Impact of COVID-19 on Board and Shareholders’ Meetings

Given the current spread of COVID-19 and the proximity of the board and shareholders meetings for the consideration of the accounting statements of the last financial year, the question arises regarding the procedure for holding such meetings remotely.

The health emergency situation posed by the advance of COVID-19 in Argentina requires that the companies analyze the possibility of holding their meetings in a remote manner, with the purpose of contributing to the social distancing required by the government authorities. For this reason, it is necessary to determine whether the Civil and Commercial Code of Argentina and the regulations of the Public Registry of Commerce of the City of Buenos Aires authorize the modality of holding meetings remotely.

Article 158 of the Civil and Commercial Code requires that the company's by-laws include rules regarding its governance, administration and representation. However, such article establishes a supplementary rule for the absence of special provisions. It states as follows: "if all those who are to participate in the event consent, they may take part in a meeting of the governing body using means that enable the participants to communicate simultaneously with each other. The minutes must be signed by the chairman and another administrator, indicating the method adopted, and records must be kept, according to the means that were used to communicate". Although the supplementary rule refers only to the governing body, we understand that it is also applicable to the meetings of the administrative body. 

However the Public Registry of Commerce of the City of Buenos Aires has issued resolutions that limit the possibility introduced by the Argentine Civil and Commercial Code. The Public Registry of Commerce allows remote meetings only for the administrative body —but not for the governing body— provided that the above is established in the by-laws of the company. Furthermore, the registry requires that the quorum for those meetings be established by the physical presence of the members. Additionally, it states that the resulting minutes must be signed by each and every participant in the meeting.

Furthermore, the Argentine Securities and Exchange Commission issued on March 16, 2020, a communique stating that the companies with accounting statements closed as of December 31, 2020, that could not hold the ordinary meeting on time, may be granted an exceptional extension.

In light of the above and the recent measures taken by the Argentine Government, it is of the utmost importance to review certain rules, their scope, validity and interpretation in order to facilitate the normal functioning of the corporate bodies —both the administrative body and the governing body— through the holding of remote meetings.