from $2,500 to $5,000. This relieves thecompliance burden for small businesses as well as freeing up cashflow. It allows people
to delay paying their provisional tax, as they can wait until 7 February in the year
following the year they file their return before they have to pay, instead of having to pay
in instalments throughout the year. It allows them to retain cash for longer, and will
benefit an estimated 95,000 people.
Allowing immediate low-value asset write offs. To encourage spending, the change will
temporarily increase the threshold of the value of assets which can be deducted in theyear the asset was purchased. The threshold will increase from $500 to $5,000 for assets
purchased in the 12 months from 17 March 2020 (reducing to $1,000 from 17 March 2021.
Bringing forward broader research and development (R&D) refundability. The proposed
amendment would bring planned refundability measures forward by one year, to the
2019–20 income year. This would help relieve cashflow problems, encourage businesses
to retain their R&D staff, and (where possible) support these firms to continue their R&D
in the current environment.
Allowing use of money interest to be waived. This allows Inland Revenue to cancel
interest on a late tax payment if the taxpayer’s ability to make a payment due on or after
14 February 2020 was significantly adversely affected by the Covid-19 outbreak.

Government measures in key jurisdictions

New Zealand

•

•

•
•
•
•

Allowing greater information sharing. This would allow Inland Revenue to share
information with a wider group of government agencies to assist the efficient andeffective delivery of the Government’s Covid-19 response.
Allowing more access to the in-work tax credit. This would ensure that working families
whose working hours are reduced as a result of Covid-19 would not lose their eligibility
for the tax credit. Around 19,000 families will benefit.
Introducing a tax loss carry-back regime to provide cash flow quickly to businesses, byallowing losses to be carried back one year.
Allowing Inland Revenue to change due dates, timeframes or other procedural
requirements for tax returns for taxpayers affected by Covid-19.
Ensuring the treatment of benefits and pensions paid to New Zealanders stranded
overseas is consistent with the treatment of equivalent payments in New Zealand.
For the 2019/20 income tax year, tax payable up to $200 will be written off. The usual
threshold for writing off tax is $50. This will reduce tax bills for about 149,000 taxpayers.

Company
law matters

To New Zealand’s Companies Act already permitted meetings to take place by means of audio,
audio and visual, or electronic communication, as well as in person, subject to any restriction
set out in a company’s constitution.

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

The Government has now passed legislation to enable entities (including companies,
incorporated societies, charitable trusts, and others) to use electronic means for doing certain
things that its constitution or rules would otherwise prevent, and to temporarily modify certain
requirements or restrictions in its constitution or rules if it is not reasonably practicable tocomply with them.
The matters that may be carried out (wholly or partly) by electronic means are:•having or recording information in writing;•calling or holding meetings (including for the purpose of establishing a quorum);•voting (provided that the entities officers believe that all of those entitled to vote will beable to do so);•giving or receiving information;•
making or keeping new records;•
providing access to records or information held by or on behalf of the entity;•
signing any instrument; and•retaining any information.
Temporary modifications to a constitution or rules can relate to:•••how meetings are called or held (including deferring or waiving a requirement to hold a meetingor changing procedures at meetings);
changing the method or form of voting; anddeferring auditing, assurance or financial reporting or review requirements.

These provisions, and any temporary modifications made, apply until 31 March 2021, unless theGovernment decided to further extend this timeframe.
Businesses have also been encouraged to sign documents electronically, where permitted, and fordeeds to be witnessed using audio-visual links.
Details on signing documents electronically, and on which documents are not permitted to besigned that way, are available here.

Government measures in key jurisdictions

99

NorwayLars Eirik Gåseide Røsås | lgr@thommessen.no | +47 23 11 13 38

Contributor: Thommessen

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

The Norwegian Government has set up financial aid for businesses, in particular throughexisting and new liquidity assistance programs.
A. The State Bond FundA NOK 50 billion State Bond Fund has been passed to provide liquidity to larger
Norwegian businesses, through government purchases of bonds. The State Bond Fund
will invest within all business sectors. A significant portion of the State Bond Fund will beplaced in non-financial business, but the mandate also includes investments in bonds
issued by banks. The mandate states the investment scope within different sectors. The
State Bond Fund will only be mandated to invest in bonds issued by companies
incorporated in Norway, i.e. business with their main office in Norway. As of 8 May 2020
the mandate was adjusted to include not only investments in companies with a rating of
B- and higher, but also companies with a CCC+ rating.
B. State Guarantee Scheme
A NOK 50 billion State Guarantee Scheme ("SGS") for small and medium businesses has
been passed pursuant to which a state guarantee aimed at facilitating loans to small andmedium businesses ("SMB") which have experienced acute liquidity distress as a result of
the Covid-19 outbreak. Under the SGS the state guarantees for 90% of each bank loan.
SMBs are defined as companies with less than 250 employees and yearly revenues notexceeding EUR 50 million, or companies with a combined balance sheet not exceeding
EUR 43 million. The State Guarantee Scheme was on 2 April 2020 expanded to include
larger companies not caught up by the definition of SMB. Under the State Guarantee
Scheme SMBs are eligible for guarantees on loans up to NOK 50 million and larger
companies are eligible for guarantees on loans up to NOK 150 million. On 13 November
2020, the government decided to extend the SGS to 30 June 2021. The government willcontinue to consider the necessity of the State Guarantee Scheme. Moreover, further
extensions must be approved by ESA. The EU recently resolved certain changes to therules on state funding, including extending the period for group exemptions until 2023,
making it possible to offer financial aid, under the group exemption, to businesses
suffering financial distress due to Covid-19. Moreover, ESA has resolved similar changes
to certain important state guarantee measures, which enhances the likelihood that ESA
will approve the further extensions to the SGS.
C. Reduction of countercyclical capital buffer
The Ministry of Finance has reduced the countercyclical capital buffer requirement from
2.5 to 1% with immediate effect, later combined with proposal to prohibit dividend
distributions by Norwegian financial institutions. On 16 December 2020 the NorwegianCentral Bank advised the Ministry of Finance not to raise the countercyclical buffer andthe countercyclical buffer remains unchanged at 1%. According to the Norwegian Central
Bank’s assessment of economic developments, advice will be given on increased buffer
requirements during 2021. They envisage that the buffer will eventually return to 2.5%.
D. Guarantee scheme for the aviation industry
A NOK 6 billion State Guarantee Scheme for the aviation transport industry has been
passed. The guarantee scheme will be administered by the Norwegian export financeinstitution GIEK. The scheme entails the state guaranteeing loans up to 90%, withcommercial lenders taking on the remaining 10% exposure. The scheme is available tocommercial airlines holding Norwegian Air Operator's certificates. Of the total NOK 6
billion, NOK 3 billion has been allocated to Norwegian, NOK 1.5 billion to SAS and NOK 1.5
billion to Widerøe together with some smaller airlines. The government decided to extend
the term of the guarantees from two to three years. In addition, the period within whichloans may be taken up under this scheme is extended to 30 June 2021.

100

Government measures in key jurisdictions

Norway

E. State Compensation Scheme
The government passed a State Compensation Scheme under which companies
which have suffered a minimum of 30% reduction in revenues due to the Covid-19
outbreak can apply for state compensation.
On 29 May 2020 the government announced that the State Compensation
Scheme was extended until 31 August 2020. However, this compensation scheme
was initially managed by the Norwegian Tax Administration, but has been
discontinued and replaced by a new compensation scheme from 1 September 2020
managed by the Brønnøysund Registers (Nw Brønnøysundregistrene), which is basedon the previous scheme. The new scheme will apply until 30 April 2021. Any grants
under the scheme will be calculated for two months at a time. Further extensions
must be approved by the ESA. Under the State Compensation Scheme companies
experiencing a minimum of 30% reduction in revenues, can apply to the state for thestate to cover a portion of the company's overhead expenses. Businesses
experiencing a minimum of 30% revenue reduction are eligible for statecompensation for up to 70% of their overhead expense in September and October(2020), up to 85% for November and December (2020) and 80% for January,
February, March and April (2021).
The deadline to apply for compensation for the first two periods(September/October 2020 and November/December 2020) is 14 March 2021, which
the deadline for January and February is 14 May 2021.
F. Financial aid for entrepreneurs and start-ups
On the 27 March 2020, the government proposed a NOK 2.5 billion financial aid
package to entrepreneurs and start-ups, pursuant to which entrepreneurs and startups are eligible for various loans, financial subsidies and investment capital.
On 29 January 2021, the government proposed to grant an additional NOK 500
million to entrepreneurs and start-ups.

Employment
What financial
support isthe government
providingto businesses and toindividuals on
employment issues?

When Covid-19 forced Norway to shut down in March 2020, several measures were
implemented by the Norwegian government to help business survive, and to protect
jobs. As the labour market is better today, some of the temporary schemes werediscontinued on 1 November 2020 and 31 December 2020, while other schemes
were extended. An important change from 1 November 2020 was that the temporary
lay-off period was extended from 26 to 52 weeks. The extended period for temporary
lay-offs allows companies to hold onto employees it expects can be taken back towork when the pandemic is over, and avoid that key employees, important skills andexpertise are lost.
The employer must paid the laid-off employee’s salary for the first 10 days of the layoff period. After the first 10 days, the laid-off employees receive unemployed benefits
for 30 weeks from the Norwegian government. Then the employer has to pay thelaid-off employees’ salary for a period of 5 days, before the laid-off employees
receive unemployment benefits for an additional 19 weeks.
On 29 January 2021, the government proposed to reduce the minimum of working
hours to qualify for unemployment benefits from 50% to 40% of the full-time
equivalent, and reduce the threshold for minimum income to qualify for
unemployment benefits from 1,5 G to 0,75 G.

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101

Norway

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

The Norwegian Parliament passed the Temporary Restructuring Act (nw:rekonstruksjonsloven), which came into force 11 May 2020. The law will remain in effectuntil January 2022 and replaces the restructuring chapters of the Bankruptcy Act(nw: konkursloven). The new rules will reduce the risk of unnecessary bankruptcies in
viable businesses that are now hit by acute revenue failure.
The most important changes in the new law are:• No requirement for the debtor to be illiquid to open reconstruction negotiations.
• Creditors may, under certain conditions, request the opening of reconstruction.
• New rules to secure financing of the debtor's operations during the reconstruction period.
• Better opportunities for conversion of debt to equity in connection with restructuring.
• New regulations which makes exceptions to the publics priority to claims regarding
taxes and VAT.
• The current requirements for equal treatment of creditors in a voluntary reconstruction
and the rules for minimum dividend in compulsory restructuring are abolished.
• Changes to the rules on the adoption of the proposal for reconstruction.
It is expected that the law will become a permanent fixture of Norwegian bankruptcy laweven after January 2022.

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Litigation
Are the courts
operating?

102

In general, there has been no change in rules governing contracts.
The fact that there is an epidemic/pandemic that has or may have negative consequences
is not in itself sufficient to qualify as force majeure. Whether the effects of the coronavirus
can be regarded as force majeure or a material adverse change in a particular contractual
relationship must be decided on a case-by-case basis.

No laws have been amended, however as mentioned above the government has put inplace several funding schemes which makes it more likely that tenants (both private andprofessional) will be able to pay their rent.
Whether a tenant claim force majeure or otherwise demand a reduction in rent, payment
deferrals or renegotiation of other contract terms under the lease depends on a specificinterpretation of the relevant lease.

The courts are operating, though with certain Covid-19 restrictions and measures, such as
restricted access for spectators, the media, etc. Due to the strict Covid-19 restrictions
implemented in March 2020 the courts scaled back operations until 13 April 2020. Most
first instance hearings and appeal hearings were postponed and had to be rescheduled.

Government measures in key jurisdictions

Norway

Nevertheless, certain hearings were conducted as live-link meetings, pursuant to section
13-1, sub-section 3 b), of the Civil Procedure Act, and according to Section 2 of thetemporary Corona Act such live-link meetings could be conducted without prior consent,
as long as the court found it "necessary and unobjectionable" to conduct court hearings
remotely. The temporary Corona Act is extended until 1 June 2021 to make it possible toprocess cases in the courts while respecting infection control measures. The courts areworking hard to get back on schedule and many postponed hearings have been
rescheduled. However, the courts are still prioritising criminal proceedings, labour
disputes, family disputes, etc.
To reduce the waiting time and to increase the courts' operating capacity at the time of theCorona outbreak, the courts were granted NOK 35,000,000 to install necessary electronicequipment to conduct electronic hearings. In October the courts were allocated an
additional NOK 39,000,000 to hire temporary judges, rent more office space and maintainadequate infection control measures. This year, a budget increase of NOK 71,000,000 has
been granted to handle the Covid-19 situation, and NOK 42,600,000 to make courts evenmore digital in 2021.

Tax
Has any new
legislation been
introduced in lightof Covid-19?

At the Covid-19 outbreak, several changes were adopted in payment deadlines for various
taxes and fees. In addition, a simplified scheme for deferred payment of taxes and fees wasintroduced in June 2020. Self-employed persons, businesses, companies and private
individuals who are facing cash-flow issues because of the coronavirus situation may apply
for deferred payment of most tax and duty claims, as well as claims handled by the
Norwegian National Collection Agency. Those who have been granted the above
mentioned deferred payment, will be allowed to pay what they owe in instalments over a
period of six months. The first instalment payment falls due on 1 April 2021. The scheme
was first decided to apply until the end of 2020, but was later extended to 28 February 2021
and again until 30 June 2021.
The Parliament resolved on 21 March 2020 to lower the reduced VAT rate of 12% applicableto passenger traffic hotels, broadcasting, movie theatres, sporting events, amusement
parks and adventure centres, to 6%. The change will be effective as of 1 April 2020 until 30
June 2021. Business registered for Value Added Tax purchasing such as services during thisperiod, who are invoiced with Value Added Tax at rate 12% instead of 6%, will not be entitledto deduct the full Value Added Tax amount – only the part of 6%. To avoid that the nondeductible amount becomes a cost, the purchaser must require the seller to issue a credit
note and new invoice with the correct Value Added Tax rate of 6%.

Company
law matters

In particular, the following temporary simplifications in relation to corporate activities
have been adopted.

Private limited liability- and public limited liability companies (AS, ASA and SE) may hold
Have any measures both board meetings and general meetings virtually. The board of directors shall ensure
been put in place that, to the extent possible, all board members participate at the board meetings.
to accommodate Moreover, the board of directors shall ensure that all shareholders can participate at thesocial distancing
general meeting and that participation and voting is controlled in a satisfactory manner.
(such as remote
The temporary simplifications will remain in effect as it stands until 1 June 2021.
general meetings)?

Government measures in key jurisdictions

103

Portugal

Contributor: Garrigues

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Pedro Lemos Carvalho | pedro.lemos.carvalho@garrigues.com | +351 218 913 264
Susana Pimenta Sousa | susana.pimenta.sousa@garrigues.com | +351 218 913 249

Specific credit lines available for treasury support: credit line of up to Ä400 million
for treasury support under the Capitalizar Covid-19 Programme preferentially for SMEs
not covered by the specific credit lines below.
Credit lines for treasury support of companies in the following specific economic sectors:• Ä100 million (tourism sector – microenterprises),• Ä600 million (restaurant business),• Ä200 million (travel agencies, tourist entertainment and event organisation companies),• Ä900 million (touristic developments and accommodation), and• Ä4.5 billion (credit line applicable to all companies, irrespective of the economic sector
in which they are engaged, and covers, inter alia, textile industry, clothing andfootwear, trade and services, transport, real estate, construction, extractive andmanufacturing industries, mining and wood industry).
Specific Portugal 2020 incentives:• Manufacturing Innovation Covid-19 (Inovação Produtiva Covid-19) (Ä46 million) for SMEs
and large enterprises.
• Research and Development for Companies – Covid-19 (I&D Empresas - Covid-19) (Ä23
million) for companies and entities part of the National Investigation and Innovation
System (Sistema Nacional de I&I).
Specific financial support measures for Portuguese start-ups:• Creation of “Startup RH Covid-19”, which is a financial support through an incentive
equivalent to 1 minimum wage per employee (up to a maximum of 10 employees per startup).
• Extension of the “Start-up Voucher” (i.e. a 3-month extension of the benefit alreadyawarded (Ä2,075 per employee)).
• Creation of the “Vale Incubação – Covid-19”, a financial support for start-ups with less than
5 years of existence, through the hiring of incubation services based on a non-refundable
incentive of Ä1,500.
• Creation of “mezzanine” funding for start-ups through a loan convertible into share capital(shareholder loans), after 12 months, applying a discount rate to avoid dilution ofpromoters (average investment tickets between Ä50,000 and Ä100,000 per start-up).
• Launch of the “Covid-19 - Portugal Ventures” for investments in start-ups, with tickets from
Ä50,000.
• Modification of the already existing fund “Fundo 200M”, which is a co-investment withprivate investors in Portuguese start-ups and scale-ups, with the minimum public
investment of Ä500,000 and the maximum of Ä5,000,000.
• Modification of the already existing fund “Fundo coinvestimento para a inovação social”,
which is a co-investment with private investors in companies with innovative and social
impact projects, with the minimum public investment of Ä50,000 and the maximum of
Ä2,500,000.
Incentive package:•

104

Deferral of 12 months for repayment instalments due up to 30 September 2020 inrespect of reimbursable subsidies granted under the incentive schemes of the
National Strategic Reference Framework (Quadro de Referência Estratégico Nacional)
or Portugal 2020 without interest charges or any other penalty.

Government measures in key jurisdictions

Portugal••

Expenses incurred by beneficiaries of such incentive schemes with events or actions
cancelled or postponed as a result of the Covid-19 outbreak, eligible forreimbursement.
Negative impact of the Covid-19 outbreak causing failure to execute contractual
obligations under the Portugal 2020 incentive scheme, may be deemed as force
majeure.

Exceptional and temporary regime applicable to insurance agreements: aimed at making
the payment of insurance premiums more flexible. Under this regime, despite the lack of
payment of the premium or fraction thereof on the respective due date, the compulsory
insurance cover is maintained in its entirety for a limited period of time (60 days). In situations
where there is a significant reduction or even elimination of the risk covered as a direct orindirect result of the legal measures adopted in response to the Covid-19 outbreak,policyholders may request that these circumstances be reflected in the premium and theapplication of an exceptional regime of fractionated payment.
“Programa ADAPTAR”: a safety incentive scheme for micro, small and mediumsized enterprises aimed at reducing the increased costs with the rapid reestablishment ofoperating conditions for this type of enterprises. Under this incentive scheme,
the Portuguese State bears part of the costs with the purchase of personal protective
equipment for workers and users, hygiene equipment, disinfection products and of the costsof reorganising workplaces and changing the layout of establishments (for microenterprises
investing between Ä500 and Ä5,000, the Portuguese State will bear 80% of the costs on a
non-refundable basis; for small and medium-sized enterprises investing between Ä5,000
and Ä40,000, the Portuguese State will bear 50% of the costs on a non-refundable basis).
Entrepreneurship and employment incentive scheme: an incentive scheme aimed at
supporting, in a simplified way, the entrepreneurship, creation and maintenance of
employment by micro and small enterprises, focusing particularly on national production.
This incentive system is aimed at investments of less than Ä235,000, with (i) remodelling or
adaptation works, (ii) acquisition of machinery and equipment, (iii) technological and digital
services, (iv) computer equipment and software, and (v) implementation of quality systems
and certification systems, and it is available on a non-refundable basis.
“Programa APOIAR”: a liquidity incentive scheme aimed at mitigating the negative impacts
on the economic activity arising from the public health protection measures taken in thecontext of the Covid-19 pandemic, and promoting support for liquidity, operational
efficiency, employment maintenance and short-term treasury support of companies. This
incentive is structured in the following measures:• “APOIAR.PT” (financing of 20% of the amount of the decrease in turnover, with a maximum
limit of (i) Ä10,000 for micro-enterprises, (ii) Ä55,000 for small enterprises and (iii)Ä135,000 for medium-sized enterprises and for enterprises that are not SMEs, because
they employ 250 employees or more, but that have an annual turnover of less than Ä50
million);• “APOIAR RESTAURAÇÃO” (financing of 20% of the amount of the decrease in turnover);• “APOIAR + SIMPLES” (financing of 20% of the amount of the decrease in turnover, with amaximum limit of Ä4,000); and• “APOIAR RENDAS” (financing (i) of 30% of the value of the reference monthly rent, up to a
maximum of Ä1,200 per month and per establishment, for 6 months, for companies with adecrease in turnover between 25% and 40%; or (ii) of 50% of the value of the reference
monthly rent, up to a maximum of Ä2,000 per month and per establishment, for 6 months,
for companies with a decrease in turnover of more than 40%).
With the exception of “APOIAR + SIMPLES”, which is exclusively addressed to sole proprietors
without organised accounts, all these measures are addressed to SMEs or to enterprises thatare not SMEs, because they employ 250 people or more, but that have an annual turnover ofless than Ä50 million. All these measures are available on a non-refundable basis.

Government measures in key jurisdictions

105

Portugal

Specific credit lines available for financial support of Portuguese micro, small andmedium-sized enterprises, Small Mid Caps and Mid Caps:•“Linha de Apoio à Economia Covid-19 – Montagem de eventos” (Ä50 million, for event
organization companies);•“Linha de Apoio à Economia Covid-19 – Apoio às empresas exportadoras da indústria e
do turismo” (Ä1,050 million, for export companies in industry and tourism);•“Linha de Apoio à Economia Covid-19 – Apoio às médias empresas, Small Mid Caps e Mid
Caps” (Ä400 million, for medium-sized enterprises, Small Mid Caps and Mid Caps);•“Linha de Apoio à Economia Covid-19 – Apoio às micro e pequenas empresas” (Ä1,000
million, for micro and small enterprises); and•“Linha de Crédito Fundo para a Inovação Social – Apoio às micro, pequenas e médias
empresas e entidades da economia social” (Ä50 million, for micro, small and mediumsized enterprises and entities from the social economy sector promoting innovation andsocial entrepreneurship initiatives that have been recognised by the Portuguese Social
Innovation Mission Structure).

Export support measures: increase of credit insurance lines guaranteed (i) for the
metallurgical, metal-mechanical and mould sectors (increase from Ä100 million to Ä200
million); (ii) for work abroad and other supplies (from Ä100 million to Ä200 million; and (iii)
for short-term export credit insurance line (from Ä250 million to Ä300 million).
Moratorium on debts: moratorium on debts until 30 September 2021, which provides forthe prohibition of the revocation of contracted credit lines, the extension of credits or
the suspension of the reimbursement of credits until the end of September this year.

