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As the financial and social impact of COVID-19 is felt across the globe, decision makers are facing and will continue to face serious challenges. In light of the rapidly evolving business environment, driven by factors largely outside of their control, it is more important than ever that directors make rational and well-reasoned decisions.
In this article, we consider some of the issues Cayman directors are likely to be faced with and how they might discharge their duties and obligations in these exceptionally difficult times.
Due to the nature of the Cayman financial services industry, many directors of Cayman companies are independent non-executive directors. A non-executive director is neither an employee nor part of the executive management team. Non-executive directors often perform a high-level supervisory role, monitoring the activities of the executive team and participating in the development of corporate strategy. From a Cayman law standpoint, there is no substantial difference between the core duties of an executive director and non-executive director.
It is also important to consider whether the same duties and obligations apply to other members of the management structure. In Cayman, the courts have held that shadow directors (i.e. those who direct the directors but are not called directors), de facto directors (i.e. those who claim to be directors but are not validly appointed), nominee directors (i.e. those directors nominated by a particular shareholder), and, in some cases, senior managers may all have the same duties that apply to formally appointed directors.
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Coronavirus: Directors in Crisis Mode