COVID-19 & business law
The coronavirus epidemic is affecting everyone. Of course, this includes banks, stock corporations, foundations, and family offices. The financial sector has to adjust to completely new – and hopefully only temporary – rules and standards.
In light of the crisis surrounding the coronavirus, Germany’s Federal Financial Supervisory Authority – the Bundesamt für Finanzdienstleistungsaufsucht, or “BaFin” for short – has adapted its supervisory practices and measures to the new circumstances. Its president, Felix Hufeld, stated that, “the existing body of rules allows for a high degree of supervisory flexibility, which we are taking full advantage of.” He went on to say that, “we are providing relief to the banks where this is possible without compromising financial stability.”
New regulations are important. For instance, a debtor should not necessarily be classified as defaulting if the debt servicing and interest on a loan are deferred because of the coronavirus.
Regarding the disclosure of financial circumstances for the provision of loans – section 18 of the German Banking Act (Kreditwesengesetz) – the BaFin recently clarified that an analysis of the most recently available annual accounts is sufficient for assessing creditworthiness, with these presently most likely to be the annual accounts for 2018, assuming the annual accounts for 2019 are not yet available. For the purpose of assessing the ability to service debts, the institutes can consult a full-year liquidity review of the borrower from the past.
Violations of the rules of conduct and information requirements in securities trading, such as may occur in the context of investment services provided from a home office, will not be pursued for the time being. However, this is conditional on any gaps in documentation and informational shortcomings being properly closed and informing clients.
Given that it is almost impossible for businesses to develop the necessary know-how regarding business law, we at the commercial law firm MTR Rechtsanwälte advise seeking the support of lawyers in times like these.
Lawyers with experience in the field of business law can offer advice.