Employment•

Simplified lay-off: lay-offs, which comprise the temporary suspension of employment
contracts or reduction of the working time, have been given more flexibility and theprocedure has eased significantly (“simplified lay-off”). Only available to companies thatare still covered by the closure obligation imposed by the Portuguese Government(currently the number of companies forced to close or suspend their activity has
increased due to the state of emergency in force and, as such, the Portuguese
Government allowed them to access the simplified lay off for the number of days that theorder of closure or suspension of activity remains in force). Contrary to what previously
happened, if from the compensation payment results an amount lower than theemployee’s gross normal remuneration, the amount of compensation paid by the Social
Security is increased to the extent strictly necessary to ensure 100% of the employee’s
remuneration, up to a maximum of 3 guaranteed minimum monthly salaries (Ä1,995).

•

Extraordinary Incentive for Business Regularization: This incentive aims to support themaintenance of employment and to reduce the risks of unemployment for employees
working for companies affected by the business crisis, as a result of the pandemic causedby the Covid-19 outbreak. Companies which have benefited from the simplified lay-off
regime may accede the extraordinary incentive for the normalization of business activity.
The payment of the incentive is made as follows: (i) the payment of the incentive underthe modality of one minimum month wage (Ä635), is made in one installment, within 10
working days as from the date of communication of the approval of the application to the
incentive; (ii) the payment of the incentive under the modality of two minimum monthwages (Ä1,270), is made in two installments with the same amount, under thefollowing terms.

What financial
support is thegovernment
providing tobusinesses andto individuals on
employment
issues?

106

Government measures in key jurisdictions

Portugal--

The first installment is paid within 10 working days as from the date of communication of
the approval of the application to the incentive;
The second installment is paid within 180 days following the last day of application of theextraordinary support for the maintenance of employment contracts (“simplified lay-off”)
or the extraordinary training plan.
The extraordinary incentive for the normalization of business activity is only granted once
to each employer, and only in one of the modalities provided for in the Ordinance no. 170A/2020 of 13 July. Therefore, only one application should be submitted by each employer.
The application is made through electronic submission here and shall be accompanied by
the documents set forth in the applicable legislation. Given the worsening of the current
situation in Portugal and the new state of emergency, the Portuguese Government
authorized that, as of February 2021, companies that have accessed the Extraordinary
Incentive for Business Regularization, regardless of the modality, can access the
progressive resumption support measure. Therefore, these support measures have only
been mutually excluded until January 2021.

•

Progressive resumption support measure: This measure is considered a substitute measure(for companies that may no longer resort to the simplified lay-off regime or consider this
support measure preferable in comparison to the simplified lay off regime, while this newstate of emergency lingers). It applies to employers who have been affected by the Covid-19
pandemic and who are, as a result, in a situation of business crisis, i.e., with a decrease inrevenues of 25% or more. Thus, the employer can access the extraordinary support for the
progressive resumption of activity with a temporary reduction of the normal work period of
all or some of its employees, being able to resort to this reduction and its respective
remuneration for one month, with a monthly extension until the date of termination provided
for by law (currently until 30 June 2021). The employer is entitled to financial support
exclusively for the purpose of paying compensation to employees covered by the reductionof the normal working period. Social security support corresponds to 70% of thiscompensation, the remaining 30% being provided by the employer. Notwithstanding, if fromthe remuneration paid for the hours worked and compensation to which the employee isentitled for hours not worked results in a monthly amount lower than that of the employee’s
gross normal remuneration, the amount of compensation paid by the Social Security is
increased to ensure 100% of the employee’s remuneration, up to a limit of 3 minimum
monthly salaries guaranteed (Ä1,995). In the event of a serious business crisis, with a 75% ormore drop in turnover, the employer is also entitled to 35% of the gross remuneration to be
paid by the Social Security to the employee for the hours worked. To resort to this support
measure, the employer must submit an electronic application, in a proper form, through the
Direct Social Security, with the employer's declaration and the certified accountant's
declaration (Mod. 3058-DGSS) attesting the business crisis situation. The form must be
accompanied by a nominative list of the employees to be covered, their social security
number, gross normal pay and an indication of the reduction in the normal working period tobe applied, in average monthly terms, per employee. Consent must also be given for
consultation of the tax standing with the tax authorities, as well as registration of the IBAN towhich the financial support will be credited.

•

Exemption from contributions: either under the simplified lay-off regime and progressive
resumption support measure, the employer has some benefits as regards contribution
obligations to which is bound. Specifically regarding the progressive resumption support
measure, the employer that is considered to be a micro, small or medium-sized enterpriseand that benefits from this support measure has the right (officially recognized by the Social
Security Services) to 50% exemption from the payment of contributions for covered
employees, related to the compensation to be paid. In relation to the simplified lay- off
regime, this support measure provides for a temporary (yet total) exemption from thepayment of Social Security contributions due by the employer (the exemption refers to theemployer's contributions related to the total remuneration paid to the covered employees,
maintaining the employee’s contribution of 11%).

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Portugal•

Simplified support for microenterprises for the maintenance of job positions: a new
simplified support measure was made available by the Portuguese Government for microenterprises in a situation of business crisis situation (decrease in revenues of 25% or more) thathave previously accessed the simplified lay-off regime or the progressive resumption of activity
measure. The financial support is granted by the IEFP, I.P., upon presentation of the application,
paid in phases over 6 months.
Specifically, the payment translates in 2 instalments that coincide with the quarters of 2021,
upon verification of the situation of business crisis of the company. The support translates into 2
minimum monthly salaries guaranteed, i.e., Ä1,330, per employee who was covered in 2020 by
the extraordinary support to maintain the employment contract or by the extraordinary support
for the progressive resumption of activity.

108•

Protection of employment: under the above mentioned support measures, as well as in thefollowing 60 days, the employer may not terminate the contracts of employees covered bysuch measures, under collective dismissal and dismissal for termination of thejob. Notwithstanding the discussion that has taken place regarding the possibility of executing
settlement agreements based on objective reasons (e.g., based on the possibility to promote job
extinction or collective dismissal), pending the support measures or within 60 days thereafter, it
is recommended that companies do not take this risk (at least until the legislation approved
regarding support is changed and this hypothesis is taken into consideration).

•

Justified absences and possibility for employees to execute their activity through telework:
Immunosuppressed employees and those with chronic disease who, according to the guidelinesof the health authority, should be included in risk groups (in particular cardiovascular patients,
those with chronic respiratory disease, cancer patients and those with renal insufficiency), mayjustify their absence from work by means of a medical declaration, provided that they cannot
perform their activity in a telework regime or through other forms of activity (as this ismandatory, in accordance with the applicable legislation in force). The medical declarationreferred to must attest the health condition of the employee that justifies his special protection.
Also, taking into account the current closure of schools, absences from work due to urgent
assistance to a child under 12 years of age or, regardless of age, with a disability or chronic
illness, resulting from the suspension of school and non-teaching classroom activities, areconsidered justified without loss of rights, except as to remuneration, and are entitled tofinancial support in the amount of 66% of their salary (with a minimum limit of Ä665 andmaximum of Ä1,995), paid in equal parts by the employer and the Social Security. Contrary towhat happened before, when those who teleworked could not access this support measure, thePortuguese Government has conceded that, in certain situations (single parent household,household with a disabled dependent, with proven incapacity equal to or greater than 60%,
regardless of age), the teleworker may interrupt the exercise of his or her activity to provide thisassistance to the family, receiving the support provided for this purpose (in certain cases
increased up to 100%, in the portion paid by the Social Security). This option must be
communicated to the employer 3 days before the interruption date. Nowadays, the telework
regime is mandatory, regardless of the employment relationship, whenever the functions inquestion allow it and the employee has the conditions to perform them, without the need for a
written agreement between the employer and the employee. Additionally, in companies withestablishments in territorial areas where the epidemiological situation justifies it, as well as indistricts considered by the Directorate-General of Health as high, very high and extreme risk,
there is a specific teleworking regime. The rule continues to be the same (telework regime is
mandatory) but, exceptionally, when the employer considers that the conditions for thedevelopment of telework are not met, the employer must communicate his decision to theemployee, duly justified and in writing, and it is up to the employer to demonstrate that thefunctions in question are not compatible with the teleworking regime or the lack of adequate
technical conditions for its implementation. The employee may, within 3 working days after theemployer’s communication, request the Portuguese Labor Authority to verify the requirements
and facts invoked by the employer.
Government measures in key jurisdictions

Portugal

Insolvency

The suspension of procedural terms and authorised judicial proceedings referred to below isalso applicable to insolvency proceedings, notably as regards the term for a debtor to file for
Has theinsolvency. This suspension, however, does not prevent the courts from ordering thegovernment made performance of any judicial steps that are necessary to prevent irreparable damage to thelegitimate rights and interests of debtors.
any changes
to insolvency
As regards insolvency law, an exceptional and temporary regime was created, under which:legislation?
•
the deadline for concluding negotiations on the approval of a recovery plan or payment
arrangement was extended and a deadline has been granted for adapting the proposed
insolvency plan in connection with the Covid-19 pandemic;•
the general movable credit privilege granted to creditors who, in the course of theproceedings, finance the companies activity by providing them with capital for theirrevitalization, was extended to shareholders or any other specially connected persons who
finance the activity of the companies during the Special Revitalisation Process;•companies that are in a state of insolvency as a result of the Covid-19 pandemic are
subject to the Extrajudicial Company Recovery Scheme;•
an extraordinary process for the viability of companies affected by the economic crisis
resulting from the Covid-19 pandemic was set up;•
an obligation to carry out partial apportionments in all pending insolvency proceedings inwhich there are liquidation proceeds deposited for a value above Ä10,000 was set out; and•priority must be given to the processing of applications for the release of collateral or
guarantees provided in the context of insolvency proceedings, special revitalisation
proceedings or special proceedings for payment agreements.
The aforementioned exceptional and temporary regime is applicable between 27 November
2020 and 31 December 2021. For more information please visit here.

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

•

Other than other measures already mentioned herein, there have been limited cases where
specific measures aimed at reinforcing contracts have been put in place. It’s worthwhile
noting that, in relation to public-private partnerships, during the state of emergency,
contractual mechanisms allowing financing rebalancing are suspended (such financial
rebalancing arising from the pandemic will result in the extension of the duration of therelevant contract).

•

With the exception of the abovementioned measures, the Portuguese Government has nottaken any further measures to specifically reinforce contracts and, therefore, the normal
rules would apply.

•

It should be taken into account that the force majeure term relates to the impossibility of theparties to perform their obligations as a result of an event that could not have been foreseen orthat, if foreseen, would be inevitable. In this respect, the scope and applicability of force
majeure would be subject to the specifics of each case, which shall be, in last instance,
examined and determined on a case-by-case basis by judicial courts.

•

Likewise, it should be considered that there is a provision on the Portuguese Civil Code thatallows contracts to be reviewed or terminated whenever the circumstances in which theparties based their decision to contract have suffered an abnormal change. However, it
should also be noted that Portuguese courts tend to apply this provision very cautiously
and the impact on the performance of each contract should always be examined on a caseby-case basis.

In the specific case of the impacts generated by the Covid-19 outbreak we are witnessing several cases but
no judicial decisions have been issued yet.

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Prohibition of termination of lease contracts by the landlords due to the mandatory
closure of establishments and facilities: mandatory closure of establishments andHave any changes facilities and suspension measures determined by the Portuguese Government cannot
be invoked as grounds for the termination, early break or other forms of terminating lease
been made tocontracts for non-residential purposes or other atypical forms of occupational
the laws aroundproperty, rent and agreements regarding real property, nor as grounds for the eviction from the properties
where such establishments or facilities are installed. The Portuguese Government has
enforcement?
declared the state of emergency on 8 November 2020, by virtue of the increase in thenumber of infections and deaths, and in the context thereof approved several measuressimilar to the ones implemented in March and April 2020. A new lockdown has been
enforced, with the closure of business establishments, facilities and services (except
those providing essential goods and services; and in case of restaurants and similar
establishments, whose activity is limited to take-away and home delivery services) andthe imposition of telework regime.

Property

Suspension of termination of lease contracts and evictions:•
The duration of lease contracts (residential or non-residential) that would
normally expire before 30 June 2021 is extended until such date (except if thetenant agrees to the expiry of the lease at an earlier date).
•
The effects of all notices for termination, revocation or opposition to
renewal/extension already served by the landlord are suspended until
30 June 2021.
•
Eviction proceedings (either judicial orotherwise) are suspended until the termination of the exceptional measures, inthe cases where, as a consequence of a potential final eviction
decision, the tenant could be put in a “vulnerable situation due to the lack of aplace for permanent residence or to another overriding social reason”.
•
The obligation of the tenant to return the premises to the landlord following thetermination of the lease is also suspended until 30 June 2021.
Deferral on payment of rents: eligible tenants will be bound to pay the deferred rental
payments in monthly instalments (which shall accrue to the monthly rents dueand payable in the same period), with no interest or penalties and landlords shall not
be entitled to terminate leases or evict tenants for default on the payment of rents
during the deferment period. These measures will apply tostandard lease agreements (residential and non-residential)
and other atypical forms of occupational agreements regarding real property
and limited to the following tenants:•
Certain residential tenants whose household income has been reduced as a resultof the Covid-19 outbreak (they shall prove that they have suffered a decrease of
more than 20% in their household income, as compared to February 2020, thepreceding month or the equivalent period of theprevious year; and that the payable rent represents an effort rate above 30% of the
reduced monthly household income);•
Retailers and services open to the public who have been forced to shut down or tosuspend activity as a result of the state of emergency, or by any other legal oradministrative order (including if they keep trading online or through distancesales); and•Restaurants and similar establishments (even if they keep operating for take-away
services or home delivery).

110

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Portugal

Establishments and facilities installed in shopping centres have in the meantime been
expressly excluded from the application of such regime.
•

Residential tenants eligible for purposes of deferral on the payment of rents, may defer
rent payment falling due in the period from 1 April 2020 up to the end of the monthfollowing the termination of the state of emergency (i.e. June 2020), and the deferredrents shall be paid in monthly instalments within 12 months after the deferment period
lapses. Furthermore, eligible residential tenants who have their “permanent residence”
in the property (and student tenants who have their permanent residence more than 50
km away from the let property) may, alternatively, request a loan without interest to theInstitute for Housing and Urban Rehabilitation, to cover the difference between the due
rent and the amount corresponding to the application of the effort rate of 35% to thehousehold income. Residential tenants with low income with an effort rate destined tothe payment of the rent higher that 35% and lower than 100%, shall benefit from a nonrefundable subsidy (calculated in accordance to the effort rate); if the effort rate ishigher than 100%, the loan is totally converted in a non-refundable subsidy.

•

Non-residential tenants eligible for purposes of deferral on payment of rents may defer
the payment of rents falling due (i) in the months during which the state of emergency is
in force, or (ii) up to the end of the 3 months following the reopening or the end of thesuspension of its activity (however, the deferral is not applicable to rents falling due
beyond 31 December 2020). The deferred rents shall be paid in 24 instalments, from
1 January 2021 up to 31 December 2022. The global amount of deferred rents accrued
for purposes of calculation of the due instalments excludes the overdue and paid rents
which shall be deemed as settled. The tenants that intend to benefit from such regime
shall communicate it to the landlord, which can propose a different payment
agreement. Favourable agreements executed between tenants and landlords before orafter the amendment to the deferral regime shall prevail over such regime; agreements
executed with worse terms and conditions than this regime may be terminated by thetenants by serving a notification to the landlord within 30 days as of 21 August 2020.
Any clauses included in agreements entailing the waiver by tenants to rights provided
under this regime and the waiver to enforce legal action against the landlord,or entailing the acceptance of increases to rent and duration of lease agreements are
deemed null and void.

•

Tenants that remain under lockdown (since March 2020 and, at least, until 1 January2021): (i) the deferred rents due in 2020 shall be paid in 24 instalments from 1 January2022 to 31 December 2023; (ii) the rents due in 2021 during the period of closure of theestablishments shall be deferred and paid in 24 instalments from 1 January 2022 to 31
December 2023.

•

Subsidies (“APOIAR RENDAS”): tenants that in 2020 suffered a decrease in turnover
between 25% and 40% shall receive a non-refundable support corresponding to 30% of
the rent, up to a limit of Ä1,200 per month; tenants that in 2020 suffered a decrease inturnover higher than 40% shall receive a non-refundable support corresponding to 50%of the rent, up to a limit of Ä2,000 per month.

•Applicable regime to shopping centres: the payment of rents due by tenants ofestablishments and facilities installed in shopping centres is governed by
the Supplementary Budget (approved by Law no. 27-A/2020, of 24 July), which
determines that up to 31 December 2020 it is only due the payment by tenants of thevariable rent (calculated on the shopkeepers’ sales), accrued with the service charge ofcommon expenses (being excluded the payment of the fixed rent). This regime isapplicable to the period between 13 March and 31 December 2020.

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Portugal•

Litigation
Are the courts
operating?

Tax
Has any new
legislation been
introduced in lightof Covid-19?

The fixed or minimum monthly rent due by the tenants of establishments installed in
shopping centres shall be reduced proportionally to the reduction of the monthly
invoicing, up to the limit of 50% of the amount of the monthly invoicing, when such
establishments suffer a drop in the monthly sales volume compared to the sales
volume of the same month in 2019, or the average sales volume of 6 months
preceding the declaration of state of emergency (in March 2020). This regime shallbe valid up to 31 March 2021, and the Portuguese Government is entitled to extend
it up to 30 June 2021.

Courts are operating, but all procedural terms for all kinds of courts have been suspended andwill resume when the state of emergency ends. This suspension is generally applicable toproceedings which are not urgent (notably those where fundamental rights are involved).
For more information, please visit here.

Postponement of CIT/PIT and Stamp Tax payments and obligations: the following deadlines
have been extended.
•••

Extension of the first CIT special payment on account from 31 March 2020 to 30
June 2020.
Deadline to submit the Corporate Income Tax return (Modelo 22) was extended from
31 May 2020 to 31 July 2020.
Extension of the first CIT payment on account and additional payment on
account from 31 July 2020 to 31 August 2020.

•

Deadline to submit the IES statement from 15 July 2020 to 7 August 2020.

•

Deadline to deliver to the tax authorities the tax file (when mandatory) from 15
July 2020 to 31 August 2020 (with no penalties).

•

Extension of the deadlines to deliver CIT and PIT withholding taxes andStamp Tax from April and May from 20 May 2020 to 25 May 2020 and from 20 June
2020 to 25 June 2020, respectively.

•

Extension of the deadline to deliver Modelo 10 from 10 to 25 February.

Tax deferrals: payment of VAT and CIT/PIT withholding taxes due in the 2nd trimester of2020 may, under certain circumstances, be deferred and paid in 3 or 6 monthly
instalments, free of interest and without the need of providing guarantees. The
first 1/3 or 1/6 has to be paid on the corresponding legal deadline.
VAT measures:•

112

Several extensions of the deadlines to submit the VAT periodic return (with nopenalties) and to pay the corresponding VAT have been approved.

Government measures in key jurisdictions

Portugal•

Simplification procedures for filing of VAT periodic returns of February, March andreferring to the 1st trimester of 2020 with no supporting documentation as long as
substitutive returns are afterwards presented by 20 December 2020. This measure is
only applicable to taxpayers with a turnover lower than Ä10M in 2019 or whose
activity was opened in 2020.

•

Application of reduced VAT rate (6% in Mainland Portugal, 5% in Azores and 4% in
Madeira) to protective masks and disinfectant gel and VAT exemption on healthequipment furnished to hospitals and non-profit health organizations.

•

Exceptional recognition of PDF invoices as “electronic invoices” from April 2020 toMarch 2021 for every legal effect.

Social Security deferrals: possibility of, under certain circumstances, reducing to 1/3
the Social Security contributions due between March/April and May/June 2020
for companies and self-employed (the remaining 2/3 should be payable under the same
instalment deferral rules set out above, i.e. payable between July and September 2020 or
between July and December 2020, depending whether payable in 3 or 6monthly instalments (free of interest and guarantees)).
Temporary exemption from Social Security contributions: exemption whichis, under certain circumstances, automatically applicable to entities benefiting fromthe exceptional and temporary measures set for labor protection in the context of theCovid-19 outbreak.

Company
law matters•

The use of distance communication mechanisms (i.e. video or teleconference) to holdmeetings of the corporate bodies and pass resolutions is also admissible, provided thatthe participation via such means is duly recorded in the relevant minutes of the meetings.

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

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Government measures in key jurisdictions

99

Singapore

Nicholas Lauw | nicholas.lauw@rajahtann.com | +65 6232 0772

Contributor: Rajah & Tann Asia

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

The Monetary Authority of Singapore (“MAS”) has established the MAS SGD Facility and
MAS USD Facility to provide SGD and USD to funding markets in Singapore in order tosupport their effective functioning.
•

The MAS USD Facility, established on 26 March 2020, seeks to provide up to USD60
billion of funding to support stable USD liquidity conditions.

•

The MAS SGD Facility is established to provide low costs funding to banks and financecompanies on the conditions that such financial institutions commit to pass on thesavings in funding costs to small and medium enterprises ("SME") applying for loans on
Enterprise Singapore's ("ES") lending schemes for SMEs: the SME Working Capital Loan
scheme and the Temporary Bridging Loan Programme. It was announced on 20 April
2020 that MAS will offer near-zero interest rate loans to eligible banks – just 0.1 per centper annum for a two-year tenor, which will help to lower the cost of loans for these SME
lending schemes and help financial institutions make loans to SME borrowers more
affordable.

•

This has been extended to 31 March 2021.

