Mexico reforms the General Law of Business Corporations: Welcome to Virtual Meetings

The amendment to various provisions of the General Law of Business Corporations (LGSM), as published in the Official Gazette of the Federation on October 20, 2023, aims to permit the use of electronic, optical, or other technological means for conducting Shareholders'/Partners’ and Management Bodies’ Meetings.

By nature, humans are social and resilient. The ability to adapt to change, combined with recent social and cultural events such as the Sars-CoV-2 pandemic, prompted the business world to adopt exceptional measures to maintain operations, even if conducted remotely. This set a precedent, forcing the law to regulate this series of practices to align with societal realities.

As a result of the legislator's efforts, on October 20, 2023, the Decree amending several provisions of the LGSM (the "Decree") was published in Mexico’s Official Gazette of the Federation.

The main points of the reform were as follows:

• Corporate by-laws should incorporate rules for attending Shareholders'/Partners’ and Management Bodies’ Meetings, either in person or through electronic, optical, or other technological means ("Technological Means"), in the latter case attendees must be able to participate simultaneously and engage in deliberations as they would in a face-to-face meeting. Additionally, appropriate mechanisms or measures must be in place to verify the identity of attendees and record their votes, ensuring the generation of corresponding evidence.
• In limited liability companies (" de R.L."):

1. Managers may adopt resolutions through Technological Means, provided that they are stipulated in the corporate by-laws.
2. Calls should be published in the electronic system established by the Ministry of Economy (the "System"), either as stipulated in the corporate by-laws or at least eight days before the meeting; they must include the Agenda and be signed by the individual issuing them. Likewise, the possibility of holding meetings by Technological Means, so that all or part of the members may attend.

• In stock corporations ("S.A."):

1. Board of Directors’ and Shareholders’ Meetings can be held by Technological Means, provided it is stipulated in the corporate by-laws. Such meetings will have the same validity as in-person Shareholders’/Board of Directors’ Meetings, with all or part of the attendees being able to participate in person or by Technological Means, both being equally valid.
2. Shareholders can access the Board of Directors' report from the time the meeting call is published until the meeting takes place, either at the company's offices or through the Technological Mean specified in the corporate by-laws.
3. The shareholders’ meetings minutes should be recorded in the corporate book and signed with a wet ink or electronic signature by the President, the Secretary, and any attending Statutory Examiner.

• Meetings of S.A. and S. de R.L. can be held at the corporate domicile using Technological Means, without implying that they are taking place elsewhere. Additionally, without the need for unforeseen events or force majeure, shareholders may hold meetings outside the corporate domicile, as long as they approve it and there is the possibility of using Technological Means. It will be necessary to specify in the minutes the address at which it took place.

The Decree entered into force on October 21, 2023, except for the obligation to publish the call of an S. de R.L. in the System, which will be effective as of April 20, 2024, even if its corporate by-laws provide for another form of publication.

Since in order to take advantage of the benefits of the reform discussed herein, it is required to amend the corporate by-laws of the companies incorporated prior to the publication of the Decree, ECIJA Mexico remains at your disposal to support you in its proper implementation and for any questions or issues that may arise.

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Corporate and M&A Area of ECIJA Mexico

socios.mexico@ecija.com