On October 20, 2023, a fundamental shift in corporate governance occurred with the publication of a Reform Decree. It modified several provisions of the General Law on Commercial Entities
The major change brought about by the decree is the authorisation for Shareholders’, Partners’ and Board of Directors’ meetings to be conducted remotely via electronic means. The provision is aimed at providing flexibility for such entities in light of the growing digital transformation in business operations across the world. These amendments could have profound effects on the daily practice of corporate law and the future direction of corporate governance.
The reform measures were passed in response to the evolving corporate landscape, where face-to-face meetings are becoming less common and are often considered inefficient in the fast-paced, globalized business arena. The ability to hold meetings remotely can facilitate business continuity and spontaneous decision-making, without the loss of time and resources spent on travel for physical meetings. It also expands the ability for larger, more international entities to better engage their partners and board of directors who might be spread across different geographical locations.
However, with this new development come challenges and uncertainties, particularly when it comes to legal formality issues, mechanisms for ensuring accountability, and protection of rights for smaller stakeholders. Corporations and their legal teams will need to navigate these issues and devise comprehensive, legally compliant policies for remote meetings.
This landmark legal reform is expected to significantly influence the corporate governance landscape, even post-pandemic, and will likely set a precedent for other jurisdictions around the world.
For a detailed understanding of the Reform Decree, visit the original report by White & Case LLP here.