The SME Capital Working Loan scheme was enhanced pursuant to the Solidarity Budget
2020 for the purpose of aiding SMEs with their working capital and operational
cashflow needs.
•
The maximum loan quantum was increased from SGD300,000 to SGD1 million.
•
The risk-share percentage is enhanced to 90% for new applications made from 8 April
2020 until 31 March 2021, i.e. lending institutions may make a claim against ES in theevent of defaults by SME borrowers for 90% of the unrecovered amount.
•
SMEs under the enhanced scheme may apply for up to 1 year deferral of principal
repayment to help manage their debt, subject to assessment and approval by thelending institution.
The Temporary Bridging Loan Programme was established in March 2020 for the purposeof providing companies with access to up to SGD5 million working capital forbusiness needs.
•
The Interest rate payable on the loan is capped at 5% per annum.
•
ES will provide 90% risk-share on loans extended under new applications made from 8
April 2020 until 31 March 2021 I.e. lending institutions may make a claim against ES inthe event of defaults by SME borrowers for 90% of the unrecovered amount.
•Companies may apply for up to 1 year deferral of principal repayment to help
manage their debt, subject to assessment and approval by the lending institution.

Employment Individuals
What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

The Ministry of Social and Family Development launched the Covid-19 Recovery Grant on
18 January 2021, which provides eligible Singapore citizens and permanent residents who
remain significantly affected by job or income loss. Those eligible will receive up to:••$700 per month for 3 months for employees who have lost their jobs or are placedon involuntary no-pay leave for at least 3 consecutive months; or$500 per month for 3 months for employees and self-employed persons who arefacing average income loss of at least 50% for at lease 3 consecutive months.

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Singapore

Businesses
The Jobs Support Scheme (“JSS”) provide wage support to employers to assist themin retaining their local employees.

116•

The Government will co-fund 75% of the first SGD4,600 of gross monthly wages paid toeach local employee until August 2020.

•

The Government will co-fund the first SGD4,600 of gross monthly wages paid toeach local employee for the months of May to December 2020. The level of cofunding ranges from 50% for sectors classified as Tier 1, 30% for sectors classified as Tier 2
and 10% for sectors classified as Tier 3 up to March 2021:- Tier 1 is the aviation and tourism sector, which include airlines, airport
ground handlers, airport operators, qualifying licensed hotels, qualifying licensed travel
agents, qualifying gated tourist attractions, cruise lines and cruise terminal operators,
venue operators of purpose-built meetings, incentives, conferences and exhibitions. As of
26 May 2020, Tier 1 also includes all businesses that are unable to reopen on 2 June 2020,
lasting until August 2020 or the date they can reopen, whichever is earlier. Upon resuming
operations, JSS payouts will revert to the base tier on a pro-rata basis. New additions toTier 1 also include: aerospace, airline fleet services, and operators providing pilot and crew
training; tourism event organisers; money changers; regional ferry operators; central
refund agencies; built environment contractors and consultants (for June to August 2020
wages).
- Tier 2 is the food services sector, which include licensed food shops and food stalls. As of
26 May 2020, Tier 2 includes: retail; arts and entertainment; land transport; and marine andoffshore sectors.
- Tier 3 is all other sectors not falling within Tiers 1or 2.
- Businesses that could not reopen on 2 June 2020 will receive up to 2 months’ additional
Foreign Worker Levy waiver and rebate. For June 2020, this will be a 100% waiver and a$750 rebate – these will be halved in July 2020 (i.e. 50% waiver and $375 rebate).
- The JSS has now been extended by up to 6 months to September 2021:
Sectors

Extended Support

Aerospace, aviation, tourism sectors

50% of wages paid to March 2021, before
lowering to 30% for wages paid between
April to June 2021 and lowering to 10% forwages paid between July 2021 toSeptember 2021.

Built environment sector

50% of wages paid to October 2020,
before lowering to 30% for wages paid
between November 2020 to September
2021 and lowering to 10% for wages paid
between April 2021 to June 2021.

Arts and entertainment, food services,land transport, marine and offshore,
and retail sectors

30% of wages paid to March 2021, before
lowering to 10% for wages paid between
April 2021 to June 2021.

For the large majority of theremaining sectors

10% of wages paid up to March 2021.

For the few sectors that are managing
well, such as biomedical sciences,financial services, and ICT sectors

10% of wages paid for four more months,
for wages paid up to December 2020

Government measures in key jurisdictions

Singapore

The Job Growth Incentive (“JGI”) was announced on 17 August 2020 and will run until
September 2021. It is a $1 billion scheme to boost hiring of local workers in growth sectors
with a special focus on helping older workers.
•

Qualifying firms that raise their headcount of local workers over the next 6 months will
receive a subsidy for up to 25% on the first SGD $5,000 of gross monthly wages.

•

The SG Government will co-pay up to 50% for workers aged 40 and above, persons withdisabilities, or ex-offenders.

The MAS Support Package was announced on 8 April 2020 and is a SGD$125 million support
package to sustain and strengthen capabilities in the financial services and FinTech sectors.

Insolvency
Has thegovernment
made anychanges toinsolvency
legislation?

•

SGD$90 million has been allocated to supporting workforce
training and manpower costs, through the launch of a new Training Allowance
Grant, enhanced course fee subsidies and salary grants to Financial Institutions
regulated by MAS of $2,000 per month for eligible Singapore citizens
hired under a structured talent development programme.

•

A new Digital Acceleration Grant has been set up to enable Singapore-based financial
institutions regulated by MAS and Singapore-based FinTech firms certified by theSingapore FinTech Association (“SFA”) to adopt digital solutions as well as upgrade
systems to enable business continuity.

•

On 13 May 2020, MAS and the SFA, AMTD Group and
AMTD Foundation launched a SGD$6 million MAS-SFA-AMTD FinTech Solidarity Grant
to complement the MAS Support Package. This includes the Business Sustenance Grant
which allows eligible Singapore-based FinTech firms to receive a one-time grant up to
SGD$20,000 to cover the wages of their local workers as well as office rental costs. It
also includes the Business Growth Grant. Eligible Singapore-based FinTech firms
will also receive 100% internship funding for salaries of Singapore
citizens and permanent resident undergraduate interns, up to a cap of SGD$1,000
per month per intern.

•

The Simplified Insolvency Programme (“SIP”) came into effect on 29 January 2021 tocater to micro and small companies (“MSCs”) which have been severely impacted by
Covid-19 and require support to restructure their debts to rehabilitate their business or
to wind up. Micro and small companies are defined as having annual revenue of lessthan $1 million and $10 million respectively.

•

The SIP provides simpler, faster and lower-cost restructuring and insolvency
programmes for eligible MSCs. The SIP consists of two separate programmes thateligible MSCs may apply for:
Simplified Debt Restructuring Programme: for the restructuring of debts and potential
rehabilitation of viable businesses; andSimplified Winding Up Programme: for the orderly winding up of non-viablebusinesses. The company’s realisable unencumbered assets cannot be more than
SGD$50,000.

•

To qualify for the SIP, the number of creditors cannot exceed 50 and the number of
employees cannot exceed 30. The company’s annual sales turnover must not exceed
SGD$10 million and its liabilities, including contingent and prospective liabilities, must
not exceed SGD$ 2 million.

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Singapore

Contractual The Singapore government has enacted legislation providing for temporary relief for theinability to perform a scheduled contract. It provides temporary relief from legal action
Issuesover the following contracts (entered into before 25 March 2020 with contractual
What measures
have been taken
to reinforce
contracts?

performance due on or after 1 February 2020) up to a certain date:•Hire-purchase agreements and conditional sale agreements for plant, machinery or
fixed assets used for manufacturing, production or other business purposes, or acommercial vehicle excluding those entered into with banks or finance companies
regulated by MAS – up till 31 January 2021.
•
Rental agreements for commercial equipment or commercial vehicles – up till 31
January 2021.
•
Sale and purchase agreements between purchasers and housingdevelopers/commercial developers in respect of one or more units of housing
accommodation/commercial property – up till 31 March 2021.
•
Construction or supply contracts, or any performance bond granted thereto – up till
31 March 2021.
•
Options to purchase issued by housing developers/commercial developers tointending purchasers for one or more units of housing accommodation/commercial
property – up till 31 March 2021.
Moratorium on enforcement: A debtor under any of these contracts may issue a
notification forrelief if he finds that an obligation due on or after 1 February 2020 cannot be carriedout dueto the Covid-19 pandemic. Upon which creditors are prohibited from taking the following
actions:• court, domestic arbitration, and insolvency proceedings, as well as execution
proceedings against the debtor’s property;• enforcement of security against immovable/movable property used for businesspurposes,• appointing a receiver and manager over the debtor’s property;• calling on a performance bond given for a construction or supply contract;• terminating a lease or license over immovable property due to non-payment of rent;• exercising any right of re-entry/forfeiture under a lease or license over immovable
property;• increase of any charges or interest rate payable under the contract unless suchincrease in charges or interest is specified in the contract and the increase incharges or interest rate is calculated by reference to a formula in the contract (anyadditional increases will not be allowed without further agreement of the nonperforming party);• imposition of new charges under the contract without the further agreement of
the non-performing party;• requiring any part of a security deposit given pursuant to the contract to be replacedby the non-performing party except with the further agreement of that party.
The aforementioned actions cannot be taken until after the earliest of:• the expiry of the respective relief period;• the withdrawal of the notification for relief; or• a determination by an assessor that the case is not one eligible for the moratorium(note: under the new legislation, if a party is not able to come to an agreement withthe other party or parties to the contract for a compromise in relation to his/her
obligations covered under the notification for relief, he/she may apply for anassessor’s determination of the issues involved.

118

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Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Temporary relief measures for property developers and individuals: On 6 May 2020,
the SG government announced temporary relief measures for property developers andindividuals affected by disruptions to construction timelines and sales of housing units
resulting from the Covid-19 pandemic:•

Extension of the Project Completion Period (“PCP”) by 6 months for residential,commercial and industrial development projects.

•

Extension of time by 6 months for the commencement and completion of residential
development, and sale of housing units in residential development projects in relation to
the remission of the Additional Buyer’s Stamp Duty (“ABSD”) for housing developers.

•

Extension of time by 6 months for the sale of the first residential property in relation to
the remission of ABSD for the second residential property purchased by a Singaporeanmarried couple.

On 8 October 2020, the temporary relief measures were extended by a further 6 months.
Concessions for Collective Sale Procedures: On 6 October 2020, the Covid-19(Temporary Measures) (Temporary Measures for Conduct of Collective Sale of Property)
Order 2020 came into operation on 6 October 2020 which provides concessions fordeadlines and procedures specified in the Land-Titles (Strata) Act (“LTSA”) on a case-bycase basis.
•

Ordinarily, the deadlines specified within the LTSA ensure that Collective Sales
Committees (“CSC”) implement the collective sale process in a timely manner.
However, some CSC’s ability to adhere to deadlines may have been genuinely andmaterially affected by Covid-19. As such, CSCs may apply for concessions.

•

Only CSCs constituted before 25 March 2020 may apply for an extension, and thechairperson of CSCs who are entitled to apply for an extension must submit thenecessary forms no later than 25 March 2021.

Litigation•

On 29 May 2020, the Supreme Court announced that the Relevant Period (where
courts would only hear essential and urgent matters) would end on 1 June 2020.

Are the courts
operating?

•

Therefore, court hearings have resumed after 1 June 2020, with parties being directed
to strictly comply with all safe distancing and other applicable measures required
under the laws of Singapore, or prescribed by the Court, to minimise the local
transmission of Covid19. These include requirements, such as on the wearing of masks
in the Supreme Court premises.

•

The Honourable Chief Justice has directed that the use of electronic means ofcommunication to conduct hearings be enhanced. Selected hearings will be
conducted by video conferencing or where appropriate, telephone conferencing.

•

Where the court determines that physical attendance before the court is appropriate,
no more than two lawyers/litigants per party may appear at the hearing, unless parties
have been granted an exemption to allow additional attendees.

•Video-conferencing will be the default option for solicitors unless otherwise directed
for the following hearings:- Case management conferences conducted by a Registrar before the Court of Appeal- Civil and Criminal Pre-Trial Conferences before a Registrar

Government measures in key jurisdictions

119

Singapore- Civil hearings before a Registrar- Bankruptcy hearings before a Registrar- Attendance before a Duty Registrar•

Tax

There are no new legislation or measures regarding tax.

Has any new
legislation been
introduced in lightof Covid-19?

Company
law matters•

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote•
general meetings)?

•

Extension of deadline for holding Annual General Meetings and filing Annual
Reports: On 7 April 2020, the Accounting and Corporate Regulatory Authority (“ACRA”)
announced a 60-day extension of time for all listed and non-listed companies to hold theirannual general meetings (“AGMs”) and file their annual returns (“ARs”). The Singapore
Exchange Regulation (“SGX RegCo”) also announced that it would automatically extend
the deadline by 60 days for all issuers with financial year-end on or before 31 March 2020
to hold their AGMs.
Alternative arrangements for AGMs which proceed: On 7 April 2020, the Covid-19(Temporary Measures) Act was enacted by Parliament. One of the provisions statethat a relevant meeting or class of meetings held on or after 27 March 2020 thatcomplies with alternative arrangements prescribed under the new law will bedeemed to satisfy any requirements for the convening, holding or conduct or deferralof such meetings under the relevant written law or legal instrument.
On 13 April 2020, the Covid-19 (Temporary Measures) (Alternative Arrangements for
Meetings for Companies, Variable Capital Companies, Business Trusts, Unit Trusts andDebenture Holders) Order was gazetted. The Order sets out alternative arrangements topersonal attendance in respect of certain classes of meetings, which include, inter alia,
general meetings of companies. Personal attendance can be via electronic means
instead.
This Order has been extended to 30 June 2021. It has also been refined to facilitate
greater convenience and engagement for virtual meetings, by introducing (1) the
provision for real-time electronic voting; (2) real-time Q&A via electronic means; and (3)use of virtual annual general meeting platforms or other electronic means to accept
submissions of questions and proxy forms in advance of the meeting.

•120

On 27 April 2020, the Covid-19 (Temporary Measures) (Alternative Arrangements for
Meetings) (Corporate Insolvency) Order (“Insolvency Order”) was
gazetted, prescribing alternative arrangements for conducting meetings in respect of
insolvency matters of companies, limited liability partnerships and variable capitalcompanies.

Government measures in key jurisdictions

Singapore

The Covid-19 (Temporary Measures) (Alternative Arrangements for Meetings)(Bankruptcy) Order (“Bankruptcy Order”) was gazetted as well, prescribing
alternative arrangements for conducting meetings in respect of bankruptcy matters.
The Orders grant broad flexibility to convenors to either hold meetings virtually, or todeter holding meetings until 30 September 2020. However, the Orders do not apply
to all meetings. For example, the Insolvency Order does not apply to, inter alia, any
meeting held pursuant to an order or a direction of the High Court under section 210(1)of the Singapore Companies Act – meetings of creditors and members in relation to
the proposal of a compromise or arrangement.
•

On 22 June 2020, following Singapore’s move into phase two of its reopening on 19
June 2020, ACRA has updated its regulatory announcement to clarify that issuersthat are permitted to operate will no longer need to submit a notification to the
Ministry of Trade and Industry for a lime-limited exemption to have temporary
operations in the same physical location for the purpose of holding a general
meeting.

•

The Singapore Stock Exchange is also providing a grant of SGD5,000 per issuer
that can only be used for the purpose of implementing Covid-19 measures for
AGMs. This ‘AGM Facilitation Grant’ will cover all AGM-related expenses incurred
between 16 March 2020 and 15 March 2021, such as augmenting physical AGMs
with video conferencing, additional logistics such as on-site temperature taking or
pre-AGM shareholder communication, amongst others.

Government measures in key jurisdictions

121South Africa

Janene Meiring | jmeiring@werksmans.com | +21 809 6159

Contributor: Werksmans

122

Loans andfinancialsupport•Has thegovernment put
in place any newbank funding
schemes?

•

Both the Government of the Republic of South Africa (“RSA”) and the private sector haveintroduced a number of financial schemes aimed at assisting businesses, in particular small
and medium sized enterprises (“SMMEs”), negatively affected by Covid-19. These schemes
are being updated from time to time. Some of the schemes have since closed or been fully
subscribed.
The Government has created a number of Covid-19 loan funding schemes which are
specifically aimed at SMMEs generally (annual turnover restrictions are dependent on theindustry), namely the:– SMME Debt Relief Finance Scheme – this scheme is available to SMMEs in order to assist
them with existing debt repayments, acquiring raw materials, paying labour and otheroperational costs, and– SMME Business Growth / Resilience Facilities – this scheme is available to SMMEs
classified as ‘essential services’ assisting in producing or supplying ‘essential goods’
during the lockdown.
– Restructuring of SEFA funded loans – the Debt Restructuring Facility is geared towards
SMMEs funded by the Small Enterprise Finance Agency (SEFA), which are negatively
affected by the pandemic (SMMEs will be required to illustrate the direct linkage). A
payment moratorium/holiday will be given to qualifying SMMEs for a maximum periodof six months, in an effort to reduce the instalment burden of loan obligations on
affected SMMEs.

•

Certain industry specific schemes have also been introduced, such as the:– Spaza Shop Support Scheme aimed at spaza shop owners and general dealers selling
essential goods;– National Department of Sports, Arts and Culture Relief Fund aimed at practitioners in thefields of arts, culture, sports and recreation;– Covid-19 Tourism Relief Fund provides once-off capped grant assistance to SMMEs inthe tourism value chain to ensure their sustainability during, and post, theimplementation of government measures to curb the spread of Covid-19 in South Africa.
The grant is capped at R50,000 per entity and can be utilised to subsidise expenses
towards fixed costs, operational costs, supplies and other pressure cost items.
– Covid-19 Agricultural disaster support fund for (i) smallholder and communal farmers
with a minimum turnover of R20,000, but not exceeding R1million, and (ii) South
African citizens who have already been farming for at least 12 months and (in respectof both) that are producing poultry, vegetables, fruits, other livestock and winter field
crops. This fund provides grant of up to R50,000;– Industrial Development Corporation (IDC) Assistance and IDC MCEP Covid-19
Programme, which provide funding to businesses for the acquisition or
manufacturing of essential medical supplies;– National Empowerment Fund Black Business Funding Solution, which provides loan
funding to black owned SMMEs which manufacture medical products.

•

The Government also announced the Covid-19 DTI Relief Fund, which aims to provide R3 billion
in relief funding to vulnerable businesses involved in the battle to roll back Covid-19. This fundis not restricted to SMMEs only. Of these funds, R500 million has been allocated for importing
medical products and R700 million for financing equipment and working capital requirements.

•

In addition to the Government funds which have been in place, a Solidarity Fund has beencreated (to which the public can donate), a number of prominent business men and women
have created dedicated funds and banks have offered certain reprieves to clients (e.g. payment
holidays).

•

For the duration of the national state of disaster, the Competition Act has been amended to allowbanks to provide payment holidays etc. to their debtors.

•

The South African Reserve Bank has also reduced the repo rate (with reference to which banklending rates are determined) on a number of occasions since the start of the Covid-19 crisis.

Government measures in key jurisdictions

SouthAfrica

Employment •What financial
support is thegovernment
providingto businesses
and to individuals
on employment
•

•

•

•

Insolvency
Has thegovernment
made anychanges toinsolvency
legislation?

The national lockdown imposed by the government of the RSA with effect from 27 March
2020, has 5 levels. With effect from 1 May 2020, the RSA moved from level 5 to level 4 andwith effect of 1 June 2020 from level 4 to level 3 and with effect of 18 August 2020 fromlevel 3 to level 2, with effect of 21 September 2020 from level 2 to level 1 and with effect of
28 December 2020 from level 1 to an adjusted level 3 and since 1 March 2021 South Africa
has once again moved down to level 1 (level 5 being the most stringent, and 1 being theleast stringent). The different levels put in place various restrictions on which industries canoperate, either fully or in part. This is presently done by allowing most business to operate.
Employers who are able to operate, either fully or in part, are expected to comply withstringent health and safety measures. Presently the majority businesses and services areallowed to operate.
In the absence of industry specific provisions to the contrary, employees who are unable torender services to their employers because of the lockdown provisions are not entitled to be
paid.
The government has put in place a number of measures aimed at assisting employers andemployees, some of which are industry specific. Some of these measures are now coming
to an end, in conjunction with the easing of the lockdown. One such measure is the Covid19 Temporary Employer – Employee Scheme (Covid-19 TERS), which provides for thepayment of benefits to employees employed by employers who have had their operations,either partially or entirely, closed due to the lockdown. The benefit also extends toemployees with comorbidities and to those over 60 years of age who cannot be reasonably
accommodated at work. The minimum benefit payable for each qualifying employee isR3,500 per month and the maximum is R6,638.40 per month. This benefit was available forMarch 2020, April 2020, May 2020, June 2020, July 2020, August 2020, September 2020and part of October 2020.
Du to a subsequent extension of the national lockdown, two additional payment periods
have been endorsed by organised labour and business (NEDLAC). The first being from 16
October 2020 – 31 December 2020 and the second from 1 January 2021 – 15 March 2021. The
right to claim for this period has, however, not yet been made law.
Additional measures available for employees include sick leave benefits, illness benefits,
reduced work time benefits (where the business is operating but on, for instance, short-time)and particular compensation where employees contract Covid-19. Furthermore, employees
who have had to self-isolate or quarantine can claim an income replacement benefit.

•

There have been no changes to the legislation governing insolvencies in RSA, however,
the Companies and Intellectual Properties Commission (“CIPC”) has issued various
notices under the Companies Act No. 71 of 2008 (“Companies Act”) in respect of theprocedure relating to companies who are, or will be, in business rescue as a result offinancial distress.

•

In notice 17 of 2020, the CIPC undertook not to invoke its powers under section 22 of
the Companies Act (to issue compliance notices to business trading recklessly) in
respect of companies that are trading in temporarily insolvent circumstances as adirect result of the Covid-19 pandemic. This notice will lapse within 60 days ofthe declaration that the national disaster has been lifted.

•

The CIPC also temporarily ceased operating at full capacity as a result of the lockdown
and as such no processing of documents or filings could take place from 24 March 2020
to 30 April 2020. In terms of section 129 of the Companies Act, a company’s board
resolution to place itself into business rescue only comes into effect when the relevant
resolution placing the company in business rescue and supporting documents are filedwith the CIPC. The CIPC accordingly provided for a dies non period for these dates during
which no business would be penalised for its inability to file resolutions and supporting
documentation to commence business rescue.

Government measures in key jurisdictions

123SouthAfrica

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

124•

As such:– any business rescue applications filed with the CIPC in the prescribed manner and form
during the dies non period would be processed to reflect the dates on which it was filed,– the appointment of business rescue practitioners filed in the prescribed manner and form
during the dies non period would be endorsed by the CIPC to reflect the dates on which it
was filed, and– entities commencing business rescue proceedings (filed in the prescribed manner andform) will automatically receive a five day extension to appoint a business rescue
practitioner.

