The COVID-19 pandemic has presented a huge challenge for boards and the governance professionals who support them. Business as usual has gone out of the window for many sectors since the pandemic first appeared, with companies having to change operating models in order to survive. In the midst of chaos, standards can slip as people rush to find solutions. As the professional body for governance, however, we know that high standards are the bedrock upon which the reputation of our members and the Institute rests.
We are a membership body with a global footprint and while the issues that our members deal with are not always exactly the same good governance is the golden thread that links us all. Much can be learned from hearing about the issues that others are facing, and we were pleased to work with members of our Irish regional council, in polling the company and board secretaries of thirty-five of the largest companies in the Republic of Ireland to understand how boards and company secretaries have been managing during the pandemic.
Overall, the survey showed a very strong performance from Irish companies, their boards and the company secretaries who advise them in maintaining governance standards. Key areas such as minute taking, governance and controls and effective communication between senior management and boards were all found to be operating well in a difficult environment – good news indeed.
Those aspects of good governance that were proving more tricky related to difficulties encountered in holding AGMs, obtaining signatures for key documents, and maintaining the dynamic of the virtual boardroom.
How to hold statutory meetings with restrictions on movement in place was one of the more immediate challenges that our members faced when COVID-19 hit Europe. The Institute moved quickly to produce guidance around AGMs and virtual board and committee meetings. Legislation was introduced in both the UK and Ireland which allowed companies to temporarily hold virtual AGMs, something which has found favour with governance professionals in Ireland, with 88% of respondents to our survey believing that the law should be changed to permit the holding of virtual AGMs.
Another key finding of the survey related to the challenge of getting documents legally executed. This issue has been particularly problematic in Ireland where restrictions imposed by the Companies Registration Office regarding the non-acceptance of electronic signatures exacerbated the problem. Many company secretaries had to organise couriers to get individual forms signed, which increased both cost and the time required to get critical transactions executed. As the CRO now moves to its new IT platform in the coming months, we would recommend that it should incorporate other electronic signature platforms such as ‘DocuSign’ to allow members wider opportunities to utilise electronic signatures for all filings.
The final key finding relates to the impact of virtual meetings on boardroom dynamics. Pre-COVID, few boards had experience of working remotely with virtual board meetings. While adapting to a virtual environment has not presented as major a challenge as some might have expected, there is a strong sense that board dynamics will suffer in the longer term if virtual meetings continue. It is harder to maintain the free flow of discussion that would normally occur if everyone were in the same room together. This is an issue upon which a watchful eye must be kept as good board dynamics are a crucial part of a functioning and effective board.
Overall, there is much that is positive to take from the survey findings. Our members have done a terrific job of keeping accurate records of decisions taken and the decision-making process. They have also ensured that all key governance and control functions, including finance, risk and internal audit, have continued to receive appropriate attention. This is something about which we, as a profession, can be rightly proud.
The results of the survey can be found here.
Sara Drake, Chief Executive of ICSA: The Chartered Governance Institute