Social and Corporate Distancing. Remote Meetings

The World Health Organization’s declaration of a pandemic and the Paraguayan government’s declaration of a public health emergency, due to the spread of COVID-19, have confronted us as a society with a series of restrictions ranging from border closures, the shutdown of a large portion of the commercial sector, and even restrictions on the movement of people.

In light of this new reality, so-called “information and communication technologies” (ICTs) have taken on unique significance worldwide as essential tools for the functioning of a large part of society. In this discussion, we focus on the—innovative and practical—possibility of directors and governing bodies holding remote meetings.

There are precedents, dating back to the 1980s, in which some boards of directors chose, when necessary, to hold conference calls among their members, recording the conversations for the record and transcribing the resolutions for subsequent validation and signature by the participants. Currently, legislation in several countries allows for remote meetings, with specific provisions in each case.

With regard to Paraguay, at the onset of the current public health emergency, the legal restriction on companies’ use of remote methods for holding meetings has led, in many cases, to the postponement of shareholders’ meetings and other proceedings typically conducted by their governing bodies.

However, by Decree No. 3605 dated May 19, 2020, the Executive Branch authorizes, on an exceptional basis, through December 31, 2020, the holding of remote meetings through the use of telecommunication means and/or digital and/or electronic platforms that allow members to attend and participate for the effective and unambiguous exercise of their rights and obligations, in real time and simultaneously with the other participants, regarding the items on the agenda.

This authorization applies to all corporate bodies—whether statutory or provided for in the articles of incorporation—of corporations and to those companies whose statutory and/or articles-of-incorporation provisions refer to the regulations governing corporations.

Although the government’s measure is not without controversy, it can serve as a test case to bring about a definitive change to our current legislation. This situation is already provided for in the recent Law No. 6480/20 (pending regulations), which establishes Simplified Joint-Stock Companies (EAS) and allows for the holding of remote meetings via simultaneous or successive communication and with the written consent of the EAS members.

This global health crisis has led us to recognize the obvious. Videoconferences and other telematic means, when properly regulated, allow members and directors to exercise all their rights and functions in the same way as they do during in-person meetings, therefore, the requirement to hold general meetings and board meetings at the registered office constitutes a restriction that is no longer justified. On the contrary, technology now offers tools that facilitate greater and more efficient participation by members in collective decision-making.