•

In terms of Notice 35 of 2020, the CIPC is now issuing certificates without a stamp whichevidence either the commencement of business rescue or the appointment of a businessrescue practitioner.

•

The offices of the Master of the High Court are still only operating in respect of certain
services.

•

The RSA legal system recognises the principles of sanctity of contract and relaxation in theface of an unforeseen event which justifiably renders the performance of a contractual
obligation impossible. There are a number of principles which are available either incommon law or commonly in agreements which may offer some options or relief tocontracting parties (described briefly below).

•

Although businesses have generally been encouraged to, where possible, not invoke force
majeure provisions in order to preserve existing contractual arrangements and business,this decision is ultimately dependent on the particular contracting party, industry andsurrounding facts and circumstances. Practically, there have been some contracting
parties who have sought to invoke these provisions, while others have been willing to holdback on doing so and/or negotiate and agree amendments to contracting arrangements.

•

Under the common law, force majeure events include acts of God, war, riots, natural
disasters, energy blackouts, lockouts and labour unrest. Material Adverse Change (“MAC”)
clauses, like force majeure clauses, are used in contracts to allocate the risk of events thatare unforeseen at the time of contracting.

•

These provisions usually provide that a party will be able to suspend the performance of
their obligations for so long as the force majeure event continues or for a set period of time,
whichever is the shorter. Since this is a contractual provision, the extent to which a party
will be able to rely upon the clause will depend on the specific wording of each clause. The
onus of proving the force majeure will be on the party alleging it and typically that party will
have to show that the event was not within its reasonable control, could not have reasonably
been avoided and was not a result of an act or omission on their part. While this may seem
likely to encompass Covid-19, it is the impact of Covid-19 on the party’s ability to performthat is essential. Force majeure clauses are also likely to include an obligation on the parties
to first discuss the effect and potential mitigation of the force majeure, as well as a generalobligation on the claiming party to mitigate the impact of the force majeure.

•

It is common to see a force majeure clause that will lead to a termination of thecontract if the force majeure is not resolved after a certain number of days.

•

MAC clauses are contractual and are not regulated by the common law.
The contract will define the circumstances in which a material change will bedeemed to occur and each contract should be carefully considered with therelevant facts to determine if circumstances exist to invoke a MAC. The burden of
proof is similarly on the party alleging the MAC.

Government measures in key jurisdictions

SouthAfrica

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

•

The impact of Covid-19 is severe and there will undoubtedly be parties who seek to avoid
their contractual obligations. Whether or not they can be saved by a MAC clause will
ultimately depend on the precise wording of the MAC clause and the allocation of risks. It
will also depend on the facts and the effect of the pandemic on the business in question.

•

When circumstances occur which renders performance under a contract impossible, theprinciple of supervening impossibility of performance in terms of the common law may also
excuse parties from performance. Supervening impossibility of performance occurs when
performance was possible on conclusion of the contract, but subsequently has become
impossible through no fault of the parties. This could be the result of a vis major or casus
fortuitous.

•

The test for performance is that it must be objectively impossible. Where a party can
perform, albeit at a higher cost or with economic hardship, the RSA courts are unlikely toconsider this supervening impossibility. On the other hand, the courts have also been clearthat it is not complete factual impossibility that is required but rather that performance has
become so difficult and onerous that it can, under no circumstances, be reasonably
expected that a party must comply.

•

If supervening impossibility can be proven, the obligations of the parties under thecontract will be discharged and the contract will be terminated. This differs from force
majeure, which often allows for a suspension of performance and only provides fortermination in the event that the force majeure is not resolved within a period of time.

•

RSA is now under lockdown level 1 legislation promulgated by the Government of the
RSA. Many borrowers are now open but are still struggling to meet their obligations in
respect of payment of their rentals. Landlords have however been encouraged tonegotiate with tenants in respect of rental and other obligations, and in practice certain
retail tenants have, in terms of the common law, refused to pay rental and have been
granted discounts or rental free months by landlords.

•

The banks and financial institutions have provided relief to certain individuals andentities. This is however not a blanket exclusion in respect of payment holidays to every
person and entity. Banks and financial institutions may, for example, either grant a one
month or three month payment holiday, depending on the financial position of theindividual or entity and provided the individual or entity was not in default withpayments when the lockdown started. Other banks have indicated that customers inselected industries who can indicate their income has been affected by Covid-19 may beoffered a 6 month payment break.

•The financial institutions are granting further bonds in respect of properties owned andgranting bonds to prospective purchasers.

•

The Deeds Office that processes the registration of bonds and transfers in terms of theDeeds Registries Act in Cape Town is up to date, resulting in a turnaround time of about
6 to 8 days from date of lodgement to date of registration of the bonds or transfers.
Covid cases were reported but this resulted only in the Deeds Office in Cape Town
closing for a day in December 2020 and January 2021. Strangely there has been a miniboom in the property market due to Covid and interest rates are at an all time low.

•

Turnaround times in the Deeds Office in Pietermaritzburg is approximately 3 weeks due
to Covid, but has been picking up after a huge backlog. This has a devastating impact inthat transfer and bond registrations cannot transpire speedily which has a detrimental
effect on cash flow of individuals and entities. King Williams Town has a turnaround timeof 6 – 7 working days and is in the same position as the Deeds Office in Cape Town.

Government measures in key jurisdictions

125SouthAfrica

Litigation•

Evictions are allowed under lockdown legislation currently in force.

•

Landlords are, however, struggling to fill vacant space as there is a trend of working
from home.

•

In the RSA, court proceedings are generally continuing as usual, save that presiding
officers in the courts have been given the discretion, and are urged, to use
teleconference or videoconference tools where possible in order to keep the court
system operational.

Are the courts
operating?

Tax
Has any new
legislation been
introduced in lightof Covid-19?

The Government of the RSA has introduced the following tax relief measures for
employers and employees:•
From 1 April 2020, an expanded employment tax incentive of R750 per month for
qualifying low-income employees for a period of four months.
•
Deferral, for a period of five months, of 35% of employees tax (“PAYE”) payable by tax
compliant SMMEs (without penalties or interest).
•
Increased deductions from PAYE of certain taxdeductible donations made by employers on behalf of employees.
•
From 1 May 2020, a four-month holiday for skills development levy contributions (1% of
total salaries) applies.
•
The Covid-19 TERS provides tax-free unemployment insurance relief throughapplications to the Unemployment Insurance Fund (“UIF”) for unemployment resulting
from Covid-19 closure of businesses.
•
Amounts received by employees on behalf of employers from a Covid-19 disaster relief
organisation may be deducted or excluded from the calculation of remuneration for
purposes of PAYE.
The following provisional tax relief has been introduced by Government and is available totax-compliant SMMEs:• A deferral, for a period of 12 months, from 1 April 2020 to 31 March 2021, of a portion ofprovisional tax liabilities.
• The first provisional tax payment is reduced to 15% (as opposed to 50%) of the estimatedtotal tax liability, while the second provisional tax payment is reduced to 65% (asopposed to 100%) of the estimated total tax liability. The remaining 35% tax liability ispayable with the third provisional tax payment.
• Deferral relief for qualifying micro businesses with regard to interim payments, similar to
the 15% and 65% deferral relief with regard to provisional tax payments for tax-compliant
SMMEs.
Other relief measures introduced by the Government:•

126

Fasttracking of VAT refunds for smaller VAT vendors that are in a net refund position bypermitting the filing of VAT returns monthly instead of every two months without theneed to apply to the revenue authority to do so.

Government measures in key jurisdictions

SouthAfrica

Company
law matters
Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

•

Extension of certain prescribed time periods under tax Acts in which the lockdown period
will be regarded as days that have no legal effect and will not be counted for purposes of
the calculation of certain time periods. In this regard, the lockdown period is defined as
the period of lockdown between 23h59 on 26 March 2020 until 23h59 on 30 April 2020.

•

Due to the restrictions on the domestic sale of alcoholic beverages, payments of excise
tax due in August 2020 and September 2020 are deferred by 90 days without interest or
penalties for excise-compliant businesses.

•

The original 90 day deferral period granted in respect of excise tax payments due on
tobacco products in May 2020 and June 2020 have been extended to a period of 150
days, without interest or penalties. As such, an additional 60 days have been added to theinitial 90 day relief period granted.

•

Three-month deferral for the filing and first payment of carbon tax liabilities, which would
otherwise have been due by 31 July 2020, has been deferred until 31 October 2020.

•

Tax-deductible limit for donations, currently 10% of taxable income, is increased to 20% in
respect of donations to the Solidarity Response Fund during the 2020/21 tax year.

•

Certain corporate tax measures that were going to be introduced in terms of which the
deductibility of interest expenses, as well as the utilisation of assessed losses, would havebeen limited will be postponed to later legislative cycles.

•

An expansion of access to living annuities for a period of four months from 01 May 2020 31 August 2020.

•

Relief for larger businesses and additional relief for tax-compliant SMMEs. The relief is notenshrined in legislation, but takes the form of an invitation to apply on the revenue
authorities' website, which applications can be made by way of email.

•The Companies Act allows shareholder and board meetings to be held by wayof electronic communication, provided that all parties are able to participate in themeeting and communicate concurrently without an intermediary. Meetings were alreadyoften held, in whole or in part, by electronic means prior to Covid-19, however, theprevalence thereof has increased substantially since the start of the pandemic.

•

In addition to the holding of meetings by electronic means, the Companies Act permits
both shareholder and board resolutions to be adopted by means of round robin
written resolutions in appropriate circumstances without the need to hold a meeting.

•

The Johannesburg Stock Exchange ("JSE") has also partnered with The Meeting Specialist
to launch the first virtual annual general meetings ("AGM") for listed companies in the
RSA to enable clients to engage with shareholders while the country is faced with tackling
the Covid-19 pandemic.

•

If a company holds a virtual-only AGM and does not allow shareholders to ask questions
in real time, without moderation, or requires all questions to be submitted in advance,that meeting will not constitute an AGM for the purposes of the Act.

Government measures in key jurisdictions

127

SpainIgnacio Corbera Dale | ignacio.corbera@garrigues.com | +44 (0)20 7710 9416

Contributor: Garrigues

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

128•

Government is granting up to Ä100 billion in guarantees for funding provided
by credit institutions. In this respect: net indebtedness limit for the Spanish Official
Credit Institute (ICO) raised by Ä10 billion, to increase ICO facilities providing
funding to companies and the self- employed, and the guarantee will cover 80% of
new financing operations and renewals for self-employed and SMEs (defined ascompanies with less than 250 employees, and with an annual turnover that does notexceed EUR 50 million or with an annual balance sheet that does not exceed EUR 43
million). For all other companies, the guarantee will cover 70% in the event of new loan
operations and 60% for renewals.

•

There is no limit to the amount of guarantee per beneficiary, subject to EUs state aid
rules. The insurance premiums may vary whether the beneficiary is an SME or a nonSME, in accordance with de minimis EU regulations.

•

A new line of ICO guarantees of Ä 40 billion (with the possibility of increasing it up to
Ä100 billion) has been activated by the Royal Decree Law 25/2020 (“RD 25/2020”) withthe purpose of financing companies and self-employed individuals with productive
investments.

•

The Spanish Export Credit Agency (CESCE) has been authorised to provide insurance
cover amounting up to Ä2 billion for the working capital credit facilities needed by SMEs
(excluding micro-companies that are those with less than 10 employees and with anannual turnover or annual balance sheet that does not exceed Ä2 million) and bigger
non-listed companies.

•

There is no requirement that the use of the funds be linked to the performance of export
contracts and should respond to new financing needs and not to pre-crisis situations.
The percentage of credit risk cover shall not exceed 80%.

•

The RD 25/2020 has increased the endowment granted to the fund for Foreign
Investment (FIEX), managed by COFIDES, from Ä10 to Ä100 million.

•

The sums in the Fund for “Red Cervera” Technical Provisions and R&D&I projects areallowed to be used to cover any risks that the Centre for Technological and Industrial
Development (CDTI) may incur by providing loans to finance R&D&I projects of small
and medium enterprises, and of mid-cap companies.

•

New Covid-19 fund (Fondo Covid-19) managed by the state-owned industrial holding
company Sociedad Estatal de Participaciones Industriales (SEPI) of Ä10 billion has beencreated to provide financial support strategic non-financial companies that have been
particularly affected.

•

The purpose of Fondo Covid-19 is to provide temporary public support to strengthenbusiness solvency, in particular through the granting of participating loans,
subordinated debt, subscription of shares or other capital instruments, to non-financial
companies experiencing severe temporary difficulties because of the Covid-19
pandemic and which are considered strategic for the national or regional production.

•

Royal Decree Law 19/2020 (“RD 19/2020”) introduces a special legal regime formoratorium agreements offered by lenders. The regulation requires that these
agreements -in order to benefit from the provisions established in RD 19/2020- are theresult of the lender's adherence to a sectoral framework agreement for deferredpayment promoted by the associations representing financial institutions, which must
be communicated to the Bank of Spain.

•

For further information regarding these moratoriums, please visit here. RD 25/2020
introduces an extraordinary line of financing with the purpose of granting financial
support to private companies and self-employed individuals related to the tourism sector
and which has been affected by economic losses arising from Covid-19. This financing
should be used for digital transformation and innovation projects.

Government measures in key jurisdictions

SpainEmployment
What financial
support is thegovernment
providingto businesses
and to individuals
on employment•

Royal Decree Law 34/2020 (“RD 34/2020”) has extended the application deadline for
ICO guarantees from December 31, 2020 to June 31, 2021.

•

For more information, please visit: Royal Decree-Law 8/2020 of March 17, 2020
launches urgent and extraordinary measures to confront the economic and social
impact of Covid-19 and Preserving and increasing liquidity in the time of Covid-19 and
Covid-19: Recommendations for accessing the financing facilities offered under Royal
Decree-Law 8/2020 and Release of two new ICO guarantee facility tranches
amounting to Ä2,550 million for companies in the process of fulfilling an arrangementwith creditors.

•

Extension of furloughs procedures (“ERTEs”) due to force majeure until March 31,
2021. Royal Decree Law 2/2021, that modifies Royal Decree Law 18/2020 (“RD18/2020”) and Royal Decree Law 24/2020 (“RD 24/2020”), allows the ERTEs due toforce majeure, as well as the exemptions from social security payments to be extended
until May 31, 2021 and also defines, inter alia, new exemptions in relation to social
security contributions, the scope of the job retention obligation, as well as certain
restrictions on the distribution of dividends of companies that have used an ERTE due toforce majeure. For further information, please visit here.

•

Furlough procedures (“ERTEs”) as a temporary solution: The conditions forprocessing ERTEs have eased and can be processed much quicker. ERTEs can beprocessed in case of force majeure and economic, technical, organisational andproduction-related grounds arising from Covid-19. On May 1, 2020 the Spanish
Directorate General of Labour (Dirección General de Trabajo) issued an interpretation
report related to the gradually cease of force majeure furloughs. For more information,please visit here.

•

Exemption from contributions in the case of ERTEs due to force majeure: There is afull exemption from the employer’s share of social security contributions for companies
with fewer than 50 employees and a 90% exemption for companies with 50 or more
employees, until May 1, 2021.

•

ERTEs due to limitation to the normal development of the activity: There is apossibility of requesting an exemption from the employer’s share of social security
contributions related to employees under ERTEs, due to an activity hindrance reason,starting from February 1, 2021 until May 31, 2021, as follows:a. an exemption equal to 100%, 90%, 85% and 80% of the employer’s share of social
security contributions, for the months of February, March, April and May 2021,
respectively, applicable to companies with less than 50 employees; andb. an exemption equal to 90%, 80%, 75% and 70%, of the employer’s share of social
security contributions, for the months of February, March, April and May 2021,
respectively, applicable to companies with 50 or more employees until May 1, 2021.

•

Obligation to maintain employment: The extraordinary employment-related
measures are subject to the company’s obligation to maintain employment for aperiod of 6 months following the date of resumption of the company’s activity.

•

Rights to adapt and reduce working hours: This measure is addressed to
employees who evidence duties of care with respect to their spouse or equivalentand relatives up to the 2nd degree of consanguinity because of Covid-19.

Government measures in key jurisdictions

129

Spain•Teleworking: The official Spanish state gazette (BOE) has published the Royal Decree Law
28/2020, dated September 22, 2020, introducing new regulations related to teleworking.
For further details please visit here.

•

Sick leave: Sick leave due to Covid-19 infections or preventive isolation is treated as an
occupational accident for the purposes of benefits.

•

Recoverable paid leave: There was a time window between March 30 and April 9, 2020,
both inclusive, in which employees involved in non-essential activities were not able to go
to work as result of the Covid-19 crisis and subsequent State of Emergency. During that
period, those affected employees benefited from a mandatory recoverable paid leave(permiso retribuido recuperable). The recovery of the missing working hours by theemployees shall be carried out until December 31, 2020, under the conditions to becollectively agreed with their employer, unless there is an agreement between the parties
to extend such period.

•

Measures applicable after the end of the state of emergency: Royal Decree Law
21/2020 (“RD 21/2020”) establishes the specific measures and obligations to be adopted
at workplaces, related to ventilation and cleaning, work shifts, workspaces or progressive
return, among others, as well as the promotion of the use of teleworking and with regard
to employees who have symptoms compatible with Covid-19. See here and below for
more information.

•

Spain: Royal Decree-Law 8/2020 of March 17, 2020 launches urgent and extraordinary
measures to confront the economic and social impact of Covid-19.
Companies facing the Covid-19 Crisis: 4th edition.
Covid-19: Key new legislation introduced in Royal Decree-Law 11/2020.
Workers in non-essential services will be compelled to take recoverable paid leave.
Covid-19: Publication of the new extension of ERTEs, unemployment protection measuresand the 'Plan Mecuida' work/life balance program.
The keys to the new telework regulation agreed by the social agents.
Teleworking: the importance of a good agreement.

•
•
•
•
•
•

Insolvency
Has thegovernment
made anychanges toinsolvency
legislation?

130•

The duty to request a voluntary insolvency order has been disabled until March 14,
2021. In this respect, no petitions for necessary insolvency orders filed by creditors
against the debtor will be admitted for consideration. However, directors should not
lower their guard, since this measure does not mean that they cannot incur liability forcausing or aggravating insolvency for the company. For further information about thismatter please visit here.

•

The Official Spanish State Gazette (BOE) has published a new Spanish Revised
Insolvency Law on May 7, 2020, introducing regulation that departs from the existing
provisions on restructurings and insolvencies and that will enter into force on
September 1, 2020. For further details please visit here.

•

For more information please see here and here and here.

Government measures in key jurisdictions

Spain•There has not been any outstanding measure taken by the Spanish Government
regarding the specific reinforcement of contracts, therefore, normal rules would apply.

•

When it comes to contract suspensions and reductions in working hours that are directly
caused by losses in activity as a result of Covid-19, a legal provision has been included in
Royal Decree-law 8/2020, of March 17 (RDL 8/2020) stating that those specific cases shallbe considered as force majeure, when duly verified.

•

It should be taken into account that the force majeure term relates with theimpossibility of the parties to perform their respective obligations due to the existenceof an event that could not have been foreseen or that, if foreseen, were inevitable. In
this respect, the scope and applicability of the force majeure would be subject to thespecifics of each case, which shall be, in last instance, examined and determined one
by one by the judicial courts.

•

Likewise, if the performance of a contract is significantly affected due to unforeseen
circumstances, it should be considered that there is a legal doctrine on hardship createdby case law, that allows obligations and contracts to be reviewed when the economic
balance of the contract has been upset and the contract has become impossible or very
difficult to perform for one of the parties due to those unforeseen circumstances.
However, it should be noted that the Spanish courts have hitherto applied hardshipprinciples very cautiously and the specific characteristics of each case must be
thoroughly looked at to determine whether it is applicable.

•

For more information, please visit: Companies facing the Covid-19 crisis and Forcemajeure and the grounds for suspension of contracts due to Covid-19 cannot be
regarded as justifying dismissal

Property•

Have any changes
been made to
the laws aroundproperty, rent andenforcement?

RDL 8/2020 incorporates a moratorium in favour of mortgage debtors who are in aparticularly vulnerable situation (i.e. the mortgagor becomes unemployed or, in thecase of a businessman, suffers a substantial loss of income or a substantial drop insales, that is, at least 40%).

•

If the landlord is an entity or a public housing company (entidad ‘pública de vivienda’) or alarge individual holder (i.e. an individual owning more than 10 properties or owning a built
facility bigger than 1,500 sq.m), the tenant may request temporary and extraordinarydeferment of the rent of his/her principal residence within one month from the enter into
force of Royal Decree-law 11/2020, March 31, provided that said deferment or the total orpartial remission of the rent has not already been achieved voluntarily by agreement
between both parties. In the event that the agreement had not taken place, the landlord
may choose between the following alternatives:

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

– a 50% reduction over the rent while the state of emergency is in force, or–a moratorium on the payment of the rent that will be applicable during the term of thestate of emergency (and which may be extended monthly if that term is insufficient inrelation to the situation of vulnerability caused by the Covid-19), and which may not, inany case, exceed four months.
•

In line with the above, Royal Decree-Law 15/2020 has extended, in one additional monthstarting from April 23 2020, the term granted to the tenant to request a moratorium on
the rent payment. However, in this case, the moratorium will be automatically binding to thelandlord, and the same conditions as indicated above will apply.

•

Likewise, measures related to the suspension of the eviction procedures as well as theremovals of judicial releases for vulnerable households without alternative housing
have been introduced.

Government measures in key jurisdictions

131

SpainLitigation•

In addition, RD 25/2020 introduces a special legal regime for moratorium agreements
offered by lenders to self-employed individuals and legal entities. This special regime
aims the protection of the financing related to properties used for tourism purposes andwhich have not been able to benefit from the above-mentioned moratoriums measures.

•

Finally, besides the above regulations introduced by the Spanish government to mitigate
the economic impact regarding the Covid-19, the undertakings that need to bear rental
payments while their business are closed (retailers, in particular) are requesting to theirlandlords, on a general basis, rent free periods regarding their lease agreements given
the extraordinary nature of the health emergency resulting from Covid-19, based on theforce majeure and hardship (rebus sic stantibus) applicable case law.

