Flexibilization of Shareholders’ Meeting Requirements for Listed Companies

I. Simplification of requirements to participate in shareholders’ meetings

General Resolution No 789/2019 issued by the Argentine Securities and Exchange Commission (“CNV” after its Spanish acronym), published in the Official Gazette on April 3, 2019. (the “Resolution”) has eliminated the requirement imposed on foreign legal entities of being registered with the Registry of Commerce in the terms of Sections 118 or 123 of Argentine Corporate Law No. 19,550 (the “LGS”) to be admitted to participate in shareholders’ meetings of listed Argentine entities.

Foreign legal entities will be able to be represented at such shareholders’ meetings by “a duly constituted  attorney-in-fact” who may be any of the following: a) the legal representative in Argentina (i.e. the person who is registered as such before the corresponding Registry of Commerce); b) an attorney-in-fact with sufficient powers pursuant to a power of attorney granted by the Legal Representative in Argentina; c) an attorney-in-fact with sufficient powers pursuant to a power of attorney granted in Argentina by a person duly authorized in accordance with the laws of the country of the foreign shareholder; or d) an attorney-in-fact with sufficient powers pursuant to a power of attorney granted outside Argentina by an authorized officer of the foreign legal entity. In this latter case, such power of attorney should comply with the issuance requirements of legal authentication in the country of origin as well as the formal validity requirements in Argentina for documents issued abroad.

The Resolution aligns the CNV rules with the Corporate Governance Principles of the Organization for Economic Co-operation and Development (OECD) and with Capital Markets Law No. 26,831, as amended by Productive Financing Law No. 27,440 (the “LMC” after its Spanish acronym), which provides that “foreign legal entities will be able to participate in all the shareholders’ meetings (…) of listed companies through duly constituted attorneys-in-fact, without any other registration requirements” (in accordance with paragraph II, Section 62 bis of the LMC).

II. Digitalization of Deposit of shares and registry of attendance to shareholders’ meetings book

The Resolution introduces the possibility of carrying out the deposit of shares and registry of attendance to shareholders’ meetings ledger (Libro de Depósito de Acciones y Registro de Asistencia a Asambleas) in digital registries.

Companies opting for this digitalization must request authorization from the CNV complying with the requirements provided by the Resolution. Among other requirements, the supervisory committee of the listed entity must submit a report on the controls undertaken to the registration system and the data recording means. In addition, the supervisory committee must inform annually if the system complies with the security and integrity conditions under which it was authorized by the CNV.

Lastly, companies opting for this system must back up the digital information every three months by transcribing it to a physical stock ledger which complies with the formalities provided by the Argentine Civil and Commercial Code.

The measure under analysis is implemented within the framework of the Administrative Simplification and Lack of Bureaucracy Process. Within this process, amendments to the LGS were introduced, allowing companies to carry corporate and accounting books in digital registries in the same form and conditions as permitted for the Simplified Corporations (“SAS” after its acronym in Spanish).