Chile Corporate Update: Attendance to Board Meeting
Due to the COVID-19 outbreak, the use of technologies for conducting Board Meetings in companies has been accelerated today more than ever. For these purposes, there are two practical issues which are highly relevant to companies and board members who may live abroad or cannot attend meetings in person due to the current circumstances:
i) Remote assistance to Board Meetings; and ii) Signature of the Board Meeting minutes.
Remote Participation by Technological Means.
Chilean Corporations Act allows the remote assistance of those directors who, despite not being present at the meeting, remain connected through technological means that were authorized by the Commission for the Financial Market (“CMF”), which is the entity in charge of ensuring the proper functioning of the financial markets.
Since 2001, the CMF has authorized the use of the telephone conference, and video conference. However, the CMF itself recently said that this Circular has generated confusion concerning who can participate by technological means at board meetings. Additionally, considering that the circular was issued 19 years ago, it is not completely adjusted to the technological and digital reality of today’s life.
Therefore, in August 2020, the CMF issued a Project of Resolution that seeks to modernize the regulations under which the directors of publicly held companies remotely attend the boards.
The CMF’s new resolution establishes that remote participation is encouraged and can be carried out through any system of transmission which allows the reception of sounds, images, or information, and also allows the interaction of Board Members in real-time, simultaneously and permanently.
For this purpose, video conferencing systems such as Zoom, Teams, Skype, Hangout, Meet and Duo of Google, Apple FaceTime Whatsapp, and Facebook, etc.; would be accepted. Furthermore, voice communication systems through data, such as WhatsApp Voice Call, Line de Line Corporation, etc.; and, traditional voice communication systems such as landlines or mobile telephones are also valid.
Each company has the autonomy to determine which is the most suitable technological means for its needs, considering the cost, security, and privacy of its information, better connectivity, etc. Therefore, the governing criteria here is the freedom that each company has to set the system it deems appropriate to carry out its Board of Directors Meetings.
In any case, the Chairman and Secretary of the Board must certify each meeting that the remote assistance mechanism was enabled, identifying the Board Members who participated in this way.
Signing the Board Meeting Minutes.
The current Corporations Act establishes that the minutes must be signed by the Chairman, Secretary, and Board Members who have participated, either physically or through technological means.
Complementing the Corporations Act, through its resolution project, the CMF provides instructions concerning remote attendance at the Board Meetings for privately held corporations, special and publicly held corporations, stating that deliberations and agreements must be recorded within minutes, signed by all the Board Members who attended the meeting, through mechanisms that provide certainty about the authenticity of the signatures of these directors.
Therefore, each minute must be issued as a single document signed by all the Board Members, either by hand or by electronic signature but not both. Either they need to be all by hand or all by electronic means.
As consequence, it is possible that the signatures can be executed by electronic means. For these purposes, we refer to the concept of electronic signature established in the Law on Electronic Documents and Electronic Signature, which understood it as “any sound, symbol or electronic process, which allows the recipient of an electronic document to at least formally identify its author “. (Art. 2 of Law No. 19,799.)
Consequently, as indicated in article 3 of the aforementioned law, a minute signed by electronic signature will be valid in the same way and will produce the same effects as those executed in writing and on paper. In this way, the Board Members would be authorized to remotely sign the document, which will be considered valid.
As an example, the electronic signature could be stamped in a single file in PDF format, which would circulate through the mail of the Board Members, the Chairman, and the Secretary who had attended the meeting.
- Considering the above, it is important to point out that in practice, the bylaws of each company need to expressly state that the minutes can be signed by electronic signature in order for companies to use this means.
- Although the CMF’s project allows electronic signature, it establishes that the minutes must be signed in a single document, either physically or electronically. In this way, the minutes could not be signed by some members physically, and others electronically, and there must be uniformity in the means of signing said minutes.
Chilean Corporations Act encourages the remote participation in Board Meetings by technologic means, and does not matter if those members live abroad. For such purposes, there are no limitations regarding the technological means to be used, as long as it allows the interaction of the Board Members in real-time, simultaneously and permanently.
Additionally, the electronic signature of board meeting minutes is allowed, for which we suggest that this option must be recorded within the company’s bylaws.
Consequently, under Chilean corporate law, the physical distance of a Board Member is not a determining factor that obstructs or hinders the correct direction and performance of the company.
Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Mexico, Peru, Ecuador, Brazil, and Argentina. Over the last 19 years, our team of English speaking Lawyers and Attorneys have been supporting foreign companies with their growth in Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.
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