•

Royal Decree-Law 35/2020 introduces a special legal regime for non residential leasingfrom December 24, 2020.

•

Please note that several regions have developed their own sectoral regulations. For more
information, please visit here and below.

•

Spain: Royal Decree-Law 8/2020 of March 17, 2020 launches urgent and extraordinary
measures to confront the economic and social impact of Covid-19.

•

Covid-19: Key new legislation introduced in Royal Decree-Law 11/2020.

•

Covid-19: Approval of measures in relation to non-residential leases.

•

Lifting of the suspension of procedural and substantive time periods, andrecommencement of judicial proceedings. An order has been enacted to lift, startingon June 4, 2020, the suspension of procedural and substantive time periods
determined in additional provisions two and four of Royal Decree-Law 463/2020 (“RD463/2020”). Also, on that same date, the judicial activities mentioned will start up
again, where health-related, organizational and procedural requirements so allow.

•

Remote hearings in civil proceedings. For the time being, this is only allowed forhearings with the exclusive participation of professionals, although the courts have notrejected the option of holding other proceedings with parties or witnesses also taking
part. This results from putting into practice the permission, envisaged in Law 3/2020
on procedural and organizational measures to confront Covid-19 in the sphere of thejustice system, to hold virtual remote hearings until June 20, 2021.

•

The General Council of the Spanish Judiciary has published guidelines on holding
judicial proceedings remotely. The guidelines provide parameters andrecommendations for reconciling the preferred use of these types of technology in theprocess with the court's plenary session, with the principles and safeguards establishedin the laws. Over four sections it addresses elements related to the preferred use of
remote technology, how the proceedings are to be held, the place and minimum
technical requirements that must be taken into account for carrying out the various
steps in the process remotely. They are available here.

•

For more information please visit our June Covid-19 special newsletter.

Are the courts
operating?

132

Government measures in key jurisdictions

SpainTax•

Extension of the filing and payment deadline for certain tax returns and self-assessments:
This extension benefits small and medium-sized companies and the self-employed, andrelates to be filed between April 15 and May 20, 2020. It applies to taxpayers that had
revenues of Ä600,000 or lower in 2019. For taxpayers with public authority status, including
the social security authorities, their latest approved annual budget cannot go aboveÄ600,000.

•

Exemption in relation to transfer and stamp tax for mortgage transactions.

•

VAT and custom duties exemption: For imports of any goods necessary for
medical treatment of individuals affected by Covid-19 and for avoiding the spread of viruses.
In addition, a 0% VAT rate is established temporarily (until April 30, 2021) for domestic
supplies, intra EU acquisitions or imports of the goods listed in the annex of the Royal DecreeLaw 15/2020, for which the customers are public entities, non-profits and hospitals.

•

Suspension of assessment of VAT and of excise taxes on electricity and on hydrocarbons
on the bills or electricity, natural gas and oil products: Exemption from any obligation
to assess and pay VAT and, where relevant, the excise tax on electricity and the excise tax
on hydrocarbons relating to bills with suspended payment, until the customer has paid
them in full, or 6 months has run from the end of the state of emergency.

•

Measures in relation to the CIT prepayments: Taxpayers with revenues of Ä600,000 orlower in 2019 will be entitled to calculate their CIT prepayments using the “tax basemethod” before May 20, 2020 (deadline for filing the April prepayment for these taxpayers,
due to the extension of the period approved by Royal Decree-Law 14/2020). Other
taxpayers with net revenues of Ä6,000,000 or lower in FY19 will be also entitled to
calculate their following prepayments (October and December 2020) using the “tax basemethod”. This measure does not apply to any tax group taxed under the special
consolidated tax regime for CITpurposes.

•

Tax credits for donations: Taking effect from January 1, 2020, a higher tax credit
is available for donations made by individuals and by non-resident income taxpayers
operating in Spain without a permanentestablishment.

•

Corporate income tax credit for investments in cinematographic productions andaudiovisual series: An increase of the tax credit percentages has been approved for theinvestments and short films are included among the investments giving entitlement tothat tax credit.

•

Events of exceptional public interest: Additional events and programs of exceptional
public interest have been included for the purposes of the tax regime for not-forprofit entities and on tax incentives for patronage.

•

Corporate income tax: Royal Decree-Law 19/2020 (“RD 19/2020”) states that the threemonth period for preparing the financial statements will start running on June 1, 2020.
Likewise, RD 19/2020 has provided a mechanism allowing a new self-assessment to be filed
until November 30, 2020 if the approved financial statements differ from the information
used in the self-assessment and filed in the voluntary period, without any surcharges,
although late-payment interest will accrue. For more information, please visit here.

•

New stamp tax exemption: RD 19/2020 introduces a new stamp tax exemption for deeds
recording the moratorium arrangements under previous Royal Decree-Laws.

•

Telematic tax inspections: the General Tax Law has been amended to introduce thepossibility that administration’s activities within tax application procedures may be dealt
with the taxpayers through telematics means.

•

Increase of tax credit for innovation and unrestricted depreciation for certain assets in theautomotive industry: the rate of the tax credit for technological innovation activities goesfrom 12% to 25% for expenses in technical innovation activities resulting in a technologicaladvancement related to the automotive industry.

Has any new
legislation been
introduced in lightof Covid-19?

Government measures in key jurisdictions

133

SpainCompanylawmatters•

Have anymeasures been
put in place toaccommodatesocial distancing(such as remote
generalmeetings)?

134•

Taxpayers may take unrestricted depreciation over investments on new tangible fixed
assets made in 2020 (excluding real estate). The maximum amount of the investmentthat may qualify for this depreciation regime will be Ä 500,000. For more information,please visit here.

•

For more information, please visit: Covid-19: Key new legislation introduced in Royal
Decree-Law 11/2020, Companies facing the Covid-19 crisis and Spain interactive
map for Covid-19.

Legislation governing corporate bodies. The various pieces of legislation publishedduring the state of emergency, such as royal decree laws 8/2020, 11/2020, 16/2020,
21/2020, 25/2020 and 34/2020, among others, together with statements by registrars
and by the National Securities Market Commission (CNMV), have created a new
exceptional regime governing the corporate bodies of commercial companies, whichmakes it necessary to structure this new legislation by summarizing the measures andtheir implications depending on the body concerned and dividing them into listed andunlisted companies.
Among the principal measures are, among others: shareholders’ andboard of directors’ meetings may be held via video call even if it is not envisaged in the
bylaws (including the notary); modification of the obligatory term for the annual
shareholders’ meetings that now may be held in the ten months following the fiscal
year-end; and the resolutions of the board of directors may be adopted by voting inwriting without a meeting even if it is not envisaged in the bylaws, whenever thechairman so decides and with just 2 members in favour.

•

Winding up and right of withdrawal at commercial companies. Some of the key newprovisions in connection with the corporate bodies of the Spanish companies affectissues related to winding up and the right of withdrawal of shareholders or members. As
a result of that, companies must be aware of to the various grounds for winding up and how
the right of withdrawal of shareholders at capital companies and members ofcooperative companies has changed. In this regard, according to the new provisions
published, losses for fiscal year 2021 shall not be taken into account for the purposes ofdetermining the ground for winding up of a Spanish company.

•

For further information regarding winding up and right of withdrawal at commercial
companies, please visit our briefing chart here.

•

Dividend distribution. Royal Decree-Law 18/2020 (“RD 18/2020”) regulates, among others,
certain limitations to the distribution of dividends by companies that have gone into furloughs
procedures (“ERTEs”) due to the economic crisis caused by Covid-19. Commercial companies
will have to review whether these limitations apply to them prior to the distribution ofdividends. These limitations include the inability to distribute dividends corresponding to thetax year in which the furloughs (“ERTEs”) are applied, unless they previously pay the amountcorresponding to the exemption applied to social security contributions.

•

For further information regarding dividend distribution, please visit here.

•

Shareholder's withdrawal right in case of failure to distribute dividends: RD 25/2020 has
suspended the shareholder's withdrawal right set forth in section 348bis of the Spanish
Capital Companies Act (Ley de Sociedades de Capital) until December 31, 2020.

Government measures in key jurisdictions

Spain•Drawing up and approval of financial statements. Royal Decree-Law 19/2020 (“RD19/2020”) modified by Royal Decree-Law 21/2020 (“RD 21/2020”), states that the threemonth term for drawing up the financial statements and other documents required by law
will start running on June 1, 2020 (and not from the end of the state of emergency as plannedon RD 8/2020). Additionally, the term for approving financial statements is reduced to twomonths running from the end of the term for their drawing up.

•

For further information regarding financial statements, please visit here.

•

For more information please visit: Royal Decree-Law 8/2020 of March 17, 2020 launches
urgent and extraordinary measures to confront the economic and social impact of Covid19, and Covid-19: Key new legislation introduced in Royal Decree-Law 11/2020.

Government measures in key jurisdictions

135

SwedenContributor: Hannes Snellman

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Johanna Wärnberg| johanna.warnberg@hannessnellman.com|+46 760 000 018
Nicole Jerad| nicole.jerad@hannessnellman.com |+46 760 000 083

State loan guarantee programme for SMEs
The Swedish Government has implemented a state guarantee for new loans granted bybanks to Swedish companies which have experienced financial distress due to the Covid-19
pandemic. The guarantee is directed towards small to mid-sized enterprises (“SMEs”). There
are however no official size limits, but the European Commission has issued arecommendation setting forth that the main factors when determining whether anenterprise is a SME are (i) staff headcount (under 250) and (ii) turnover or balance sheet total(under EUR 50,000,000 in turnover or EUR 43,000,000 in balance sheet total).
The Swedish state guarantees up to 70 per cent of the loan amount, up to SEK 75,000,000
per debtor (with a possibility for the Swedish National Debt Office (Sw. Riksgäldskontoret) togrant exceptions from this limitation). Interest will accrue during the entire credit period,
but the debtor’s interest payments may be postponed during the first twelve months. No
amortisation is required on the loan during the first twelve months and the loan may be freefrom amortisation during the entire loan period. The guarantee for loans taken under theguarantee program is valid for up to three years. The guarantee applies to loans granted onor prior to 30 June 2021.
Almi’s bridge loan
In order to bridge a period of financial distress resulting from the COVID- 19 pandemic, startups and SMEs in Sweden can apply for a bridge loan with Almi, a state-owned non-profit
company. Due to COVID- 19, Almi has received an additional SEK 3 billion in order toincrease its lending to start-ups and SMEs. The bridge loan is granted for a term ending onor prior to 31 December 2021 with an individual floating interest rate up to 4.69 per cent, no
set-up fee and a possibility to apply for interest and amortisation deferrals for up to twelve
months. After the end of the initial term, or 31 December 2021 (as applicable), there is apossibility to convert the bridge loan into a new loan with the same terms applied as theterms applied at that time.
State reorientation support
The Swedish Government has introduced a financial support for companies which have hadan annual turnover of at least SEK 250,000 and a loss of turnover due to the Covid-19
pandemic to help cover the company’s fixed costs in accordance with the below:•

Companies with a loss of turnover of at least 30 per cent for March and April 2020
compared with the turnover for the same months of 2019. The support may in any event
not exceed SEK 150,000,000. The expiry date for applying was 1 September 2020.

•

Companies with a loss of turnover of at least 40 per cent for May 2020 compared withthe turnover for the same month of 2019. The support may in any event not exceed SEK
75,000,000. The expiry date for applying was 30 November 2020.

•

Companies with a loss of turnover of at least 50 per cent for June and July 2020
compared with the turnover for the same months of 2019. The support may in any event
not exceed SEK 8,000,000. The expiry date for applying was 30 November 2020.

Regulations with support for the period between August 2020 to February 2021 have been
proposed by the Swedish Government and approved by the EU Commission but have notyet entered into force. The support will be divided into three periods of two months and thelevels of support depending on period (e.g. a loss of turnover of a minimum of 30 to 40 per
cent will be required and the support may in any event not exceed SEK 72,000,000).
Furthermore, the Swedish Government has introduced a financial support for sole
proprietorships (Sw. enskild näringsidkare) and partnerships (Sw. handelsbolag), which have
had a loss of turnover due to the Covid-19 pandemic of at least 30, 40 or 50 per cent forperiods between March 2020 and February 2020, depending on application period. Support
can be granted for up to 75 or 90 per cent of the business’s loss of turnover.

136

Government measures in key jurisdictions

SwedenMiscellaneous
In addition to the schemes mentioned above, the Swedish Government has also
implemented certain financial support to the airline, shipping, public transport, travellingand fishing industries and increased the limit on borrowings from the Swedish Export Credit
Corporation and extended credit guarantee limited for guarantees granted by the Swedish
Export Credit Agency.

Employment
What financial
support is thegovernment
providingto businesses
and to individuals
on employment

Short-term work
Swedish companies can obtain a governmental subsidy for short-term work, meaning that theworking hours of the employees can be reduced with up to 60 per cent (however, up to 80 per
cent during May and June 2020 and January, February and March 2021), whereas the employees
retain approximately 90 per cent of their salary. The government subsidy covers 75 per cent of
the costs for this reduction.
In order to qualify for this subsidy, the following criteria must be met:
• The company should be able to demonstrate financial problems resulting from the Covid-19
pandemic;• In the event that the company is bound by a collective agreement, the short-time work must
be agreed upon with the company’s signatory trade unions;• In the event that the company is not bound by any collective agreement, the short-timework must be agreed upon with 70 per cent of the employees at the relevant business
unit and the working hours should be reduced with the same level for all employees;• The company must have made use of other available measures to reduce its costs, suchas termination of non-permanent personnel who are not regarded as critical to thebusiness operations (if possible); and• The company should not be subject to a restructuring or be insolvent.
The former 24-month waiting period following a grant term has been eliminated meaningthat companies who previously have received governmental subsidy for short-term work can
re-apply in 2021.
Governmental subsidy for short-term work is not applicable if dividends are paid or
distributed two months prior to or six months after the grant period. These rules also apply tothe parent company.
Compensation for people belonging to a risk group: An individual belonging to a risk
group who has to refrain from working due to Covid-19 can apply for a temporarycompensation (up to SEK 810 per day) for the period 1 July 2020 to 30 April 2021, provided
that the individual can submit a doctor’s certificate showing that he or she belongs to a risk
group, that it is not possible to work from home, and that the situation cannot be solved inany other manner.
Sick pay: The government assumed the company’s liability for sick pay during April, May,
June and July. For the period August 2020 to February 2021, the level of compensation isbased on an amount exceeding 0.35 to 1.07 per cent (depending on the employer’s totalsalary costs) of the paid sick pay. Companies will receive reimbursement for sick pay costs
after they have filed their monthly PAYE tax return. This period may be extended until 30
April 2021.
Qualifying period for sick pay: The government temporarily compensates employees withup to SEK 810 for the deduction from sick pay (i.e. the qualifying period) until 28 February
2021. This period may be extended until 30 April 2021.
Doctor’s certificate: The requirement to provide a doctor’s certificate from day eight in thesick period has been modified, meaning that such certificate is now required after day 21.

Government measures in key jurisdictions

137

Sweden

Unemployment insurance: The qualifying period for obtaining compensation from theunemployment insurance was temporarily reduced during the period March 2020 to
December 2021. However, regular rules apply from 1 January 2021. In addition, thecompensation will be paid out at a higher level until 31 December 2022, as the cap has
temporarily been modified.
Social contributions: The social security contributions were reduced between
1 March 2020 and 30 June 2020 (the reduction applies for a maximum number of
30 employees and is capped at SEK 5,300 per employee). Regular social security
contributions apply from 1 July 2020. However, social security contributions for young
employees (18 to 23-year olds) are reduced between 1 January 2021 and
31 December 2021.
Tax deferment: Companies can seek deferment of certain tax payments for the period
January to December 2020, however subject to an interest being paid.

Insolvency•

The Swedish Government has not made any changes to the insolvency legislation
due to the Covid-19 pandemic.

•

The Swedish Government has not introduced new legislation due to the Covid-19
pandemic that would specifically reinforce contracts between commercial entities.
Normal contractual rules apply.

Has thegovernment madeany changes toinsolvency
legislation?

Contractual
IssuesWhat measures havebeen taken to
reinforce contracts?

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

138

New temporary act enables stricter restrictions
A new act on special restrictions to prevent the spread of Covid-19 (the “Pandemic Act”)
entered into force on 10 January 2021. The Pandemic Act gives the Swedish
Government, or any other authority authorised by the Swedish Government, thecompetence to issue restrictions in order to reduce the spread of Covid-19.
For inter alia shopping centres, department stores, service facilities and other retailvenues, as well as gyms, sport facilities and other facilities for leisure or culturalactivities that are open to the public, the Swedish Government, or an authorised
authority, may issue provisions limiting the opening hours and the number of visitors
allowed at the premises. The Pandemic Act also authorises the Swedish Government toprescribe that retail venues and facilities for leisure or cultural activities must be kept
completely closed, if other infection control measures are deemed insufficient.

Government measures in key jurisdictions

SwedenBased on the Pandemic Act, the Swedish Government has prescribed that anyone who
professionally uses, leases or lets out premises for an event or other similar private
gathering, should only be allowed to do so for a gathering of up to eight participants.
In the same regulation, the Swedish Government authorised the Public Health Agency of
Sweden (the “PHAS”) (Sw. Folkhälsomyndigheten) to issue provisions regarding infection
control. The PHAS has announced that the number of visitors at gyms, sport facilities,
bathhouses and retail venues shall be limited to a maximum of one visitor per ten square
meters.
Temporary reductions of fixed rental costs
On 16 April 2020, the Swedish Government decided on an ordinance concerning temporary
reduction of fixed rental costs in sectors which have been negatively affected by the Covid19 pandemic. The regulation is believed to mitigate the financial consequences of the virus
outbreak. Sectors covered by the ordinance include, inter alia, hotel, restaurant and retailsectors as well as consumer services sections such as dentists, physiotherapist practices,and hair and beauty salons. On 2 July 2020, the Swedish Government decided on anamendment to the abovementioned ordinance, to include several additional sectors. The
additional sectors covered by the regulation include, inter alia, driving school activities,
maintenance and repair services of motor vehicles and rental and leasing services of cars
and light motor vehicles. In total, the Swedish Government has allocated SEK 5 billion forrent reductions.
If a landlord and a tenant (which is active in a vulnerable sector) have agreed on a reductionof the rent for the period between 1 April 2020 and 30 June 2020, the landlord will be able
to seek support to compensate part of the reduction. The compensation provided will be a
maximum of 50 per cent of the reduced fixed rent, i.e. the discount that the landlord andtenant have agreed on for the period from 1 April 2020 to 30 June 2020. However, thesupport can never exceed 25 per cent of the original fixed rent amount. It should further be
noted that the agreement on the temporary discount must have been entered into by 30
June 2020. With regard to the new sectors affected by the amendment made on 2 July 2020,
the agreement on the temporary discount must have been entered into by 31 July 2020.
Furthermore, a tenant (where a group is seen as one and the same tenant) cannot obtain anadvantage exceeding EUR 800,000.
Compensation could have been applied for by the landlord from 1 July 2020 until
31 August 2020.
In February 2021, the Swedish Parliament announced that the time period during which it ispossible to apply for compensation for rental reductions will be extended to the first quarterof 2021. The formal decision will be made on 25 February 2021. Please note that there is no
proposal for compensation regarding the time period between 1 July 2020 and
31 December 2020.
Temporary removal of interest on deferred rental payments
The Swedish Fortifications Agency (Sw. Fortifikationsverket) and the National Property Board
Sweden (Sw. Statens Fastighetsverk) are temporary exempted from the requirement tocharge interest when granting deferment of rental payments. Under Swedish law, publicauthorities are normally required to charge interest according to the interest rate set forth
for each financial year by the National Debt Office (Sw. Riksgälden), with an addition of two
percentage points when granting credit or deferment with a payment.
The temporary exemption applies to all tenants of the two aforementioned authorities who,
in agreement with their landlord, have been allowed to postpone their rental payments in
2020, regardless of whether the tenant is active within the public or private sector andregardless of industry, region or the size of company. The largest proportion of the tenants
are state actors. However, the authorities also have private tenants such as technology andreal estate companies, industrial companies and restaurants.
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139

Sweden

Litigation

Operation of Swedish Courts

Are the courts
operating?

Swedish courts are operating normally, while observing social distancing guidelines andCovid-19-related precautions. A new act on special restrictions to prevent the spread of
Covid-19 (the “Pandemic Act”) entered into force on 10 January 2021. The Pandemic Act
gives the Swedish Government, or any other authority authorised by the Swedish
Government, the competence to issue restrictions in order to reduce the spread of Covid19. The Swedish Government has restricted the number of participants allowed at publicgatherings/events, prohibiting gatherings with more than eight participants; however, court
hearings are not considered public gatherings, and each court decides on suitableprecautions (e.g. the number of audience seats may be limited). The number of hearings
being cancelled and postponed has increased slightly in the beginning of the years 2021,
but despite this the number of such cancellations has almost returned to pre-Covid-19
levels. The increased digitalization brought on by the pandemic (e.g. the number ofhearings being carried out remotely via video conferencing technology has increased byalmost 90 per cent compared to the year before) has in fact contributed to the number ofadjudicated cases reaching record levels. The Swedish National Courts Administration
produces statistics on how the courts are affected by the Covid-19 pandemic.

Tax

Please note that we do not have a tax department internally, therefore we may not advise on tax
aspects.

Has any new
legislation been
introduced in lightof Covid-19?

Companylawmatters
Have anymeasures been
put in place toaccommodatesocial distancing(such as remote
generalmeetings)?

140

Remote general meetings
The Swedish Parliament has adopted a temporary law that allows Swedish companies to
conduct general meetings with remote participation during the Covid-19 pandemic. The
measures included in the temporary law permit companies to collect proxy forms in respectof general meetings and enables companies to allow shareholders to vote by post at general
meetings even if such option is originally not included in the company’s articles ofassociation, as well as to conduct general meetings electronically in combination with postal
voting, or solely by postal voting. The temporary law is effective throughout 2021.
The Swedish Corporate Governance CodeThe Swedish Corporate Governance Board (Sw. Kollegiet för Svensk Bolagsstyrning) has
decided that companies do not have to apply section 1.1 - 1.3 of the Swedish Corporate
Governance Code (the “Code”) throughout 2021. The Code, which applies to publicly listedcompanies, sets out norms for good corporate governance and applies on a “comply-orexplain” basis. The aforementioned suspended rules contain requirements regarding
advance publication of the date of the general meeting, attendance of board members andthe CEO at the general meeting and presentation of proposals regarding election of thechair at the general meeting. Consequently, publicly listed companies do not have tocomply with these requirements or explain any deviations from the aforementioned rules.

