Restriction of movement: Directors may face challenges holding meetings in the normal way due to the social distancing guidelines imposed by the government of Kenya (the “government”). Therefore, directors of private companies have now been forced to hold virtual/electronic meetings and pass decisions by way of written resolutions subject to any prohibitions in the company’s constitution. Following a recent High Court ruling, public companies are also able to hold virtual/electronic meetings subject to a “no objection” confirmation received from the Capital Markets Authority.
Labour relations: Under the Occupational Safety and Health Act of 2007, employers have a duty to ensure the safety, health and welfare of workers and all persons lawfully present in the workplace. Employers also have a duty to give relevant safety and health information to persons other than employees who may be affected by the employer’s business operations. For instance, if an employee has symptoms of COVID-19 or tests positive for the virus, the employer has an obligation to inform the government as well as persons who have been in contact with the employee of that fact. Further, the employer must protect the employees’ welfare, for instance by providing washing soap or sanitizers and ensuring that measures are taken to adhere to social distancing directives. Under the new Public Health (Covid-19 Restriction of Movement of Persons and Related Measures) Rules 2020, any employer who contravenes these or other rules is guilty of an offence and may on conviction be liable to a fine not exceeding twenty thousand shillings or to imprisonment for a period not exceeding six months. Employers are also required under the Public Order (State Curfew) Variation Order 2020 to allow all staff who are not designated as critical or essential service providers to leave the workplace by no later than 16.00hrs for the duration of the dusk-to-dawn curfew which was imposed on 27 March 2020. From 25 April 2020, this period was extended indefinitely. This variation of working hours has far-reaching impacts on businesses, especially those that are heavily dependent on their workers working shifts. Companies with unstable cash flows, especially small and medium-sized enterprises (SMEs), have had to lay off employees or require some of their employees to take unpaid leave indefinitely.
Business agility: Many companies have been forced to scale down operations or close down following the restrictions put in place by the government to ensure there is minimum movement. The few who are able to carry on have had to realign their businesses to cope. For instance, some companies have now changed their core objectives to making masks and hand sanitizers to maintain cash flow and avoid insolvency.
Solvency: In the wake of the COVID-19 crisis and the economic challenges that come with it, directors now have tougher decisions to make to avoid insolvency and ensure business continuity. To achieve this, the directors must explore viable options such as seeking reliefs under the agreements entered into by the company i.e. force majeure, legal remedies i.e. frustration of contract, taking advantage of concessions available from lenders such as loan repayment holidays/payment extensions and considering feasible restructuring options such as cash calls from shareholders, conversion from debt to equity, among others.
Data protection: Every person has the right to privacy, which includes the right not to have information relating to their private affairs required or revealed. Under the Data Protection Act of 2019, an employee’s medical information is considered sensitive personal data and should not be disclosed. This runs contrary to the Public Health (Prevention, Control and Suppression of Covid-19) Rules 2020, which require employers to report to the authorities any persons in the workplace whom they suspect of exhibiting symptoms of COVID-19 or who has tested positive. This potentially gives rise to a breach of employees’ privacy which could trigger claims against employers.
Immigration: In March 2020, the government declared a partial lockdown by imposing a dusk-to-dawn curfew. All international flights in and out of Kenya were suspended. In April 2020, the government further ordered restriction of movement in and out of the Nairobi Metropolitan area as well as Kilifi, Kwale and Mombasa counties. What followed was the temporary closure or scaling down of services of various government offices, including the Department of Immigration Services. These measures have created a disruption of business for companies which rely on foreign expertise. Companies which have employees whose work permits have expired or are expiring are now faced with challenges in ensuring that such employees can work legally in Kenya, since the government has not addressed the issue of extension of validity of work permits.