The amendment impacts significantly on the mechanism for holding shareholders' meetings and administrative bodies´ sessions.
On October 20, 2023, an important amendment to the Mexican General Law of Commercial Companies (LGSM, per its acronym in Spanish) was published.
The amendment impacts significantly on the mechanism for holding shareholders' meetings and administrative bodies´ sessions. In summary, it eliminates the obligation to hold such meetings in person and establishes rules for holding them through electronic, optical or any other technology means. In other words, opens the door to holding virtual meetings.
When this amendment shall be effective?
October 21, 2023.
What will happen to companies incorporated before this date?
Companies incorporated before the amendment will have the option to reflect the new rules into their bylaws.
What actions are recommended?
It is recommended to review and amend your company's bylaws as soon as possible to take advantage of virtual meetings.
Relevant aspects and legal situations that may be resolved with the reform.
Comparison of in-person attendance with electronic media. The reform focuses on enabling electronic and optical means or any other technology, and consider such means equivalent to in-person attendance of meetings and sessions. Article 75. Article 6.
Full Equivalence. The reform grants full equivalence between the use of traditional means and electronic means, as well as technology neutrality. Article 143.
Attendance Options. Pursuant to the reform, shareholders´ or partners´ meetings may be held fully or partially in person or using electronic, optical, or other technological means. Article 82. Article 178.
Corporate domicile. The amendment clarifies that a shareholders´ meeting shall not be deemed held outside the company's corporate domicile when electronic, optical or other technological means were used to hold it. In addition, shareholders may hold meetings outside the company's corporate domicile, provided all shareholders approve to do so, and the shareholders´ right and option to attend the meeting either in person or using electronic, optical, or other technological means is guaranteed.
With the reform, discussions regarding the place where the meeting was held will be resolved, and it is entirely up to the shareholders to decide the best mechanism to validly approve resolutions. Article 80. Article 179.
Voting rights protection. Access of each of the shareholders to meetings or sessions shall be guaranteed by measures or mechanisms to protect voting rights. Appropriate evidence must be produced to guarantee the legality of these types of meetings. Article 6.
Geographical Location. The geographical location where meetings may be held is now more flexible, so that the decision-makers of the companies may determine the format and place where to hold the meetings.
Call to Meetings. The call shall be published in the electronic system of the Ministry of Economy, and shall contain the agenda, signature of the person calling the meeting, and shall be published with the anticipation established in the bylaws. Article 81. Article 186.
Use of advanced electronic signature. A novelty of the reform is the use of the advanced electronic signature, (in accordance with the provisions of Article 7 of the Law on Advanced Electronic Signature) in electronic documents and data messages, and grants the same legal effects than documents signed by hand. Accordingly, these documents will have the same probatory value pursuant to applicable provisions. Article 194.
First virtual Shareholders' Meeting: The reform allows a first meeting to authorize a set of rules and requirements to hold a valid meeting, for example, with respect to attendance lists, appearance at the corporate domicile of the "host" of the meeting.
Meeting formalities: The reform resolves the issue of attendance and voting of the entirety of shareholders with voting rights, for purposes of implementing the mechanisms to be followed to reach agreements when holding virtual meetings. Accordingly, the amendment requires resolutions adopted are confirmed in writing and posted in the shareholders´ meetings minutes book. Finally, if deemed necessary, the minutes may be notarized before a public attestor. Article 194.
We recommend all of our clients to prepare for this new stage of corporate law. It is advisable to review and eventually amend the company's by-laws.
For further information, please contact one of our partners or send us a message at contacto@dha.mx
