Stockholders and Board of Directors Meetings can now Happen Virtually in Costa Rica
All corporations and limited liability companies in Costa Rica are required to have legal books. Corporations or SAs are required to have three books as follows: 1. General Assembly to keep the minutes of shareholder meetings, including all decisions to amend the original articles of incorporation by changing the corporate structure, legal address, raising capital stock, granting powers of attorney and electing the board of directors, 2. Board of Directors Meetings, which is used to keep the minutes reflecting decisions taken by the board and 3. Shareholder Records, which is the book used to register all share ownership and transfers.
Limited liability companies or “Limitadas” also require General Assembly and Shareholder Records books. No Board of Director Meetings book is needed since that type of entity does not have a board. Previously, another three accounting books called DIARIO, MAYOR, INVENTARIO Y BALANCE were also required, but in 2012 the obligation to have those books was eliminated. Given that such books require the signature of the stockholders or directors, it has always generated problems by requiring the physical presence of everyone in the same place.
This changed during 2018 when the Registry of Corporations issued a communication number DPJ-010-2018 in which it was indicated that it was possible to hold Assemblies through electronic media. That statement indicates that current technology has made virtual presence possible, allowing to hold virtual assemblies as long as the media used allows participants to intervene, deliberate and decide in the same way as if they were gathered face to face. For this, there must be evidence of the holding of the assembly by means of recordings and filming that can be kept as evidence.
The requirements to be able to hold virtual meetings of stockholders or directors are the following:
1. Interactivity: There must be two-way and real-time communication.
2. Comprehensiveness: Communication must be comprehensive because it allows the sending of images, sound and data.
3. Concurrency: Everyone must attend simultaneously at the scheduled time
In this way, it is established that general assemblies can be held completely or partially virtually (it could be that some people are in the same place and only one or two connect via videoconference) as long as real-time communication is guaranteed, allowing all participants to interact without restrictions. Every decision must also be recorded so that it can be kept in digital files as evidence. t is also necessary to record everything that has been done in writing in the aforementioned general meeting minutes book, indicating that the meeting was digitally recorded.
When agreements or changes to clauses that require registration have been made at the meeting, a Public Notary must be requested to proceed to make the document official in its protocol book. For this, the Public Notary must state: a. That the assembly adhered to principles of comprehensiveness, interactivity and simultaneity, b. that there is a digital file of the celebration of the assembly, c. that a technological system was used that allowed videoconferencing in real time. It is also necessary that the assembly agrees to reform the articles of incorporation allowing virtual meetings to be held.
The truth is that although this tool has been available for almost two years, it has been very little used. But this could change as the current crisis caused by the COVID-19 virus has caused the cancellation of international flights, brought several restrictions on the use of vehicles and, most importantly, has made necessary to avoid meetings of people in closed places. Social distancing seems to be the new trend in the days to come.
About the Author: Allan Garro was incorporated as a lawyer and public notary in 1996. He specializes in Litigation, Corporate, and Real Estate Law. He has also acted as an external legal consultant to Congress. He has been the author of more than 100 published English Language articles and can be reached at allan@garrolaw.com