Government measures in key jurisdictions

.:

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The Netherlands
Contributor: Houthoff

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

142

Thomas de Weerd | t.de.weerd@houthoff.com | +31 20 605 6361
Karim Abass | k.abass@houthoff.com | +31 20 605 6358•

On April 8 2020, the Dutch government announced that it intends to reinsure suppliercredits for the remainder of 2020. This measure is mostly aimed at helping SME retailers
and catering establishments that make use of supplier credits and which need to provide apayment insurance to the supplier via a credit insurer. It is estimated that the measure will
cost around EUR 12 billion, resulting into a loss of approximately EUR 1 billion for the Dutch
government. The reinsurance of supplier credit has been extended until 30 June 2021.

•

For the first six months of 2021, all income and costs, including claims, will be divided
between the Dutch government and the insurers, in the ration 90/10. There is no longer amaximum to the deductible that the insurers bear. Seven insurers have entered into areinsurance agreement with the Dutch government.

•

The Dutch government has taken measures to expand export credits in order to keepinternational trade flows going. With this support package, businesses can cover more risks
with a state guarantee. This insurance is provided by the Dutch government fortransactions which involve risks that cannot be insured by the capital market. Businesses
may apply to Atradius Dutch State Business for the insurance.

•

An SME Credit Guarantee Scheme is available for small and medium sized enterprises
established in the Netherlands that have substantial activities in the Netherlands (except
for undertakings active in agriculture, fisheries, public health care, insurance and finance,and real estate). Under the regular scheme, the government guarantees loans to SMEs up
to 50% of the loan provided by the financier. The size of the maximum guarantee has
been increased from 50% to 75% for loans with a maximum amount of EUR 266,667.
For loans of more than EUR 266,667, the guarantee is capped at 50%. In addition,
the maximum loan for which the guarantee applies has been increased from EUR 1 million
to EUR 1.5 million. With effect from 28 April 2020, the term of the credit is extended to four
years. Furthermore, the scheme has become more accessible due to the use of a turnover
test instead of a comprehensive liquidity forecast. The scheme can be used by companies
for bridging loans or to increase their current account credit. The premium forthe Dutch government guarantee has been decreased from 3.9% to 2% for a loan with aduration of 8 quarters. The premium for a loan with a duration between 9 and 16 quarters
has been decreased to 3%. EUR 30 million has been made available for this measure. The
budget for this scheme has been increased from EUR 765 million to EUR 1.5 billion. The
eligible companies make an application to the accredited financier which is usually a bank.
The accredited financiers can submit an application to the Rijksdienst voor Ondernemend
Nederland. This scheme will continue until 30 June 2022. You can find the eligibility criteria
and the list of accredited financiers here.

•

A scheme is available for SMEs and large companies that are established in the Netherlands
and have substantial activities in the Netherlands (except for undertakings active
in agriculture, fisheries, public health care, insurance and finance, and real estate) and havesatisfactory prospects regarding their internal rate of return and continuity. The Dutch
government helps companies by providing a guarantee on bank loans and bank guarantees.
Under the GO Scheme, the maximum amount of the guarantee to be provided by the Dutch
government to (i) large companies with a minimum turnover of EUR 50 million is 80% of
the related bank loan or bank guarantee; and (ii) SMEs with a maximum turnover of EUR 50
million is 90% of the related bank loan or bank guarantee, provided that the large company
or SME (as the case may be) has been affected by the Covid-19 outbreak. Under the regular
scheme, this applies to loans and guarantees from EUR 1.5 million up to a maximum of EUR
50 million per undertaking. The Dutch government has increased the maximum amount of
any loan or guarantee under the GO Scheme to EUR 150 million per undertaking with amaximum term of six years. The budget of the GO Scheme has been increased from EUR
400 million to EUR 10 billion. The eligible companies can submit an application to an
accredited financier which is usually a bank. The accredited financiers can submit anapplication to the Rijksdienst voor Ondernemend Nederland. The scheme runs until 1 April
2021. You can find the eligibility criteria and the list of accredited financiers via this link.

Government measures in key jurisdictions

The Netherlands•

A broader scheme was introduced under the same GO-C. The GO-C scheme offers
businesses the opportunity to secure funding for liquidity caused by corona that would
otherwise not have been possible. The scheme is for medium and large companies with
substantial activities in the Netherlands and for entrepreneurs on Bonaire, St. Eustatius or
Saba. The GO-C scheme allows banks to obtain an 80% or 90% state guarantee on
medium and large loans. The percentage of the state guarantee depends on the turnoverof the company. Loans of up to Ä150 million are guaranteed up to Ä135 million. The state
guarantee reduces the risk for banks to provide liquidity financing as a result of thecorona and increases their options for lending money. A budget of Ä2.5 billion (for GO
and GO-C together) is available for 2021. The scheme is available until 30 June 2021. A
guarantee application may be submitted to the RVO until 15 June 2021.

•

A measure is available for businesses and self-employed individuals, named “TVL”. On
21 January 2021, the Dutch government announced that the existing TVL Scheme will
be expanded with broader support: (i) The TVL will be made available to all companies
in the Netherlands. (ii) The subsidy percentage will be further increased to 85% for all
entrepreneurs with a loss of turnover from 30%. This was 50% increasing to 70%. (iii)
The minimum amount of fixed costs for a company will be reduced to EUR 1,500 per
quart. That was EUR 3,000. This gives smaller companies access to the TVL. The shareof fixed costs associated with the SBI-code (indicating the business activities), not withthe actual fixed costs of the company. (iv) The minimum subsidy amount per quarter will
be increased to EUR 1,500. (v) The maximum subsidy amount per quarter will be
increased to EUR 330,000 for SMEs (maximum of 250 employees) and EUR 400,000 for
non-SMEs (more than 250 employees). (vi) A subsidy for closed non-food retailers(“VGD”) will be extended in Q1 2021 and increased by 21% on top of the fixed costs
percentage of the TVL, with a maximum compensation of EUR 200,000. (vii) Companies
in the travel sector receive an extra compensation for costs that are not refunded incase of cancellations. An extra 3.4% is added one-time only to the percentage of fixed
costs and is on top of the TVL subsidy. (viii) Agriculture and horticultural businesses
receive an additional compensation for the special costs to keep plants and animals
alive. This compensation of 21% is added to the percentage of fixed costs and isprovided on top of the TVL subsidy. (ix) There will be a separate subsidy scheme forentrepreneurs who started their business between 30 September 2019 and 30 June
2020. This is still being worked out and is expected to open for applications in thesecond quarter of 2021.

•

The TVL Q1 scheme is available from 15 February 2021 until 30 April 2021. An extra EUR
3.8 billion is made available for the TVL Scheme.

•

Bridge financing is available to start-ups and scale-ups that have been affected by the
Covid-19 outbreak. Since these companies usually do not have banking relationships,
the credit will be provided by Regional Development Agencies (Regionale
Ontwikkelingsmaatschappijen, "ROM"). The loans provided vary between EUR 50,000
and EUR 2 million. For amounts above EUR 250,000, 25% co-financing is expected fromthe shareholders or other investors. A uniform interest rate of 3% applies. The
government has made EUR 100 million available to support the start-ups and scale ups
through this scheme. Applications may be submitted via this link.

•

On 29 May 2020, the Dutch government has made EUR 750 million available for SMEs
with a minimum turnover of EUR 50,000 and a financing need of between EUR 10,000
and EUR 50,000. The Dutch government will guarantee 95% of the total amount of theloan granted by the financier. The loans can be granted by banks and non-banking
accredited financiers and will have an interest rate of maximum 4%. Furthermore, theSMEs have to pay a one-time premium of 2% as compensation and the bridging loan canbe used for a maximum term of five years. Rabobank, ABN AMRO Bank, ING Bank, deVolksbank, and Triodos Bank have agreed to offer loans through this scheme. Applying
for this loan is possible until the end of June 2021.

Government measures in key jurisdictions

143

The Netherlands•

A measure named BL-C is available for agricultural SMEs that are established in the
Netherlands and have substantial activities in the Netherlands. The Dutch government
has decided to temporarily amend the scheme to provide more financial leeway for
agricultural SMEs that run into difficulties and need working capital and/or liquidity. The
temporary extension is aimed at regular agricultural loans and means that the Stateguarantees 70% of the total amount of the loan granted by the financier. This
temporary extension can be used by agricultural SMEs to obtain a bridging loan or an
increase in current account credit from a lender for a maximum term of two years.
On 10 April 2020, the measure has also been extended to include fisheries andaquaculture companies. Companies within these sectors can make use of the scheme
retroactively per 18 March 2020. Furthermore, the premium for the government
guarantee has been decreased from 3% to 1.5% and from 1% to 0.5% for starters. The
eligible companies make an application to the accredited financier which is usually abank. The accredited financiers can submit an application to Rijksdienst voor
Ondernemend Nederland. Applications may be submitted until 31 March 2021. You canfind the eligibility criteria and the list of accredited financiers here.

•

The government introduced a scheme with a EUR 650 million budget for the compensationof damages suffered by specific agricultural sectors as a result of the Covid-19 outbreak.
Businesses in the ornamental horticulture sector and specific sections of foodhorticulture with a loss in turnover of at least 30% were compensated for up to 70% of theirloss in turnover in March, April, May and June 2020. The benchmark was the average
turnover in the same period in three preceding years. As of 11 June 2020 only EUR 156
million of the available EUR 600 million was requested. Chip potato growers received
compensation in relation to the quantity of potatoes they still had in storage. The
compensation applied to potatoes that can no longer be processed into chips for thisseason. The total compensation amounted to 40 percent of the average market value of thepotatoes over the period from September 2019 up until February 2020. A total of EUR 50
million was made available to this end. The schemes were not extended beyond 18 June
2020. Further details on the measures may be found here and here.

•

A guarantee fund for events will be put into place, to make sure event organisers can startplanning and set up their events. 1 July 2021 is being considered as a starting date. At least
EUR 300 million has been reserved for this scheme. Further details are still being
worked out.

Employment •What financial
support is thegovernment
providing tobusinesses and toindividuals on
employment issues?

•

144

A subsidy is available for employers that pay Dutch wages and expect to see at least a
20% decline in turnover. The scheme is known as NOW 3.0 and replaces the preceding
furlough scheme. The NOW scheme has been extended from 1 October to 1 July 2021.
The extension is divided into three intervals of three months. As at 15 February 2021, theapplication period for the fourth period has started (for January until March 2021). This is
the 4th application period. It is no longer possible to apply for subsidies for previous
periods. The limit for the turnover loss percentage will remain at 20%. The compensation
for wages which can be claimed depends on the turnover loss, up to a maximum amount
80% for the period October until December and of 85% of the wage bill for January untillate June. Employees must be paid 100%. The compensation must be used to pay wage
costs, employer’s contributions, holiday allowance, pension contributions and the like.
The benchmark is the average turnover over the course of four months in 2019
for companies which existed in 2019. Only in the event of a 100% decline in turnover,will 80% or 85% of the total wage bill be paid out. If the decline in turnover is lower, thesubsidy will be set at a proportionately lower level.

Government measures in key jurisdictions

The Netherlands•

Based on the application, the Dutch Employee Insurance Agency (the UWV) will pay anadvance payment of 80% of the estimated amount of the subsidy based on the average
wage bill of June 2020 and the employers’ actual wage costs in time period 3, 4 or 5. A
final settlement will take place on the basis of the actual turnover which normallyrequires an audit opinion. In cases of a composition of legal entities, the decline inturnover is assessed at group level. This means that if a group as a whole has a decline
in turnover of less than 20%, the individual members of that group are not eligible for a
NOWsubsidy. A maximum of twice the maximum daily wage per month per individual
employee is taken into account as salary.
Compensation for each individual employee’s wage is capped at EUR 9,718 per month. As
of June 2020, a correction to the subsidy will be applied in case of dismissals. However,the penalty for making employees redundant will no longer apply. Furthermore, thesubsidy may also be used for purposes other than the payment of wage costs. Whenusing the scheme, companies are prohibited, amongst other things, to make profit
distributions to shareholders, pay bonuses to the board and management, and/or
repurchase their own shares. Furthermore, companies must declare that employees
will be encouraged to retrain. Applications may be submitted via UWV.

•

A measure is available for the self-employed registered in the business register before
17 March 2020. The support may take the form of a benefit payment
up to a certain maximum amount (social minimum) and/or a loan forworking capital to solve liquidity problems. No viability test will be applied so thatthe requests may be processed quickly, i.e. 4 weeks instead of the regular 13week period. The level of income support depends on income
and the household composition but is a maximum of approx. EUR 1,500
per month (net). This income support does not need to be paid back. The accelerated
procedure also applies to loan applications for working capital up to a maximum of
EUR 10,157. In addition, a lower interest rate than the regular rate will be appliedon the loans.

•

On 20 May 2020, the Dutch government announced that it intends to extend thescheme, which means that entrepreneurs can apply to their municipality until 1
October 2020. The income support under the extended scheme can only be granted
for the period between 1 June 2020 and 1 October 2020. The difference between theschemes is that the income support under the extended scheme is subject to a partner
income test. If the household income is above the social minimum, entrepreneurs are
not entitled to the income support under the extended scheme. To apply for a loan ofworking capital, the applicant must declare that no suspension of payment orbankruptcy for the applicant, their company or one of their partners (vennoten) has
been applied for or obtained. The amount of working capital granted under theschemes jointly is capped at EUR 10,157.

•

On 28 August 2020, the Dutch government announced that it intends to extend thescheme, named Tozo 3, until 1 April 2021. As of 1 October 2020, a maximum savings
requirement will be introduced. This entails that entrepreneurs with more than EUR
46,520 in savings will not qualify for Tozo 3. As of 1 January 2021, Tozo has gone into a
new phase, where municipalities support applicants where necessary to prepare forthe reorientation of business operations. As of 1 February 2021 it is possible to apply forsupport retroactively for one month prior to the month of application.

•

The Dutch government has announced that from 1 April 2021 until 1 July 2021 thescheme will be extended as Tozo 4. Additional information has not been published yet.

•

Entrepreneurs can apply to the municipality until 31 March 2021, for a maximum of
three months in the period between October 2020 and March 2021. Applications cantherefore also be submitted retroactively. You can find the eligibility criteria here.

Government measures in key jurisdictions

145

The Netherlands

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesThe Dutch Ministry of Justice and Security published a bill on 8 April 2020 on temporary
provisions in the area of the Ministry of Justice and Security in connection with thecoronavirus (Covid-19) outbreak (the "Emergency Act") and an accompanying Explanatory
Memorandum.
The Emergency Act provides for, among other things:•
The facilitation of electronic decision making by temporary derogation from the legal
and statutory provisions concerning holding physical meetings of legal entities;•
a temporary limitation on the ‘presumptions of proof’ for directors’ liability in case ofbankruptcy if filing the annual accounts is delayed as a result of Covid-19;•
the extension of the period for preparing annual accounts by the management board
instead of by the general meeting.
The Emergency Act entered into force on 24 April 2020. All the rules apply retroactively
from 16 March 2020, except the regulation on presumptions of proof when annual
accounts are filed late. The regulation on presumptions of proof in the event of late filing ofannual accounts expires on 1 September 2023, as a directors’ liability in bankruptcy
can be invoked for up to three years. More information can be found here.

•

There has been no expressive Government intervention into the workings of contracts
in the Netherlands and the normal rules apply.

•

Delays in production, supply and transportation may result in delay or failure to
perform a contract. Therefore, particular attention has been given to existing force
majeure clauses within contracts. Contracts usually include a list of force majeure
events, including events such as natural disasters, wars, government acts, etc.
Whether a ‘pandemic’ such as the coronavirus and the resulting
government measures, is deemed to fall within the scope of the ‘force majeure’clause will have to be examined on a case-by-case basis.

•

Absent contractual clauses to this effect, Dutch law allows a contracting party to
invoke ‘force majeure’ by relying on various grounds under the statutory provisionsof the Dutch Civil Code in case of absence of fault, by virtue of law, a juridical act, orbased on common opinion.

What measures
have been taken
to reinforce
contracts?

Property
Have any changes
been made to
the laws aroundproperty, rent andenforcement?

146

Tenants•

The Dutch Government has come to an agreement with housing corporations
and associations that the eviction of tenants will avoided during the Covid-19 crisis.
For tenants who are unable to pay the monthly rent despite these measures,
landlords will endeavour to provide custom solutions. The number of evictions
decreased by more than half in the first half of 2020.

Government measures in key jurisdictions

The Netherlands

Litigation
Are the courts
operating?

Tax

Businesses
There is a temporary regulation in place, which is valid until 1 April 2021.
•
The Dutch Ministry of Economic affairs has drawn up guidelines with real estate•From
11 May 2020,
physicalhearings
will recommencecases The
where
the important
physicalcompanies
on how
to catershop owners
in financial for
distress.
mostpresence
is deemed
necessary.
Criminal,
youth, andfamilyhave
guidelineofisthe
forparties
real estatecompanies
to (partially)suspendthe rent
in matters
April, Mayandpriority.
Fromrequest.
17 August 2020, the public may, in principle, attend hearings or judgments
June, uponagain, if the respective person signs up at least two days in advance.
•
Real estate companies are urged to act in accordance with the guidelines, however•
The deadlines for submitting documents to the courts remain unchanged as much as
they are not legally binding.
possible, unless the court reports otherwise.
••

Whenever possible, courts aim to carry out any other hearings remotely, using various
digital aids that have been put into place.

•

More information can be found here.

•

Companies can obtain deferral of payment of income tax, corporate income tax, wage tax
and/or value added tax, excises (mineral oils, alcohol, and tobacco), insurance tax, gamblingtax, environmental taxes (storage of sustainable energy, energy, coal, waste and tap water)
and landlord levy). Businesses can request a tax deferral or request an extension of thedeferral until 1 July 2021 and any deferral granted upon such request will also end on 1 July
2021. If a deferral of payment has already been granted, the deferral may be extended until 1
July 2021.

•

The Dutch government obliges taxpayers to resume payment of new tax liabilities inaccordance with the usual rules as of 1 July 2021, which means that the foregoing Covid-19
related deferral measures will not apply to such tax liabilities. Companies to which a deferralfor certain tax liabilities has been granted will in principle have to resume the payment ofthese tax liabilities from 1 October 2021 onwards, but may request to pay these in 36 monthly
instalments. No assurance is necessary for the debt. The exact conditions of this payment
arrangement have not yet been disclosed. More information can be found here. The deferralapplication may be submitted here.

•

The tax authorities will not impose default penalties for non-payment or late payment of taxes
on taxpayers that have obtained deferral of payment of tax. Default penalties (automatically)
imposed will be reversed. Both measures apply since 12 March 2020 and ended as of 1
January 2021. The tax collection interest (invorderingsrente) that normally starts after the
expiry of the payment term will be temporarily reduced from 4% to 0.01% from 23 March
2020 until 31 December 2021. This applies to all tax debts.

•

In addition, the interest rate for unpaid tax (belastingrente) was also reduced to 0.01% as of 1
June 2020. For personal income tax, this rate was reduced as of 1 July 2020. The interest rateon unpaid tax (belastingrente) has been adjusted to the original rate of 4% as of 1 October
2020. For corporate income tax, the interest rate on unpaid tax (belastingrente) will also be set
at 4% (instead of the regular rate of 8%) until 31 December 2021. More information can befound here.

•

If a preliminary corporate tax assessment has been imposed and the taxable profit is likely to
be lower than the taxable profit estimated for the preliminary assessment, a reduction of
the preliminary assessment may be requested. This creates a right to a refund (if thepreliminary assessment has already been paid in full) or provides for a reduction of themonthly tax due (if the preliminary assessment is paid monthly). The Dutch government hasannounced that the Dutch tax authorities will grant all requests to reduce preliminary
assessments.

•

On 24 April 2020, the Dutch government announced that taxpayers may form a reserve("fiscal coronavirus reserve") up to the amount of the expected loss for 2020 in their 2019
corporate income tax return and hence offset the fiscal coronavirus reserve against the 2019
taxable income. The amount of the fiscal coronavirus reserve may not exceed the total
taxable income for 2019. The fiscal coronavirus reserve will be mandatorily and fully released
in 2020.

Has any new
legislation been
introduced in lightof Covid-19?

Government measures in key jurisdictions

147

The Netherlands

Company
law matters•

Since forming the fiscal coronavirus reserve will lower the 2019 taxable income, the remaining
taxable income in 2019 may be insufficient to (fully) offset historical tax losses a result of
which these may (partially) forfeit (depending on the year in which those historical losses wererealized). The application may be submitted here.

•

Directors who are also major shareholders in their own company are deemed to receive a'customary salary' for Dutch wage tax purposes. The customary salary rules(gebruikelijkloonregeling) aim to avoid artificial structures under which no salary or only asmall salary is attributed to directors/major shareholders. The 'customary salary' depends onthe director/major shareholder's specific situation, but is in principle at least EUR 47,000(2021) or equal to the most comparable employee of another company or the highest earning
employee of the director/major shareholder's own company. On 24 April 2020, the Dutch
government announced that these rules will be changed so that directors/major shareholders
may temporarily reduce the 'customary salary' they are deemed to receive in proportion to theturnover losses incurred due to the coronavirus for 2020 and 2021. The “customary salary” for2021 may only be reduced if the company has lost at least 30% in turnover in 2021 ascompared to 2019. Approximately 135,000 directors/major shareholders are expected tobenefit from the measure. More information can be found here.

•

Until 1 April 2021 the existing fixed travel allowance as granted by the employer before 13
March 2020 can still be reimbursed tax-free by the employer, even if these travel expenses are
no longer (entirely) incurred as a result of working from home.

