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Corporate Governance and Compliance in Equatorial Guinea: Navigating the New Normal during COVID-19

As Equatorial Guinea continues to grapple with the economic and social impacts of the COVID-19 pandemic, corporate governance and compliance have become more critical than ever. In this article, we explore the special duties and responsibilities that governing bodies in Equatorial Guinea must adhere to during these unprecedented times.

Cooperation Duty under Decree 42/2020

In response to the COVID-19 outbreak, Decree 42/2020 was issued, which sets forth a general cooperation duty for all structures and layers of society. This provision requires that all entities contribute to the efforts of the government and Ministry of Health in fighting against the pandemic.

Key Provisions

  • All entities must cooperate with the government and Ministry of Health in fighting against the COVID-19 pandemic.
  • The provision is still in force according to our interpretation.

Right to Information under the LPCP

The Law on Public Health and Consumer Protection (LPCP) provides that citizens, entities, and state bodies have the right to receive information on risks affecting them as a group, be briefed on measures taken to prevent or mitigate such risks, and be provided with instructions on safety measures to adopt.

Key Provisions

  • Citizens, entities, and state bodies have the right to receive information on risks affecting them.
  • Failure to comply with this obligation is considered a minor infraction punishable by fine.

Special Duties of Care for Governing Bodies

Companies in Equatorial Guinea are subject to special duties of care in managing the risks inherent to the COVID-19 threat. As such, governing bodies must:

Key Responsibilities

  • Prepare and implement contingency plans to continue business and ensure the safety of employees, shareholders, customers, suppliers, and other stakeholders.
  • Inform the National Committee for the Fight against the COVID-19 (NCSTC) of any material sign of COVID-19.
  • Adjust commercial strategies to minimize and overcome economic, financial, and commercial impacts resulting from the pandemic.

Consequences of Non-Compliance

  • Members of governing bodies may be held liable for the absence of such plans or measures.
  • Highlighting the importance of a rational business approach in setting up and approving these plans.

Reconsidering In-Person Meetings of Corporate Bodies

Given the general cooperation duty under Decree 42/2020, it is advisable to reconsider holding in-person meetings of corporate bodies. While applicable corporate law permits virtual meetings if set forth in the company’s bylaws, this provision should be reviewed on a case-by-case basis.

Key Considerations

  • Annual General Assembly meetings must still be held.
  • Governing bodies are responsible for preparing financial statements within a specified deadline.
  • Failure to comply with these obligations will trigger liability for members of governing bodies.

Disclosing Strategic Decisions and Negative Impacts

Companies must assess the potential impacts of COVID-19 on their business and keep shareholders updated at all times, as required by applicable law. This includes disclosing strategic decisions and negative impacts on the company’s business.

Key Requirements

  • Companies must disclose strategic decisions and negative impacts to shareholders.
  • Highlighting the importance of transparency in corporate governance during this time.

Conclusion

Corporate governance and compliance in Equatorial Guinea have become more critical than ever during the COVID-19 pandemic. Governing bodies must adhere to special duties of care, cooperate with the government and Ministry of Health, and disclose strategic decisions and negative impacts to shareholders. By navigating these challenges, companies can ensure continuity, safety, and transparency, ultimately mitigating the risks associated with this global health crisis.