General Resolution 11/2020 Public Registry of Commerce

Resolution No. 11/2020 (the “Resolution”) of the Public Registry of Commerce (“PRC”) published in the Official Gazette on 27 March 2020 amends sections 84 and 360 of PRC General Resolution 7/2015 with regards to board or shareholders meetings held remotely.

The current situation that the country is going through due to Covid-19 pandemic and the impossibility for people to meet personally, affects companies directly as it may lead to the cessation of the activities of the corporate bodies. The resolution establishes that while the movement restrictions are in force as a consequence of the health emergency and its eventual postponements, board or shareholders meetings of companies, civil associations or foundations may be held remotely by electronic means and digital platforms, when these are held taking all reasonable precautions even in those cases in which the bylaws do not allow them.

After the emergency period, board or shareholders meetings held remotely by electronic means and digital platforms will only be permitted for those companies whose bylaws allow them in accordance with the new wording of sections 84 or 360 of General Resolution 7/2015.

The specific clause that allows meetings to be held remotely shall guarantee:

(i) Free access to all participants;

(ii) The chance to take part in the meeting remotely and by using platforms which allow the live broadcast of audio and video;

(iii) Participation with voice and vote of all shareholders and the control organ, where applicable;

(iv) Recording of the meeting by digital means;

(v) The representative shall keep a digital copy of the meeting for a period of 5 years, which shall be available for all the shareholders;

(vi) The meeting shall be transcribed to the corresponding corporate book, mentioning expressly the names of the participants and signed by the companies’ representative;

(vii) When calling the meeting, it shall be clearly and simply informed which are the means that will be used to hold the meeting and how to access the system in order to take part.

The Resolution has its grounds in the General Companies Law and the National Civil and Commercial Code (“NCCC”) which establish the freedom to choose the wording and design of the clauses for passing shareholders resolutions, which must be exercised allowing the access and participation of all those who form part of the corporate governing body. Also, the law must be interpreted taking into account its words, purposes, analogous laws, dispositions coming from human rights treaties, legal principles and values in cohesion with the legal system. Therefore, denying the possibility to held board and shareholders meetings by using the available technological means (as allowed by Section 158 of the NCCC) is not convenient for the shareholders, the company, or the development of any corporation.

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