Tax Flash Note | Amendment to the General Law of Commercial Companies regarding virtual meetings

On September 13, 2023, the draft to reform the General Law of Commercial Companies (LGSM, for its acronym in Spanish) was published in the Senate Gazette, to include the possibility for shareholders or partners meetings, as well as sessions of the administrative bodies of commercial companies, to be held using electronic and/or technological means.

The abovementioned initiative was originally approved in the House of Representatives back in 2021, and, subsequently, by the Senators’ Chamber, on September 12, 2023. Currently, it is waiting to be published in the Official Gazette of the Federation (DOF, for its acronym in Spanish) to become effective.

Some of the main aspects of the reform to highlight are the following:

• Enable the use of electronic, optical and/or any other technology as an equivalent mean to physical presence
• Allow all partners or shareholders meetings, or board sessions, to be held with total or partial physical or virtual presence
• Standardize the terminology used in the LGSM with the latest amendments to the Commercial Code regarding the use of technologies, such as the acceptance of the electronic signature with the same effects as the handwritten signature, in accordance with the principle of functional equivalence
• Recognize the use of electronic means to document meeting minutes and any other corporate documents
• Make the requirement to hold meetings at the company’s corporate domicile more flexible

Additionally, it is specified that the technologies used for such purposes shall guarantee access and accreditation of the identity of all attendees and acknowledge how they vote and generate the relevant evidence of the meeting.

Regarding shareholders’ meeting minutes, it is recognized that these can be signed either with a handwritten or electronic signature.

Finally, the possibility for commercial companies to use electronic and technological means is expanded to call, hold and execute document meetings held by their partners, shareholders, administrators, commissioners, among others.

Due to the imminent entry into force of the referred amendments, it is convenient for companies to review and update their bylaws, and thus take advantage of the new possibilities that these changes to the LGSM will provide.

As always, the staff of  KPMG's Tax and Legal practice in  Mexico is at your service to analyze in detail the effects that the application of these provisions may have on your company.