Supply and Distribution Chain Disruptions
- Identify risks of supply chain disruption due to closures of plants and industrial units or drop in production, restrictions on transport of certain goods and travel of passengers, closure or control of borders or air spaces within the EU or abroad, employee shortages due to contagion or quarantine.
- Consider rapid short-term changes to supply chain model (e.g., replacement of suppliers or service providers, choosing national instead of foreign ones, production at local level or other alternatives).
- Assess potential impact on suppliers’ capacity to deliver goods or services and customers’ capacity and willingness to respect deadline for payment. Consider deferment and division into installments of payments that most likely cannot be met.
- Identify potential contractual issues arising from delays in production, failure to fulfill outstanding orders or the postponement of deadlines for delivery of services (e.g., events of default, notice requirements and any related consequences regardless of cause).
- Check whether all contracts entered into by the company contain clauses of force majeure that could trigger exemptions or if they include cross-default issues.
- Establish alternative communication methods with staff, customers and suppliers while any transport and travel restrictions remain in force.
Risk of imminent debt maturity
- Review existing debt repayment obligations to identify possible cases of default (e.g., interest defaults) and evaluate the likely consequences.
- Review possible breaches of contract resulting from operational disruptions.
- Consider whether there are any upcoming debt maturities (e.g., next six months to one year) and assess the ability to address them.
- Assess the impact of declining loan offers and falling bond prices on the secondary loan market
- Contact lenders and other business partners, investors or banks to discuss issues related to possible debt rescheduling or alternative funding sources.
Potential Financial Risks
- Regularly review the cash flow account and continuously monitor the cash situation (e.g. weekly) to mitigate the potential impact of supply chain disruption, decreased sales, and extended transport and travel restrictions.
- Consider the implications of unachieved goals and assess the ability to achieve the overall projections described in the current business plan and update it.
- Assess the consequences of the delay in internationalization plans or business consolidation and the ability to obtain new funding.
- Consider the economic impact of supply chain disruption and the possibility of replacing the company's existing suppliers.
- Consider the impact of workforce reduction on the continued operation of the business.
- Consider the cost of implementing employee health risk prevention programs.
- Check insurance policies taken out to evaluate potential recoveries from any business interruption and determine the need for additional coverage to address the situation.
Alterations in the relationship with consumers and final customers
- Determine whether the relationship with consumers and users regarding the purchase and sale of goods and the provision of services or the offer of package tours may be affected as a result of the measures adopted.
- Goods that cannot be delivered within the time limit or services that cannot be provided to consumers and users will entitle the latter to terminate the respective contracts within 14 days of the impossibility of performance, unless negotiations are entered into within 60 days and concluded by agreement between the parties.
- Contracts for the provision of continuing services shall not be terminated, but payment of the fees may not be required from the time the service is interrupted until it is resumed in full.
- The cancellation or impossibility of enjoyment of package tours will entitle the consumer or user to a refund or enjoyment within one year from the conclusion of the state of alert.
Alterations to the company's internal corporate operations
- Determine in the case of corporate transactions whether to resort to any or all of the approved flexibility measures relating to:
- Use of telematic means in a general way. Video calls and telephone conferences are permitted in a generalized manner and without the need to modify the articles of association, provided that participants can be identified and the security of the means used is ensured, and the decisions of the administrative body and the General Meeting of Shareholders are recorded in the minutes, and their exchange and forwarding by e-mail is accepted.
- Maximum flexibility in written shareholders agreements. Written decisions may be adopted without holding a meeting.
- Preparation and submission of the annual statements during the state of alert or after its termination. Presentation is permitted up to three months after the end of the state of alert, and two months for the review by the auditors, but also during this period, without limitation.
- Modification of the proposed application of results in the financial statements. If the annual statements have been drawn up before the start of the state of alert, the report and proposal may be replaced before the general meeting, or the proposal for the application of the result may be withdrawn and deferred to a later date.
Alterations to the foreign investment regime in Spain
- Determine in the case of foreign investors whether the approved measures affect your company directly or indirectly.
- The liberalization regime for direct foreign investment (from residents outside the European Union and the European Free Trade Association) is suspended when the latter hold a real ownership interest of more than 25% of the capital or voting rights of the investor, or exercise control, directly or indirectly, over the investor.
- Authorizations for foreign investments are simplified:
a. in case of agreement or binding offer before March 18, 2020
b. for an amount of EUR 1 million or more and up to EUR 5 million
c. investments of up to EUR 1 million do not require prior approval
Applicability of laws, regulations and government decrees
- Check whether Royal Decree 463/2020 declaring the state of alert for the management of the health crisis caused by COVID-19 affects your company directly and whether you should take measures within your organization. This Royal Decree suspends the procedural, administrative, statute of limitations and expiry deadlines.
- Check whether Royal Decree Law 8/2020 of 17 March on urgent extraordinary measures to deal with the economic and social impact of COVID-19, approved by the Government, directly affects your company and whether you should take measures within your organization.
- Check whether Royal Decree Law 11/2020 of 31 March, which adopts urgent complementary measures in the social and economic field to deal with COVID-19 (RDL 11/2020), published in the Official State Gazette of 1 April 2020, which also amends Royal Decree Law 8/2020 of 17 March, directly or indirectly affects your company, and whether you should adopt measures within your organization.