Amedment to the General Law of Commercial Companies

AMENDMENT TO THE GENERAL LAW OF COMMERCIAL COMPANIES

er 20, 2023, a Decree was published in the Official Gazette of the Federation adding and amending several articles of the General Law of Commercial Companies (“LGSM”), regarding the use of telematic means.

Due to such decree, several provisions were added regarding the use of telematic means in corporations and limited liability companies. Hereinbelow, we refer to the most relevant ones:

a) Partner’s and Shareholders’ Meetings and Meetings of the Management Body. The partners’ and shareholders’ meetings, as well as the meetings of the boards of directors and managers, may be held through the use of telematic means, with the same validity as if they were held in person and without being considered as held outside the corporate domicile of the company.

Additionally, regarding the annual shareholders’ meeting, it will be possible making the directors’ report available to the shareholders through telematic means, without the need of making it available physically at the company’s office.

b) Calls for the Partners’ and Shareholders’ Meetings. Partners’ Meetings of the limited liability companies must be called through the publication of a notice in the electronic system established by the Ministry of Economy, with the anticipation set forth in the bylaws, or failing that, eight days before to the execution of the meeting.

The foregoing implies an alignment between the formalities for the publications of the calls for both the corporations and the limited liability companies for which, before this reform, this modality of calls was not provided.

c) Requirements that bylaws must contain. Incorporation deed of the companies must include an additional requirement, which is the rules for the holding of partners’ meetings and meetings of the management body: both may be held through the use of telematic means, provided that the participation is simultaneous and the interaction in the resolutions is allowed in a way equivalent to a face-to-face meeting. Additionally, it is provided that there must be mechanisms or measures through which the identity of the attendees and the way they vote can be proved, both for the partners’ meetings and the meetings of the management bodies, either in person or through the use of telematic means.

In our opinion, this reform to the LGSM represents an important step forward for Mexico, as it implies both a modernization and adaptation of our legislation to the current global circumstances and to the cultural and digital-technological advances. In addition, from an operational point of view, the reform may generate a broader participation in the partners’ and shareholders’ meetings and in the meetings of the boards of directors and managers, as well as a reduction of the costs associated thereto.

Please note that reform will enter into force the day after its publication, therefore, from that date on, for the companies to take advantage of the benefits provided by these law amendments, the aforementioned provisions should be included in the bylaws of the companies to be incorporated or already incorporated, in the latter case through a bylaw’s amendment.

If you would like more information in this regard, please do not hesitate to contact any of our partners or associates.

Yours sincerely,

Cannizzo