•

Under the work-related cost scheme, employers may use a certain percentage of their total
wage sum (i.e. the discretionary margin) for tax-free allowances and benefits to employees. Asfrom 1 January 2020, the discretionary margin was increased to 1.7% (instead of 1.2%) for the
first EUR 400,000 of the total wage sum. On 24 April 2020, the Dutch government announced
to further increase the discretionary margin from 1.7% to 3% for the first EUR 400,000 of thetotal wage sum for the years 2020 and 2021. For the amount of the total wage sum above thefirst EUR 400,000 the discretionary margin is 1.2% in 2020 and 1.18% in 2021. More information
can be found here.

•

On 26 June 2020, the State Secretary of Finance announced a six-month postponement of thereporting deadlines under EU Directive 2018/822 on mandatory automatic exchange of
information in the field of taxation in relation to reportable cross-border arrangements ("DAC6"). The DAC 6 reporting deadline was originally intended to take effect from 1 July 2020. As aresult of this postponement, the 30 day period for new reportable cross-border arrangements
was deferred from 1 July 2020 to 1 January 2021 (i.e. reportable cross-border arrangements
between 1 July 2020 and 1 January 2021 needed to be reported ultimately 31 January 2021). The
deadline for reportable cross border arrangements of which the first implementation step
occurred between 25 June 2018 and 1 July 2020 was deferred from 31 August 2020 to 28
February 2021.

•

The Dutch Ministry of Justice and Security published a bill on 8 April 2020 on temporary
provisions in the area of the Ministry of Justice and Security in connection with the coronavirus( Covid-19) outbreak (the “Emergency Act”) and an accompanying Explanatory Memorandum.
The Emergency Act provides for, among other things:

Have any measuresbeen put in place
to accommodatesocial distancing(such as remote
general meetings)?

–the facilitation of electronic decision-making by temporary derogation from the legal andstatutory provisions concerning holding physical meetings of legal entities,–extension of the period for preparing annual accounts by the management board insteadof by the general meeting,and–a temporary limitation on the ‘presumptions of proof’ for directors’ liability in case ofbankruptcy if filing the annual accounts is delayed as a result of Covid-19.
•

148

The Emergency Act entered into force on 24 April 2020. All the rules apply retroactively from
16 March 2020, except the regulation on presumptions of proof when annual accounts are
filed late. The Emergency Act will apply until 1 April 2021. More information can be found here.

Government measures in key jurisdictions

Government measures in key jurisdictions

149

United Arab Emirates

Dipali Maldonado | d.maldonado@tamimi.com | +971 (0) 43641641

Contributor: Al Tamimi & Co

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

UAE Central BankThe UAE Central Bank issued standards for its Targeted Economic Support Scheme (TESS)
with a focus on private sector companies, SMEs and individuals. In summary TESS targets
three principal aspects:• Firstly, funding relief to banks where such banks can avail zero rated facility from theCentral Bank as part of the AED 50 billion stimulus package for UAE banks;• Relaxation in capital buffers prescribed for banks thereby allowing banks to tap into a
capital conservation buffer up to 60% and in some instances up to 100%. TESS also
imposes a temporary suspension on banks on maximum distributable amount;• Offers payment deferral of interest and principal of up to 6 months to private sector
companies, SMEs and individuals. Also a restriction on banks to charge fees andpenalties;• The Central Bank has announced the extension of the applicability period of the key
components of TESS until 30 June 2021.
Abu Dhabi Fund for Development (ADFD)
ADFD is a multilateral agency which has pledged a COVID 19 soft loan program of AED 1
billion for industrial, healthcare and sectors completely disrupted by COVID 19. Eligibility
criterion for availing the soft loans include:• (a) Annual revenue not less than AED 150 million;• (b) Asset valuation no less than AED 10 million;• (c) Audited financials for the last 3 years• (d) Details of the financial stress on the company proposing to avail the soft loan;• (e) Operational plan for the utilization of the soft loan and impact on its business; and• (f) Details of Strategic growth for the next 3 years

Employment
What financial
support is thegovernment
providing tobusinesses andto individuals
on employment
issues?

•Support to Businesses: No state aid, state wage subsidy and/or state payroll cofunding scheme has been introduced or launched in order to assist employers
adversely financially affected by the Covid-19 pandemic and unable to (or facing
difficulty in) paying staff wages. Businesses therefore remain solely and exclusively
liable for discharging staff wages and other labour-related benefits or entitlements.

•

Support to Individuals: No state aid and/or unemployment benefit scheme has
been introduced in order to assist employees who have lost employment due tothe effects of the Covid-19 pandemic.

However, the Ministry of Human Resources and Emiratisation (the “MOHRE”) enacted
interim legislation on 26 March 2020 mandating the continuation by employers ofcontractual allowances and (if applicable) staff accommodation for its terminated staff
until the earlier of them being able to exit the country, secure alternative UAE
employment or the revocation of such interim legislation. The rationale behind suchmeasures is to ensure a sufficient financial safety net is in place for such staff pending
repatriation to their home countries (particularly in the light of travel restrictions andtravel embargoes still being in place in certain countries). Whilst this interim
legislation applies only to those companies falling under the direct remit of the
MOHRE (and so technically excludes the free-zones), a number of free zone
authorities have nonetheless adopted its terms either wholesale or in varied form.

150

Government measures in key jurisdictions

United Arab Emirates

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

The UAE issued Insolvency Law No. 19 of 2019 came into effect on 29 November 2019 so is
still a relatively new law. The Law aims to provide an enhanced regime for individuals facing
financial difficulties. It encourages individuals to seek expert and professional help through acourt-led process.
The Insolvency Law only applies to natural persons and the estate of the deceased. It does not
apply to merchants, traders, commercial companies and similar persons which fall under thescope of the Bankruptcy Law No. 9 of 2016.
Both laws primarily focus on assisting distressed persons and entities through offering themsettlement options.
Federal Law No 9 of 2016 was amended in 2020 to add a new chapter addressing provisions
which would apply during a period of Emergency Financial Crisis. The amendment defined an
Emergency Financial Crisis as “A general situation that affects trade or investment in the
country, such as a pandemic, natural or environmental disaster, war, etc. The UAE Cabinet has
now confirmed that an Emergency Financial Crisis shall be deemed to exist during the period
from 1 April 2020 until 31 July 2021 due to Covid-19.

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

No specific measures have been taken to reinforce contracts in view of the Covid-19
situation. Contracts continue to be governed by the Civil Code and Commercial
Transactions law. With regards to force majeure, under UAE law, the concept of force
majeure may be pursued by a party to a contract as a matter of law. It is a mandatory rule,
as opposed to a default rule, of law that de jure applies even without being expressly set
out in a contract.
The UAE Civil Code (Federal Law Number 5 of 1985) sets the definition and boundaries ofa Force Majeure event, and the consequences it triggers. In principle, Article 273 of the
UAE Civil Code stipulates that in order for an event to be qualified as a force majeure it
should be: (a) claimed in a bilateral agreement; and (b) makes the performance of theobligation impossible – not just in hardship
It is anticipated that force majeure claims will be on the rise over the coming days due to
Covid-19. However, as the World Health Organization (“WHO”) declared the threat of
Covid-19 since it was first reported from Wuhan, China, on 31 December 2019, any
defaulting party to a contract that is concluded afterwards is unlikely to succeed ininvoking a force majeure claim. As for contracts preceding the WHO declaration, it will be
examined on a case-by-case basis in order to determine whether the underlying events
meet the criteria set by law and courts practice.

Property

Emirate of Dubai

Have any changes
been made to
the laws aroundproperty, rent andenforcement?

•

The Dubai Judicial Council have temporarily suspended all eviction judgments
related to residential and commercial facilities in Dubai (except cases of abandoned
homes) and imprisonment judgements linked to rental disputes since March 2020
and as far as we are aware this continues until further notice.

•

The Dubai Government have launched an AED 1.5 billion economic stimulus
package to support companies and the business sector in Dubai. Some of the key
property initiatives include renewal of commercial licenses without requirement of
mandatory renewal of lease agreements.

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The Dubai Land Department have launched a CSR initiative called “Together” incooperation with several jointly owned property management companies in Dubai tosupport tenants and landlords. Under the initiative, they provide the necessary life
supplies (such as food, medicine, sterilisation materials, gloves, paper napkins, andface masks) free of charge to those in need in various projects and freehold areas
across Dubai. Additionally, the management companies shall consider extending
additional measures including cancellation of fines for 2019 and 2020, provision offlexible instalments to pay service fees, reduction of service costs, and flexible
payment options for air conditioning services.

Emirate of Ras Al Khaimah•

The Ras Al Khaimah government have announced that all eviction procedures
relating to family residential premises have been postponed until end June 2020.
The travel ban measurement of a debtor has been temporarily replaced withconfinement. There is a further suspension of execution procedures on moveables,
properties, shares and bonds. We are unsure of the current status of this and await
further updates from the Ras Al Khaimah government.

Emirate of Sharjah•

The Sharjah Executive Council have launched a 47 points stimulus package withsuggested recommendations to support the Sharjah economy which include realestate suggestions such as (a) resolutions may be issued relating to suspension ofeviction judgments and imprisonment rulings on all rental-related cases; (b)exemption from rent payment for tenants in Buildings (1 and 2) of the Sharjah
Chamber of Commerce and Industry for a period of 3 months effective from 1 April
2020; (c) exemption for (a) tenants of Expo Centre Sharjah and (b) participants in the
Sharjah Centre for Export Development’s permanent national industries exhibition,from payment of rent for a period of 3 months effective from 1 April 2020; (d)exemption for employees of small and medium enterprises (SMEs) in 101 Trade
Centre from payment of rent until the end of 2020; (e) exemption for hotel
establishments from payment of the 5% municipal fees for a period of three months
effective from 1 April 2020; (f) exemption for hotel establishments from payment ofaccumulated prior violations imposed by the Sharjah Commerce and Tourism
Development Authority, during the year 2019 until 31 March 2020; (g) suspension of
all pending rental property eviction cases together with executive procedures suchas imprisonment, blocking of bank accounts, and seizure of vehicles, stocks andassets for a period of two months; (h) deferment of all current and new cases before
the rental committees for 1 month; (i) release of 100 prisoners approximately
imprisoned on rental issues and provision of a 3 months’ period to settle overdue
amounts; and (j) 50% reduction in rents for restaurants, exchange shops,
commercial shops, banks, travel agencies, car rental companies,
telecommunications companies and tourist promotion companies for a period of 3
months from 1 April 2020. We are unsure of the current status of this and await
further updates from the Sharjah government.

Emirate of Umm Al Quwain•

152

The Umm Al Quwain government have announced that all licensed establishments
and companies affected by the decision to suspend their services due to COVID 19
lockdown are exempt from certain fee payments such as fees for renewing licenses
and rental contracts, and other fees or fines incurred that are determined by the
Executive Council until further notice. We are unsure of the current status of this andawait further updates from the Umm Al Quwain government.

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United Arab Emirates

Litigation
Are the courts
operating?

Abu Dhabi and Dubai Courts are operating virtually - All hearings are being conducted via
Zoom and pleadings are submitted online. Some criminal proceedings are being conductedin person at the discretion of judges.
Sharjah Courts are operating both virtually and in person, at the discretion of the judge andon a case by case basis.

Tax
Has any new
legislation been
introduced in lightof Covid-19?

VAT – Extension of filing and payment deadline for monthly and quarterly VAT period
ending on 31 March from 28 April to 28 May 2020.
Excise tax – Extension of excise tax submission and payment for March 2020 period forone month (i.e. filing and payment deadline for the March/April periods is 17 May 2020 –two returns were required to be filed by this day for both periods.)

Company
law matters

The concept of remote general meetings is already recognized under UAE company law.
In addition, the Ministry of Economy issued a circular governing remote general assembly
meetings of private joint stock companies. Pursuant to this circular the Ministry hasrequested shareholders to adopt written resolutions instead of attending physicalHave any measures
meetings.
been put in place
to accommodatesocial distancing(such as remote
general meetings)?

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United Kingdom
Contributor: Farrer & Co

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Anthony Turner | anthony.turner@farrer.co.uk | +44 (0)20 3375 7460
Ian De Freitas | ian.defreitas@farrer.co.uk | +44 (0)20 3375 7471

Lending is available under five new schemes that have been introduced in the UK:• The Covid Corporate Financing Facility (CCFF) – this scheme provides funding (throughcommercial paper being issued by the business and purchased by the Bank of England(BoE)) to larger businesses and corporates with investment grade credit ratings in orderto support their liquidity and working capital issues by helping them to, for example, pay
wages and suppliers due to the disruption caused by Covid-19 to their cashflows. The BoE
publishes the names of businesses with outstanding commercial paper issued into the
CCFF and the amount outstanding. Throughout the pandemic, the CCFF has helped
several eligible businesses bridge Covid-19 related temporary disruption to their cash
flows. As indicated by the BoE in March 2020, the CCFF was only intended to operate for
an initial period of 12 months. In line with that time frame, and in light of the market
conditions and usage patterns at that time, on 22 September 2020 the BoE and HM
Treasury gave six months’ notice of the withdrawal of the CCFF and announced that the
CCFF would close for new purchases from issuers with effect from 23 March 2021. Thismeans the CCFF will make no new purchases of commercial paper after 22 March 2021.
The CCFF also closed to new applications from counterparties and issuers looking tobecome eligible on 31 December 2020. Eligible issuers that were already signed up to the
CCFF at 31 December 2020 will continue to be able to issue new commercial paper until
closure of the CCFF.
•

The Coronavirus Business Interruption Loan Scheme (CBILS) – this scheme is designed tosupport lending to SMEs (businesses with a turnover of no more than £45 million), thatare experiencing lost or deferred revenues, leading to disruptions in their cashflow.
CBILS was initially intended to run for six months from 23 March 2020 to 30 September
2020.

•

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) – this scheme isdesigned to support lending to mid-sized and larger UK businesses with a group turnoverof more than £45 million (the upper limit for CBILS) that are suffering disruption to theircashflow due to lost or deferred revenues due to the Covid-19 outbreak. Businesses
borrowing more than £50 million through CLBILS will have restrictions on payment ofdividends, senior pay and share buybacks during the period of the loan, including a ban
on dividend payments and cash bonuses, except for where they were previously agreed.
CLBILS was initially intended to run for six months from 23 March 2020 to 30 September
2020.

•

Bounce Back Loan Scheme (BBLS) – this scheme was introduced to help provide financial
support to smaller businesses across the UK that are losing revenue and seeing theircashflow impacted by Covid-19. It aims to assist those businesses to borrow between£2,000 and up to 25% of a business’ turnover (maximum £50,000). BBLS was initiallyintended to run until 4 November 2020 with the possibility of being extended by theGovernment should circumstances warrant it.

•

The Future Fund (FF) – this scheme was put in place by the Government for start-up
businesses as CBILS does not apply to loss making businesses. Under the FF, theGovernment will match any investment given to start-up businesses by making loans
which will be convertible into equity if not repaid. Those businesses must have previously
raised £250,000 from private investors in the previous five years. The Government
announced on 30 June 2020 that the FF’s eligibility criteria was expanded toaccommodate businesses that contribute significantly to the UK economy, but do nothave their parent company based in the UK because they participated in a non-UK based
accelerator programme. These changes allow a wider number of suitable companies toapply, while maintaining scheme protections against fraud and abuse and ensuring that
the Future Fund continues to support economic activity in the UK. There are certain
restrictions on use of FF proceeds, including limitations on use for repayment ofdividends, bonuses and advisory fees in connection with the FF. The FF was initiallyintended to run until the end of September 2020 with the possibility of being extended by
the Government should circumstances warrant it.

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With the exception of BBLS and FF, these schemes ensure that businesses that were viableprior to the outbreak of Covid-19 will have access to funding. Those businesses who were
facing financial difficulty prior to the outbreak, will find it more difficult to get access tothis funding.

•

For more information, see our articles Covid-19 Government help for UK
businesses and Covid-19 Government funding for UK businesses update – further
help for smaller UK businesses•

A further £750 million will also be available as loans and grants for small businesses
focusing on research and development. This support will be available through Innovate
UK’s grants and loan scheme.

UPDATES:• Following calls for extensions to each of CBILS, CLBILS, BBLS and the FF (together, theSchemes), in September 2020, as part of the Government’s Winter Economy Plan, theChancellor of the Exchequer announced the extension of the Schemes to 30 November
2020 (Extension 1). This was in response to the likelihood of a second national lockdown
being announced in November 2020 due to a second wave of Covid-19 becoming areality. Those tougher lockdown restrictions would put more UK businesses underpressure without being able to access additional funding to stay afloat.

156•

Some of the main changes to the Schemes under Extension 1 are summarised as follows:(i) initially loans under CBILS were for a maximum term of six years, but lenders are now
allowed to extend the term to up to ten years. This will reduce the required monthly
repayments business would need to make after the first twelve months; (ii) CBILS and
CLBILS will also benefit from more flexibility on the date of the test of whether or not theirbusiness is an “undertaking in difficulty” is assessed. In order to be eligible for thisscheme, businesses previously had to demonstrate that they were not an “undertaking indifficulty”, a requirement under EU State Aid Law, as of 31 December 2019. The new
guidance allows for this assessment to now be determined as at the date of application for
CBILS/CLBILS. This flexibility means that businesses can take action to convert their debt
to equity in order to qualify for CBILS/CLBILS, giving them the option to restructure theirfinances before applying in order to become eligible; and (iii) in order to offer greater
flexibility, businesses which borrowed under BBLS now have new options to: (a) repay
their loans over a period of up to ten years; (b) move temporarily to interest-only payments(no repayment of principal) for six months which businesses will be able to do three times
during the term of the loan; or (c) request a full six-month payment holiday for bothinterest and principle once over the term of the loan, but this is only after the business has
made six repayments.

•

In order to help keep businesses affected by Covid-19 afloat during the second national
lockdown (which commenced on 5 November 2020), the Chancellor announced on 2
November 2020, that the Government would further extend the Schemes to the end ofJanuary 2021 (Extension 2). Extension 2 was granted in order to give businesses two extra
months from to make loan applications (from 30 November 2020 as above).

•

The main changes under Extension 2 affected BBLS in that businesses which received
loans via BBLS will now be able to top-up existing loans if they need extra/additional cash.
This top-up will help businesses who have borrowed less than the maximum sum available(up to 25% of their turnover up to a maximum of £50,000) in order to avoid them having
to take on extra debt. As of 10 November 2020, businesses can request top-ups from their
existing BBLS lender, but they are only allowed to do so once.

Government measures in key jurisdictions

United Kingdom•

On 17 December 2020, the Chancellor announced a further extension of CBILS,
CLBILS and BBLS until 31 March 2021 (Extension 3) meaning more businesses would
have more time to benefit from the scheme and access the finance they need. This
support was vital due to the economic impact of the tier system and the imposition of
the third national lockdown in January 2021 leaving many businesses having to face
the first few months of the new year with reduced or no revenue.

•

As the Government did not announce an extension to the FF, this scheme closed for
new applications on 31 January 2021. The FF is still processing applications submitted
prior to its closure.

•

As Extension 3 was announced prior to the Budget (which will take place on 3 March
2021), it is expected that details of a new UK state-guaranteed successor loan scheme
to SMEs (to replace the Schemes) will be provided by the Chancellor at the Budget.

•

On 8 February 2021, the Government announced further details of the Pay as You
Grow (PAYG) repayment system, which is designed to provide flexibility for businesses
repaying a loan under BBLS. This announcement confirms that businesses will be able
to pause repayments entirely for up to six months. Previously, the repayment holiday
was only expected to be available after six monthly repayments had first been made.
As announced previously at Extension 1 (see above), PAYG will, in addition, still givebusinesses the option to (i) extend the length of the loan from six to ten years; and (ii)make interest-only payments for six months (on up to three occasions). Businesses cantake advantage of these repayment options individually, or in combination with eachother, however businesses will pay more interest overall if they use one or more ofthese options, and the length of the loan will increase in line with any repayment
holidays taken. Businesses should wait until they are contacted by their BBLS lenderabout PAYG options, and these lenders should be in touch three months before
repayments commence. Businesses first began to receive loans under BBLS in May
2020, and the first repayments (subject to any repayment holidays) are due from May
2021 onwards.

•

With the exception of BBLS and FF, these schemes ensure that businesses that wereviable prior to the outbreak of Covid-19 will have access to funding. Those businesses
who were facing financial difficulty prior to the outbreak, will find it more difficult to
get access to this funding.

•

For more information see Covid-19 – Government help for UK Businesses, Covid-19
Government funding for UK businesses update – further help for smaller UK
businesses, Every good business deserves a (Government) favour – the recent
extensions of the Government’s Loan Guarantee Schemes and Further extensions toGovernment lending schemes – an early Christmas present for SMEs.

•

A further £750 million will also be available as loans and grants for small businesses
focussing on research and development. This support will be available throughInnovate UK’s grants and loan scheme.

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Employment
What financial
support isthe government
providing tobusinesses and toindividuals on
employment issues?

158•

The UK Government introduced The Coronavirus Job Retention Scheme (or "furlough
scheme") in March 2020 under which employers could access a grant to cover thewages for employees on “furlough” (i.e. still on their employer’s payroll but not providing
any work). Under the Scheme the grant covers 80% of an employee’s wage, up to a
maximum of £2,500 per month. To find out more: Coronavirus Job Retention Scheme.

•

The Coronavirus Job Retention Scheme was originally intended to last for three months,
but has been extended a number of times, most recently until 30 September 2021 (asconfirmed by the Chancellor in his Budget speech on 3 March 2021). Currently, the UK
Government is contributing 80% of wage costs for hours not worked up to a maximumof £2,500 per month; employers only need to contribute employer National Insurance
Contributions and pension contributions. Employers will be expected to start
contributing towards the cost of wages for hours not worked by furloughed employees
from July onwards, at a rate of 10% in July and 20% in August and September. To findout more: Coronavirus: Budget 2021 - furlough scheme extended and other
employment-related Covid news.

•

To be eligible, for periods up until 20 April 2021, employees must have been on theiremployers payroll on 30 October 2020. For periods starting on or after 1 May 2021,
employees must have been on payroll on 2 March 2021. It is possible to “flexibly
furlough” employees – where an employees work some hours (and receives full pay
from their employer for hours worked) and is furloughed the rest of the time. It is notpossible to claim a furlough grant for any employee serving a contractual or statutory
notice period for their employer. To find out more: Coronavirus: furlough scheme
extended until March and Coronavirus: quick furlough update – notice periods notcovered from December.

