The sudden and wide-ranging impact of COVID-19 has resulted in companies and boards of directors facing unprecedented situations and challenges. The pressure on boards of directors and companies is higher than ever. Accordingly, directors should be mindful of their fiduciary duties and act in a manner consistent with such duties.
The nature of a director’s fiduciary duties has not changed as a result of COVID-19—fiduciary duties exist whether or not a company is facing a crisis, financial distress, or any other circumstances—but, in many board rooms across the Latin America region, directors are asking if exercise of their fiduciary duties should change in light of the current circumstances.
As the Delaware Supreme Court has stated on many occasions, “[t]here is no single blueprint that a board must follow to fulfill its duties” and the same principle applies in Latin America. There are, however, certain guidelines that directors should follow. This article highlights what these fiduciary duties entail, as well as best practices that directors of Latin American-based companies can adopt to comply with their fiduciary duties and help their companies navigate this challenging environment.