Peruvian shareholder meetings during the Covid-19 period and the legal voids in Peruvian legislation

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Paolo Arbulú Zumaeta

CPB Abogados, Lima

parbulu@cpb-abogados.com.pe

Given the current global situation due to the rapid spread of coronavirus (Covid-19) and its effects on the growth prospects of the global economy – in particular, the Peruvian economy – the Peruvian Government has issued several laws. One of these laws is related to mandatory social isolation, which in mid-March 2020 initially ordered 15 days of quarantine in order to combat the virus. However, this isolation has been extended until at least 30 June.

This situation is undoubtedly a challenge for companies which were not prepared for the extended period of social isolation and many companies are suffering financial distress. Considering the impact on Peruvian companies, the government has issued regulations on corporate, labour, tax, banking and financial matters so companies can better cope with the current situation.

One of the main challenges is around how shareholders could meet in order to adopt the necessary agreements for company, either because a meeting was scheduled during the quarantine period or because it was necessary to hold a meeting due to the effects of quarantine.

First, companies must evaluate how to distribute the notice of the meeting. According to Peruvian corporate law (PCL), the notice can be distributed in one of the following ways:

• Publication in the national newspaper El Peruano: this will depend on the bylaws of the company or the type of the company. At the beginning of the quarantine, El Peruano didn’t accept – either physically or virtually – requests to post the notice of the meeting. However, in mid-April, the newspaper began to accept virtual requests to post notices of shareholder meetings. 

• Through a notary: until recently, the notice could not be distributed by notaries as the notary activity was suspended until 25 May. There is no problem calling the shareholders’ meeting through this way now, however;

• Notice with charge to reception: this will also depend on the bylaws of the company or the type of the company. Since the beginning of the quarantine, there has not been an issue regarding this method of calling a shareholder’s meeting, considering that it was not necessary to post in the national newspaper, nor the notary service.

Second, the companies must make decisions around the meeting itself. According to the PCL, the meeting could be ‘face-to-face’ or ‘non-face-to-face’:

• Face-to-face: at the beginning of the social isolation period, meetings had to were be postponed if they were summoned for any date in the quarantine period. At present, certain economic activities can operate, so some companies may be able to hold a face-to-face meeting, depending on its activities.

• Non-face-to-face: the type of company will determine if it is possible to hold a virtual meeting. According to the PCL, if the company is a Sociedad Anónima Cerrada (SAC) and its bylaws do not say anything about meetings, the PCL is applied in a supplementary manner. This indicates it is possible to hold this type of session. According to the PCL, these virtual meetings are reflected in minutes which must be signed by the chair and the secretary of the meeting and must be inserted in the shareholders’ book.

What about companies that have a board of directors? The bylaws of each company can provide for non-face-to-face sessions through written, electronic or other means that allow communication and guarantee the authenticity of the agreement. According to the PCL, resolutions can be taken out of a board meeting and adopted unanimously by its members with the same validity as if they had been adopted in a face-to-face session as long as they are confirmed in writing.

These resolutions should be signed by the general manager of the company who will certify that the resolutions have been adopted out of the board meeting and that the written confirmations of the favourable vote of all the directors are in its possession.

What about the companies that are not allowed to have non-face-to-face meetings and are not allowed to perform commercial activities?

The Peruvian Government is aware of the need for companies to hold shareholder meetings in order to adopt several agreements. Through Supreme Decree No 056-2020, exceptionally, entities under the supervision of the Peruvian Superintendency of Capital Markets are authorised to call and hold non-face-to-face general or special shareholder meetings through the use of technological, telematic and communications means. This is allowed even when the respective bylaws of said entities only recognise the possibility of calling and holding face-to-face meetings of shareholders.

In this case, these virtual meetings are also reflected in minutes and the only person required to sign these minutes is the secretary of the meeting. However, it is possible that the chairman or some of the shareholders might sign these minutes too.

This provision is in force from 4 June 2020 until 90 business days after the end of the validity of the State of National Emergency.

Even though the Peruvian Government has issued the Supreme Decree, the government has not yet come up with the perfect formula. There is still a critical legal void regarding the still-suspended companies that are not under the supervision of the Peruvian Superintendency of Capital Markets. These companies are still unable to hold non-face-to-face shareholders’ meeting. The government must tackle this situation, so that all Peruvian companies can hold their shareholders’ meeting and adopt the necessary agreements for the company during the Covid-19 period.

Conclusion

There are now a number of different ways to hold shareholder meetings, and because of the new reality that we are living around the world, Peruvian companies will need to embrace these new methods. The government must help companies to implement these new ways, through laws that can allow all companies to incorporate technological means to hold non-face-to-face meetings. 

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