AMENDAMENT OF THE GENERAL LAW OF MERCANTILE ENTITIES FROM OCTOBER 20th 2023
On the past Friday, October 20, a decreewas published in the Official Gazette of the Federation, amending many articles and dispositions of the General Law of Commercial Entities in matters of celebrationof shareholders’ meetings and board meetings. Due to the COVID-19 pandemic in 2020, many activities, including shareholders’ meetings of commercial entities, were compelled to take place remotely. The General Law of Commercial Entities, although it allowed to celebrate shareholders’ meetings outside the registered office due in case of force majeure or fortuitous events, there wasn´t an assumption that explicitly address virtual sessions. This raised concerns about the validity or possible nullity of virtual shareholders. On December 15, 2021, Deputy Ana Lilia Herrera Anzaldo proposed to carry out this decree. On March 31, 2022, with unanimous support of 467 votes, the Chamber of Deputies approved the proposed reforms. Finally, the amendment was published on October 20, 2023, becoming effective the next day.
Broadly speaking, the amendment impacts the following aspects:
1. Virtual shareholders’ meetings nowhold the same validity as in-person ones. 2. Shareholders’ meetings can take place outside the registered office without the existence of a force majeure case. 3. Board of directors' sessions can be celebrated through electronicallymedia. 4. Announcements can be issued through an electronic system established by the Economy Ministry.
The reform is expected to bring benefits in:
• Accessibility and participation • Cost reduction • Organizational flexibility • Increased efficiency in voting • Easy documentation and record-keeping • Security with authentication systems • Adaptability to circumstances • Environmental sustainability • Integration of technological tools • Greater inclusion despite potential limitations
Although relatively recent, some refinements are needed for structured implementation.However, there are some general recommendations for electronic shareholders that are starting to be issued, most of them include: 1. In case of representation, Limited Power of Attorney should be submitting to the Administration Body at least 2 days in advance. 2. Having a technical support assistant during the shareholder meeting, which can take care that the participants can access and participate during the development of the shareholder’s meeting, or in case of being necessary, give technical support. 3. The Chairman should allow audio usein every moment, so the participations of all the members wouldn’t be restricted. 4. The participants should allow recording the meeting, then it can be consulted at every time by every member in case of being necessary. 5. At the end preparing and sending the corresponding minutes, which needs to be signed in an autograph or electronic way. 6. It is recommended using a platform that comply with the standards of the Law of Electronic Signature Use to guarantee that the signed document hasn’t being modified later.
At VILA, we specialize in providing corporate advice to clarify any concerns regarding the effects of this reform.
Feel free to contact us for further information or assistance.
For more details, please contact: Valeria Uribe
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