The start of each fiscal year not only marks a new accounting period for commercial companies but also triggers a series of mandatory corporate obligations. Among these is the holding of the Ordinary General Shareholders’ Meeting, which must take place within four months of the end of the fiscal year, in accordance with Article 134 of the Commercial Code.
Timely compliance with this obligation is not a mere formality, but an essential element for the validity of corporate management, proper accountability, and the prevention of legal and administrative contingencies.
As stated in Article 134 of the Commercial Code, in addition to the items proposed on the agenda, the following must be addressed:
- Discuss, approve, or disapprove the profit and loss statement, the balance sheet, and the management report and, where applicable, the report of the supervisory body, if any, and take the measures it deems appropriate.
- Appoint and remove the administrators, the supervisory body, if any, and determine their respective emoluments.
- Review and decide on the profit distribution plan that the administrators must submit for its consideration.
- Review and decide on the matters specifically indicated in the articles of incorporation.
From a corporate governance perspective, the Ordinary General Meeting is the main forum for shareholder control and decision-making. Holding it in a timely manner ensures transparency in corporate management and keeps the company’s legal status up to date with third parties, authorities, and financial institutions.
Although the law does not provide for a specific penalty for failing to hold the Meeting, its absence may raise questions and practical difficulties. For example, in the information requests made by the Superintendency of Tax Administration (SAT) during audits, certification of the resolutions adopted at the General Shareholders’ Meeting is usually requested in order to verify the emoluments agreed upon when appointing the administrative body and/or the supervisory body.
Similarly, regarding acts performed by the administrative body that shareholders consider to be the cause of liability on the part of its members, it is necessary to verify whether the Ordinary General Meeting previously approved the management of said administrators.
For these reasons, it is advisable for companies to hold their General Shareholders’ Meetings within the legal deadline.