Directors’ Duty of Care in Times of Financial Distress Following the Global Epidemic Crisis

Authors

Leon Yehuda Anidjar

First Page

99

Abstract

The global COVID-19 pandemic is causing the large-scale end of life and severe human suffering globally. This massive public health crisis created a significant economic crisis and is reflected in a recession of global production and the collapse of confidence in the functions of markets. Corporations and boards of directors around the world are required to design specific strategies to tackle the negative consequences of the crisis. This is especially true for small and medium-sized enterprises (SMEs) that suffered tremendous economic loss, and their continued existence as ongoing concern is under considerable risk. Given these uncertain financial times, this Article is devoted to exploring directors' duty of care from a global perspective. In particular, I argue that the current crisis will underline the importance of the advisory role of the board of directors rather than the monitoring function, and further regulatory reforms that strengthen such capacity are expected to emerge. Furthermore, I maintain that the civil law rather than the Anglo-American law on directors' duty of care provides boards with a more expansive scope of discretion to confront the unusual challenges associated with COVID-19 because these governance regimes are tailored to the unique features of companies and markets. I apply this novel argument to different types of SMEs, mainly in family business firms and venture capital-backed firms.

Recommended Citation

Leon Y. Anidjar, Directors’ Duty of Care in Times of Financial Distress Following the Global Epidemic Crisis, 46 Brook. J. Int'l L. 99 (2020).
Available at: https://brooklynworks.brooklaw.edu/bjil/vol46/iss1/3