Proposed reform to the Mexican General Law of Commercial Companies to allow virtual meetings
The Mexican Senate recently approved the House of Representatives' Committee’s proposal to reform to the General Law of Commercial Companies (Ley General de Sociedades Mercantiles) to incorporate a legal framework for holding shareholder and board meetings using digital means.
The revised law would allow virtual attendance and participation in shareholder and board meetings through the use of any digital technology. The reform aims to preserve the principles of equality between traditional and digital means, as well as technology neutrality, and seeks to regulate the use of digital means for recording meeting minutes and other documents.
Additionally, the reform would provide flexibility for holding meetings outside the company’s registered office and would aim to ensure that each shareholder has access to the digital means used for the meeting.
Specifically, the initiative that gave rise to the approved project contemplates the following aspects:
- Allowing the use of any telematic means as an equivalent to physical presence in shareholder and board member meetings.
- Permitting shareholder and board member meetings to be held entirely or partially through in-person or virtual attendance by any telematic means.
- Preserving the principles of full equivalence between the use of traditional and telematic means, the technology neutrality principles provided for in the Commercial Code and Federal Civil Code, and the supplementary principles applicable to this legislation, as this regulatory framework is incorporated into and forms part of commercial legislation in those principles not repealed by the latter.
- Regulating the use of telematic means for the holding of multi-cited meetings without seeking to make the use of one mandatory over the other. The proposal recognizes that the use of electronic means to document minutes and other documents is already provided for in the Commercial Code and Federal Civil Code.
- Allowing shareholders and board members to agree, on a case-by-case basis, whether or not a meeting may take place outside the registered office, safeguarding the right and possibility of each shareholder or board member to attend such meetings in person or by telematic means.
Among the agreed adjustments, the revised law would replace the term "telematic means" with "electronic, optical or any other technology" as the latter terminology is broader and allows the reform to remain in force despite technological changes that may occur in the future. Additionally, in order to protect shareholders’ and board members’ right to vote, the reform would require meeting hosts to guarantee participant access to all digital means used in the meeting. It would additionally require companies to produce corresponding evidence related to each meeting and its respective resolutions.
In approving the proposed reform, the House of Representatives and Senate highlighted the success of public collegiate bodies, such as the Supreme Court of Justice, in successfully adopting the virtual session format, safeguarding legal certainty, and preserving the health of its members by minimizing the contagion risks posed by the COVID-19 pandemic.
The reform represents a significant step forward for Mexican commercial law and aligns with recent legal developments in other jurisdictions, where the use of digital means to hold meetings has become increasingly common.
For more information, please contact the authors.