•

The UK Government has also introduced changes to Statutory Sick Pay, which
can now be paid both to those who are displaying symptoms of Coronavirus, who livewith someone who has symptoms and who have been notified that they have been incontact with someone with Coronavirus. To find out more: Coronavirus: an update on
Statutory Sick Pay.

•At the start of the Coronavirus outbreak in 2020, the UK Government announced it
would be delaying changes to IR35 (also known as off-payroll working) in the private
sector, which have the potential to affect the taxation of payments to consultants andcontractors. These changes are due to come into effect on 6 April 2021. To find out
more: IR35 tax rules delayed by 12 months.

•

The UK Government is continuing to recommend that people should work from homewhere they can and minimise the number of journeys they make where possible. It is
likely that this advice will remain in place until around Step 4 of it’s “roadmap out oflockdown”, which will take place no earlier that 21 June 2021. For anyone unable to workfrom home, they are permitted to attend their workplace. Employers are under anobligation to follow “COVID Secure” guidelines. The Government has published a seriesof guidance documents for employers aimed at helping ensure workplaces are as safe
as possible.

•

To find out more: Guidance on making workplaces safe for employees told they “should
go to work” - 10 key takeaways. And: Employment updates from 1 August - changes tohome working, the furlough scheme and further detail on the Job Retention Bonus.

•

To assist employers and employees, the UK Government has also amended the Working
Time Regulations 1998 (which govern holiday entitlement in the UK) to relax the carrying
over of holiday entitlement: under these new rules, workers will be allowed to carry-over
up to four weeks’ holiday into the next two holiday years. The Government has also
published guidance on holiday entitlement and pay during the Coronavirus pandemic.
To find out more: Holiday entitlement and pay during the Covid-19 pandemic and theimpact of this on the furlough scheme.

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United Kingdom

Insolvency
Has thegovernment madeany changes
to insolvency
legislation?

On 25 June 2020, the Corporate Insolvency and Governance Act received royal assent (theAct). It came into force on 26 June 2020.
The Act introduced changes to the UK insolvency laws in order to address the unique
circumstances arising from the Coronavirus pandemic.
Measures introduced included:•

Wrongful trading provisions – As we outlined in our previous briefing, the Act will
temporarily relax the threat of personal liability for wrongful trading from company
directors who continue to trade a company through the coronavirus pandemic. The
provisions set out in the Act do not provide a blanket suspension of the wrongful trading
provisions. Under the Act, directors will not be responsible for any worsening of thefinancial position of the company or its creditors that occurs during the period 1 March
2020 to 26 November 2020. Following the lockdown measures announced across the
UK in November 2020, the temporary measures were re-introduced for the period 26
November 2020 to 30 April 2021. These provisions may help boards where the company
is (or was) in financial difficulties and there is significant uncertainty regarding thebusinesses’ financial future. It is worth noting that in theory, a director could be liable forwrongful trading between 1 October 2020 and 25 November 2020, but in reality thiswould be difficult (but not impossible) to prove.
Whilst directors may not be liable to contribute to the extent the financial position
worsens during these periods, it is important to note that this does not apply to theperiod before and after the pandemic will still be able to be reviewed and will not fallunder the protections laid out in the Act. There are likely to be significant challenges“apportioning losses” in this manner. In addition, directors may still be subject to action
for misfeasance and fraudulent trading claims for director misbehavior during the Covid19 period. Further, directors can also still face disqualification. Although these measures
have been in force for almost a year at the date of this briefing, it remains to be seen
whether the courts will be sympathetic to directors during the pandemic or makeexamples of those who have sought to take unfair advantage of temporary changes atthe expense of others.

•

Company Moratorium – A proposed moratorium which will give struggling businesses a
20-businesss day opportunity to consider a rescue plan, extendable by the directors fora further 20 business days or with creditor consent up to a year. The company willremain under the control of its directors during the moratorium, and no legal action canbe taken against a company during this period without leave of the court.

•

Restructuring Plan – The proposed legislation will introduce a Restructuring Plan,
allowing struggling companies, or their creditors or members, to propose a new
restructuring plan which will provide an alternative rescue option for companies that are
suffering financially. The plan will enable complex debt arrangements to be restructured
and will support the injection of new finance in order to support a rescue.

•

Winding Up Petitions and Statutory Demands – The Act introduced temporary
provisions prevent aggressive creditor action against companies. Under the Act,statutory demands will not be able to be used as the basis for issuing a winding up
petition against a company. This provision applies to all statutory demands served on
any company between 1 March 2020 and 31 March 2021. The provision prevents
statutory demands served in this period from forming the basis of a winding up petition
presented on or after 27 April 2020.

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In addition, the Act restricts winding up petitions from 27 April 2020 to 31 March 2021,
unless the petitioning creditor has reasonable grounds for believing that the coronavirus
crisis has not had a “financial effect” on the company (i.e. that as a consequence ofcoronavirus or for reasons relating to coronavirus, the debtor’s financial position has
worsened).
Although no announcement has been made to date, these changes brought in by the Act
have been extended twice since their enactment, and may be subject to further extension
should the UK Government see it fit to do so.

Contractual •IssuesWhat measures
have been taken
to reinforce
contracts?

•

•

•

•

•

•

•

•

160

The Government has been reluctant to intervene into the workings of UK contracts
between commercial entities and the normal rules apply. The Government is still strongly
urging contracting parties to act fairly, reasonably and in the national interest whenseeking to enforce contractual rights and remedies, in an attempt to minimise the impact
the coronavirus will have on jobs and the wider economy.
In the UK the focus on contractual small print continues, such as the precise wording offorce majeure clauses within contracts. The sort of unforeseen disruption to lives andbusinesses that we are now seeing is exactly what one imagines a force majeure clause isdesigned to respond to. In many cases the pandemic or the resulting restrictions andguidelines issued by the Government to limit its spread will fall into a contractual
definition of force majeure, however the clause itself will need to be scrutinised carefully
in order to determine whether or not it is engaged.
If a force majeure clause is engaged, typically it will suspend the performance of theaffected party’s obligations under the contract, for the duration of the force majeure event.
Sometimes, it can also provide a right of termination.
If performance of a contract may be significantly affected it is crucial to review the termsof your contracts so you understand your rights and obligations and to allow you toscenario-plan accordingly.
Our article published last year sets out the finer details and analysis of force majeureclauses, and these still apply one year on: Contracts in the time of Covid-19: Forcemajeure and frustration.
Particularly with long-standing contracting partners, many businesses are trying to agree
a mutually acceptable way forward, including varying contractual obligations and sharing
the exposure more fairly (in which case any variations should comply with the formalities
required by the original contract).
Public sector bodies are being strongly encouraged by the Government to provide financial
support to their at-risk suppliers to increase the financial resilience of their supply chains. The
Government is fearful of a plethora of disputes that could arise as a result of the chaoscaused by the coronavirus crisis and is encouraging parties to resolve contractual
disputes responsibility, using alternative dispute resolution procedures where possible,
before commencing formal litigation.
The Government is fearful of a plethora of disputes that could arise as a result of the chaoscaused by the coronavirus crisis and is encouraging parties to resolve contractual
disputes responsibility, using alternative dispute resolution procedures where possible,
before commencing formal litigation.
The Corporate Insolvency and Governance Act (discussed in the Insolvency section above)came into force at the end of June 2020. It introduced a restriction on triggering‘termination for insolvency’-type provisions in contracts as such terminations may
jeopardise attempts to rescue companies at risk of insolvency due to the current crisis.
The restrictions will only apply to suppliers who have contractual rights to terminate
against their customers. It does not apply to termination rights after an insolvency
procedure has commenced. There is also a temporary exemption for small suppliers.

Government measures in key jurisdictions

UnitedKingdom•

Now that the UK is no longer in the EU, and with the transition period having ended on 31
December 2020, data protection clauses may need to be updated (e.g. from the EU GDPR
to the UK GDPR – or both regimes could apply). In addition, following the ‘Schrems II’
judgment and as the UK awaits its impending adequacy decision, data transfers to andfrom the UK may require careful consideration and/or variations to contracts.
Generally, we have seen an evident move to ‘future-proof’ commercial contracts. There
has been an increase in specific ‘Covid-19 clauses’, cancellation clauses and greater
negotiations around termination rights (particularly in the events industry and forcontracts regarding the provision of time sensitive goods or services). It is hoped thatthese provisions will help rather than hinder enforceability in the event that the parties’
obligations under the contracts are impacted by the pandemic.

•

Property•

Under emergency legislation: landlords of business tenancies are prohibited from reentering premises (forfeiture) for non-payment of any sums due under the lease, from 26
March 2020 to 31 March 2021 inclusive. This period can be extended by further
legislation, and reports suggest the government is planning to extend this to 30 June
2021. Landlords will retain their right to exercise re-entry for these sums at a later date,unless they expressly waive it in writing. Existing court orders for possession of premises
may be postponed. Notice periods for terminating most residential tenancies wereextended to three months, for the period 26 March 2020 to 31 March 2021.

•

The suspension of possession claims which affected residential and commercial property
was lifted on 20 September 2020, but claims can only be made subject to various extra
requirements. These may include serving a ‘re-activation’ notice and explaining thetenant’s circumstances in relation to Covid, depending on the particular case.

•

The enforcement of possession claims in the residential sector is prohibited until 31
March 2021, subject to exemptions in serious cases such as illegal occupation, anti-social
behaviour and rent arrears of 6 months or more. Taking control of goods in a dwelling forrecovery of rent arrears is prohibited for the same period.

•

Commercial Rent Arrears Recovery, the process used to take goods to recovercommercial rent arrears, can now only be exercised if 366 days’ rent is due (compared to
7 days in normal times). This applies until 31 March 2021, although there is a suggestion it
will be extended until 30 June 2021.

•

Many business tenants are now able to open their doors to the public, althoughsome remain closed. Aside from the legislation above and absent any other intervention,leases will continue and the obligations on tenants will carry on as before.

•

The most practical route for the majority of tenants will be some form of temporary
adjustment to the rent payable under the lease, from a switch from quarterly to monthly
rent payments, to a rental holiday or deferment or even a full rent-free period.

•

Landlords in the UK are being encouraged to approach negotiations with a degree of
flexibility and it may become increasingly difficult for landlords to resist some nod to thegravity of the situation faced by the whole business community.

•

A number of practical tips for both landlords and tenants is here.

Have any changes
been made to
the laws aroundproperty, rent andenforcement?

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Litigation•

In England and Wales, with the help of some technological innovation such as the use of videoconferencing tools, the civil courts have been operating largely ‘business as usual’.

Are the courts
operating?

•On 19 March 2020, the Business and Property Courts of England and Wales issued aprotocol regarding remote hearings, providing that remote hearings should take place
wherever possible. Where a remote hearing is not possible, then the Court has only twosolutions: (1) proceed with the matter in court; or (2) adjourn because a remote hearing
is not possible. The protocol emphasises the need for the court and parties to beproactive in relation to forthcoming hearings. Subsequent guidance from the senior
judiciary and from case-law has been consistent that remote hearings are to be thenorm for the foreseeable future wherever possible even in more complex crossjurisdictional cases.

•

There has recently been a case where remote access to a hearing was provided too
widely by one of the law firms dealing with the case. They received a censure from thecourt and have self-reported themselves to the legal profession’s regulator. Thisillustrates the care with which remote access to hearings should be handled.

•

Similar methods are being employed to deal with arbitration hearings. To find out more
information, see here.

•

The cash grants being offered under the UK Government’s Coronavirus Job
Retention Scheme mentioned is closely linked to HMRC’s existed pay-as-you-earn(PAYE) tax withholding system. HMRC is now starting to investigate Covid-19 grantclaims in depth, using the investigatory powers given to it in Finance Act 2020.
Taxpayers can correct any mistake that they have made without penalty or othersanction, provided they notify HMRC by 20 October 2020, or within 90 days ofreceiving the grant, whichever is latest.

•

Payments of VAT for the period from 20 March 2020 until 30 June 2020 may bedeferred until April 2021, regardless of the type or size of business, although the VAT
returns must still be made. However, VAT refunds and reclaims will be paid by HMRC asnormal to aid businesses’ cashflow. HMRC will also consider extending
payment deadlines for customs duty and import VAT on a case-by-case basis forimporters facing severe financial difficulties as a direct result of Covid-19.

•

Businesses that did defer paying VAT can now opt to use the VAT Deferral New Payment
Scheme to pay that deferred VAT in up to eleven equal payments from March 2021,
rather than one larger payment due by 31 March 2021.

•

Income tax self-assessment payments for the self-employed, including individual
partners in partnerships, that are otherwise due on 31 July 2020 were deferred until 31
January 2021.

•

All businesses in the hospitality and retail sectors irrespective of their rateablevalue are exempted from paying business rates to 31 March 2021. The government hasannounced it will continue to provide eligible retail hospitality and leisure properties inEngland with 100% business rates relief from 1 April 2021 to 30 June 2021. This will befollowed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022.

•

A £25,000 grant will also be available to businesses with smaller retail, hospitality andleisure premises that have a rateable value between £15,000 and £51,000.

•

There have been various support packages for self-employed individuals who makeprofits of up to £50,000 a year. Two further payments will be made under this schemewith the payment in May based on 80% of average profits and a further payment in July.
The newly self-employed who filed a 2019-20 tax return before today can claim thesefourth and fifth grants.

Tax
Has any new
legislation been
introduced in lightof Covid-19?

162

Government measures in key jurisdictions

United Kingdom

Company
law matters•

From 15 July 2020, a reduced 5% rate of VAT has applied (previously 20%) to supplies
of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar
premises across the UK. From 15 July 2020, a reduced 5% rate of VAT has applied(previously 20%) to supplies of accommodation and admission to attractions
across the UK. The government has now extended the temporary reduced rate of 5%
VAT for goods and services supplied by the tourism and hospitality sector until 30
September 2021. To help businesses manage the transition back to the standard 20%
rate, a 12.5% rate will apply for the subsequent six months until 31 March 2022.

•

There is a temporary increase in the Nil Rate Band of Stamp Duty Land Tax onresidential property purchases in England and Northern Ireland from £125,000 to£500,000 until 30 June 2021 which can save up to £15,000 on a purchase. Thereafter
from 1 July 2021, the Nil Rate Band will reduce to £250,000 until 30 September 2021
before returning to £125,000 on 1 October 2021.

•

Coronavirus and the UK tax system•

On 20 May 2020, the Corporate Insolvency and Governance Act 2020 introduced
temporary measures to allow those companies required by law to hold general
meetings to do so by other means (i.e. virtually) even if the company’s constitution
would not normally allow it.

Have any measuresbeen put in place•
to accommodatesocial distancing(such as remote
general meetings)?
•

Allowing companies not to follow the process set out in the existing articles will
ensure that shareholders’ rights will be protected by allowing them to vote on issues
virtually. This will also ensure that directors are not exposed to liability for a lack ofshareholder approval of certain actions taken by the company.
These measures have been extended and now apply until 30 March 2021. It is likely,
at least in the short term, that this timing will not be extended further. As such,companies should seek to hold general meetings before that date to take advantageof the temporary extension.

Government measures in key jurisdictions

163

United States ofAmerica
Contributor: Nixon Peabody

Loans andfinancialsupportHas thegovernment put
in place any newbank funding
schemes?

Employment
What financial
support isthe government
providing tobusinesses
and to individuals
on employment

164

David Kaufman | dkaufman@nixonpeabody.com | +1 415 244 2224
David Brown | drbrown@nixonpeabody.com | +1 312 977 4426•

The U.S. federal government has embarked on several initiatives to support
businesses. At the end of December 2020, the Congress enacted another large relief
program. The Consolidated Appropriations Act, 2021, provided approximately $900
billion in coronavirus (Covid-19) relief, including some $300 billion in additional
Paycheck Protection Program (PPP) funding.

•In this new round of we saw an expansion of permissible expenses for new and existing
borrowers AND new categories of borrowers to permit some previously ineligible
entities to seek PPP funding. At the same time, however, the legislation narrows
eligibility for a few categories of borrowers. In addition to narrowing the size of (now no
more than 300 employees) of eligible companies and adding a revenue loss
requirement, the new program also makes ineligible publicly traded companies,
companies organized in or with significant operations in China or Hong Kong, andcompanies with board members who are residents of China. For more details, pleaserefer to our client alert here.

•

The new legislation also made changes to the Employee Retention Credit (ERC), which
was introduced in March 2020 in a prior stimulus package. The ERC uses the tax code
to provide economic benefits to struggling businesses. For more details, please refer
to our client alert here.

•

Perhaps few industries have been as negatively affected by the ongoing pandemic as
the performing/visual arts sector. As part of above mentioned recently passed relief
program, the U.S. government is providing $15 billion in support to entities that qualify
as a “live venue operator or promoter, theatrical producer, or live performing arts
organization operator[;] a relevant museum operator[;] a motion picture theatre
operator[;] or a talent representative.” For more details, please refer to our client alert
here.

•

The 2021 The Consolidated Appropriations Act provided for extended unemployment
coverage and a supplemental benefit of $300 per week. The payment is available torecipients of state unemployment benefits through March 14, 2021. However, theBiden Administration is looking to extend the program until August and increase theadditional weekly payments to $400.

•

Also on the employment front, in the U.S. employers can require employees to receive
the Covid-19 vaccine; however, there are still some liability risks. Employers can also
put in programs to incentivize vaccination by employees; but, thereto, restrictions
exist.

•For more details, please refer to our recent webinar.

Government measures in key jurisdictions

United States of America

Insolvency•

The CARES Act modifies the Small Business Reorganization Act (SBRA) and greatly
expands the restructuring options available to businesses with less than US$7.5 million
in debt through March 27, 2021. It is effective immediately. Previously, only businesses
with up to $2.7 million in debt could use the SBRA’s expedited procedures. Small
business debtors have traditionally been wary of a reorganization process under
Chapter 11 of the Bankruptcy Act (which provides for reorganizations), despite its wellacknowledged benefits, due primarily to the potential cost and disruption it oftencauses. For those businesses that qualify, the SBRA is intended to alleviate
those concerns and to make small business bankruptcies proceed under a fastertimeline and at reduced cost.

•

We are seeing a major uptick in bankruptcy filings by retailers. Even when theeconomy was firing on all cylinders, retailers were facing rising expenses, changing
consumer shopping habits, and stiff competition-leading many iconic retail brands
in the U.S. and around the world into bankruptcy. As the coronavirus (Covid-19)
pandemic and economic crisis have taken hold, it is not surprising that even moreretailers (whether teetering prior to the pandemic or crippled as a result of statemandated closures) are considering bankruptcy as a viable strategy for survival.

•

For more details, please refer to our client alerts here & here.

•

The Covid-19 pandemic has significantly affected the global supply chain. In addition
to duties, liabilities, and defenses created by contract, businesses also need to be
conscious of a number of common law duties and obligations that may arise as a resultof what is happening around the globe. These can include extra-contractual defences
and concepts such as force majeure, impossibility of performance, and frustration of
purpose. We are beginning to see litigation begin in earnest, albeit under different
circumstances with virtual hearings and other modified protocols. We are encouraging
clients to be proactive about their possible disputes. Typically, a party does not have alegally valid breach of contract claim until after a breach occurs. But that does notmean you have to sit idly by when you can see the writing on the wall.

•

For more details, please refer to our client alerts here & here.

Has thegovernment madeany changes
to insolvency
legislation?

Contractual
IssuesWhat measures
have been taken
to reinforce
contracts?

Property•

The impacts of Covid-19 have led many landlords and tenants to consider theiroptions under existing leases to determine the best path forward and what actions
to take if someone on the property has contracted the virus. As a result, many states
and local jurisdictions have taken action to prohibit certain evictions based on nonpayment of rent and to delay foreclosures by mortgage lenders. We are starting to
see litigation around these issues; however, many landlords and lessees are stillnegotiating resolutions of claims. Additional state and local legislation will also likely
impact leases (and mortgage) obligations by residential and some commercial
tenants. Also, there are special considerations for multi-family residential property
owners and property holders in light of the virus.

•

For more details, please refer to our client alerts here and here.

Have any changes
been made to
the laws aroundproperty, rent andenforcement?

Government measures in key jurisdictions

165

United States of America

Litigation

Generally, yes. Federal and state courts are operating, albeit under modified protocols.

Are the courts
operating?

Tax•

Government stimulus policy generally takes two forms: fiscal policy (direct payments
to individuals, business subsidies, and tax incentives) and monetary policy (central
bank intervention). The U.S. government is using tax policy to stimulate theeconomy in response to the coronavirus (Covid-19) outbreak. These policy tools arecontained in the Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) andFamilies First Coronavirus Response Act (FFCRA). The CARES Act offers some
taxpayers an opportunity to take immediate action to reduce their federal income tax
liability as they prepare their 2019 income tax returns. However, much of the CARES
tax impact will be delayed until income tax returns are filed for tax periods during thecrisis, which, for most U.S. taxpayers, began in 2020. Thus, in many cases, federal
income tax refunds (particularly refunds resulting from the carryback of net
operating losses (NOLs)) will not become available until income tax returns for 2020are filed in 2021. Nevertheless, some action may be taken in the short-term toaccelerate the ability of taxpayers to obtain income tax refunds this year, and someaction may be taken during the balance of 2020 to ensure that income tax refunds
will be obtained when 2020 income tax returns are filed in 2021.

•

For more details, please refer to our client alert here.

Has any new
legislation been
introduced in lightof Covid-19?

Company
law matters

Yes, in many cases taking advantage of legal concepts already on the books. Generally, U.S.
corporate law is specific to the state of incorporation, except for listed companies, wherefederal securities law considerations are important. State law generally permits adjournment ofannual meetings for emergencies, and for the conduct of meetings by remote means. State
Have any measures
law generally allows for action by written consent without a meeting in many cases. For private
been put in placecompanies, those whose charters contain conflicting provisions are generally reviewing
to accommodatechanging them. For public companies, the long-held idea that holding annual meetings onlinesocial distancing
could suppress shareholder democracy has been turned around, with many enthusiastically(such as remote
embracing the idea.
general meetings)?

166

Government measures in key jurisdictions

Please note, this bulletin does not constitute legal advice. The law is accurate to 15 February 2021
and the position is moving rapidly. We recommend that the latest government guidance ischecked as this is changing daily. This publication is a general summary of the law. It should not
replace legal advice tailored to your specificcircumstances.