AMENDMENTS AND ADDITIONS TO SEVERAL PROVISIONS OF THE GENERAL LAW OF COMMERCIAL COMPANIES.

The SARS-CoV-2 pandemic forced institutions to adapt to new working modalities in order to remain active after the cessation of face-to-face activities. Thanks to technological advances, this process has been facilitated and managed efficiently.

Taking this into consideration, since February 2021, the Congress worked on a proposal to reform the General Law of Commercial Companies (Ley General de Sociedades Mercantiles or “LGSM”, as per its acronym in Spanish) regarding the resolutions of the administrators and telematic meetings (the “Reform“), given the existing gap to enable the bodies of limited liability companies and corporations (the “Companies“) to meet and adopt resolutions through the use of information technology.

The Reform proposal was unanimously approved by the Chamber of Deputies (Lower House) on March 31^st, 2022, and by the Senate on September 12^th, 2023. On October 20^th, 2023, the Reform was published in the Federal Official Gazette through the Decree amending several provisions of the LGSM, effective as from the day after such publication and, in the case of the amendments to the second paragraph of Article 81 of the LGSM, regarding the publication through the electronic system of the Ministry of Economy of calls to partners meetings of limited liability companies, it will be effective six months after such publication, that is, on April 21^st, 2024.

The purpose of the Reform is to regulate the use of electronic, optical or any other technology means (the “Electronic Means“) to hold Partners’ or Shareholders’ Meetings, as well as meetings of the administrative bodies of the Companies, in order for them to have the same validity as the Meetings and sessions in person. In order to achieve this, it was necessary to amend and/or add Articles 6, 75, 80, 81, 82, 143, 178, 179, 186 and 194 of the LGSM.

Among the most relevant issues of the Reform are the following:

• To allow the use of Electronic Means, as equivalent to physical presence at Meetings and sessions of the administrative bodies, as well as for the adoption of companies’ resolutions.
• To allow that the Partners or Shareholders Meetings, as well as the meetings of the administrative bodies may be carried out totally or partially by means of physical or virtual attendance by any Electronic Means.
• Preserve the principles of full equivalence between the use of traditional means and Electronic Means, as well as the principle of technological neutrality provided by the Mexican Commercial Code and the Federal Civil Code, as well as the supplementary applicable principles of the latter.
• To regulate the use of Electronic Media for holding the Meetings and sessions of the administrative bodies, recognizing that the use of electronic media to document the Minutes, records and other documents, is already provided for in the Mexican Commercial Code and the Federal Civil Code, without seeking to make mandatory the use of one over the other, leaving full freedom to companies to do so as it is in their best interest. Likewise, the use of Electronic Means is allowed for the provision of reports and annexes corresponding to the Meetings.
• Establish the obligation of limited liability companies to publish their notices by means of the publication of a notice in the electronic system established by the Ministry of Economy.
• The requirement to hold the Meetings at the company’s domicile is made more flexible, allowing shareholders and partners to agree, on a case by case basis, to hold Meetings out of the corporate domicile, safeguarding the right and possibility of each shareholder or partner to attend such meetings by Electronic Means, or in person.
• Finally, since the Meetings and reunions held through Electronic Means are considered fully equivalent to those held in person, it was considered of the essence not to hinder or make the holding of the Meetings or reunions through such means more expensive by requiring the presence of notaries to attest to the facts related to the development thereof, since it is not a requirement for the holding of the Meetings or reunions in person, but rather an option that the parties may use voluntarily.

It is important to note that the Reform states that it will be the partners or shareholders of the companies themselves who must decide to include the possibility of holding meetings through the use of Electronic Means in their by-laws, and that it is not a direct effect of the mere entry into force of the Reform. In other words, the articles of incorporation, in the case of new entities, or the by-laws of an existing company must contain the rules for holding the Partners or Shareholders and the meetings of the administrative bodies.

Some of these rules may be the audio and video recording of the Meeting and/or the use of electronic signatures, as long as the principles applicable to the Meetings held in person are respected (notice requirements, attendance and voting quorum, right to attend, right to deliberate, among others) and the Electronic Means used allow the same conditions for all those involved to participate simultaneously in an interactive manner, as would happen in the development of a Meeting or session in person, as well as to have certainty of the participation and identity of those involved. The above will be beneficial for the Companies as it favors the continuity without interruptions of the activities, as well as the reduction of time and costs.

Therefore, we suggest that each Company, given its characteristics (such as nature of the partners or shareholders, residence and location of the same, number of participating stakeholders, among others) analyze the convenience of incorporating these new provisions in its by-laws, in order to foresee the possibility of their use and to regulate the various aspects that make it possible to hold Meetings and sessions in this format.

We remain at your disposal for any consultation, advice or support you may require in this regard.