THE HOLDING OF BOARD MEETINGS AND SHAREHOLDERS’S MEETINGS BY VIRTUAL AND REMOTE MEANS
There is nothing better than personal interactions and direct, physical contact, of directors and shareholders for decision making. However, there are extraordinary circumstances that make it impossible to hold meetings or assemblies with face-to-face participation. This is not, nor can it be, an impediment to the holding of such meetings; decision making cannot be hindered, and the conduct of business cannot be paralyzed.
Fortunately, Panamanian mercantile legislation, which is avant-garde and cautious, contemplates the possibility of holding board meetings and shareholders’ meetings by technological or virtual means, and even adopting resolutions by means of consent, without the need for notice or to hold the meeting or assembly in person.
By the amendment made to Article 203 of the Commercial Code, by Decree-Law No. 5 of 2 July 1997, “Acts or contracts concluded by telephone, fax or electronic means of communication shall be deemed to be between present parties if the parties or their representatives or agents have been in direct communication. Likewise, meetings of the board of directors or the assembly of partners or shareholders, or of the liquidators of companies of any class in which the participants have been directly in communication by any of the means indicated in the previous paragraph, shall be understood to be between present parties. In this case, minutes must be drawn up expressing the meeting held, the resolutions adopted, and the way in which the participants were in communication. The resolutions of directors, partners, shareholders, administrators, or liquidators of companies of any kind will be valid, even if they sign the document in different places and on different dates”. The aforementioned rule is the legal basis that allows directors, administrators, partners or shareholders of any Panamanian legal entity, regardless of their class or nature, to hold meetings or assemblies remotely; from the place where they are located, without the need for physical appearance; all in the same place, as long as the participants have been in direct communication by any of the means used to do so. At one time, it was by telephone, in modern times, by audiovisual means, such as video conferences. The rule intends that the participants are “connected” and can interact, even at a distance.
The final sentence of the provision mentioned above also allows dispensing with the holding of meetings and assemblies, even by such technological means, to pass resolutions by written means, even if they are not in contact or communication. This modality is known as approval of resolutions by “means of consent” since the person is limited to expressing his or her acceptance or rejection through some written means.
It is to be noted that the rule only requires for the case of meetings or assemblies by technological means that minutes be drawn up of the meeting held, the resolutions adopted, and how the participants were in communication. The purpose of this is to document the incidents of the meeting. In our opinion, it is also necessary to record in this document the consent of the participants to hold the meeting or assembly in this way, as well as those who were absent, who may send their consent before or after the meeting, by any means that allow them to prove their agreement.
Since the legislation does not require the president or the secretary of the company to act as such, the assistants may well appoint an “ad hoc”; that is, a person appointed to act as such in replacement of the incumbent(s).
The minutes required by Article 203 may, in our opinion, be replaced by a secretarial certification, issued by the secretary of the company, or by the person acting as such at the meeting.
In the case of the approval of resolutions by consent, even though the rule does not require it, we consider it advisable that the particularities that motivated the use of this mechanism are also stated in a certification issued by the secretary of the company, to leave a written record of the respective agreements, concerning the consent of all the directors, administrators, partners or shareholders of the company, to dispense with the holding of the meeting or assembly, either with a physical presence or virtual participation and the prior notice; their agreement to take decisions in writing, by means of consent; how each one sent their communication and the vote they cast on the various resolutions submitted for their consideration.
In any of the cases, although the law does not apply estipulate it, it follows from the rule that the consent of all the directors, administrators, partners or shareholders of the company will be required to carry out the meeting or assembly by virtual means or to approve the resolutions by means of written consent, regardless of how each one vote on the decisions to be adopted, especially in the case of corporations, given that Law 32 of 1927, which regulates them, establishes as a rule that the meetings and assemblies of shareholders must have a physical presence for their consideration.
Such express consent is intended to safeguard the right of directors, managers, partners, or shareholders to participate in the meeting or assembly and have their say on the issues to be discussed. Finally, we would like to point out that the new modalities introduced by the norm in question were expressly applied only to companies incorporated after the approval of the amendment to Article 203, given that, according to Article 39 of Decree-Law 5, for companies incorporated before that date to benefit from its provisions, they had to amend their articles of incorporation to introduce them into the corporate governance rules.