In the process of registering the agreements from assembly minutes with the National Registry, we can observe the interaction of two types of legal subjects. On one hand, there are legal entities, which are subjects of Private Law, and on the other, the Legal Entities Registry of the National Registry, which is a subject of Public Law.
Legal entities, as subjects of Private Law, are governed by the Principle of Autonomy of Will, and can perform their actions as long as they are not expressly prohibited by law. They hold their assemblies and make their agreements as long as they do not violate any regulations. Since no regulations prohibit holding virtual assemblies, these can be held as long as they comply with pre-existing regulations for this purpose.
On the other hand, the Legal Entities Registry of the National Registry, being a subject of Public Law, is governed by the Principle of Legality, which means it can only act and perform those actions expressly established by law.
The Registry’s previous position, based on the Principle of Legality, was that it would not allow the registration of minutes from virtually held assemblies. This was based on Article 184 of the Commercial Code, which states the following:
“ARTICLE 184[1].- (…) The social deed or the statutes shall determine the form of convening the council, the place of the meeting, the manner in which the minutes shall be kept, and other details regarding the council’s functioning (…)”
For this reason, the Registry maintained the view that if a legal entity’s statutes did not expressly permit holding virtual assemblies, they would not be viable and could not be registered. Although the possibility of authorizing the registration of formal notarizations of minutes from such assemblies has been raised on various occasions, it has always been rejected.
This has been a topic addressed since 2007 through Opinion C-298-2007 [2], issued by the Advisory Prosecutor of the Attorney General’s Office, which has discussed issues such as telepresence, teleconference, video conference, and the principles of simultaneity and deliberation.
This opinion indicated that virtual sessions could be held as long as the following aspects were met:
- Draft minutes of the session indicating, among other things, that it was held virtually and what technological means were used.
- Use technological means that allow for sharing video, audio, recording, and any other medium that provides access to the interaction of all participants.
- Ensure correct and secure communication and interaction among all participants.
- Ensure effective identification, among other things.
Even with the arrival of the COVID-19 Coronavirus in Costa Rica, legal entities had to adapt starting in March.
On July 28, a large number of deputies of the Legislative Assembly of Costa Rica proposed Bill No. 22.111 [3], “LAW AUTHORIZING VIRTUAL SHAREHOLDER ASSEMBLIES DUE TO THE NATIONAL EMERGENCY FOR COVID-19,” which only contemplates this possibility based on the Declaration of National Emergency and in shareholder assemblies. The bill is still pending in the Legal Committee of the Legislative Assembly.
However, in August, the Legal Entities Registry of the National Registry took a great leap on this matter by issuing DIRECTIVE D.P.J.-001-2020, which was published in Supplement No. 207 to La Gaceta No. 193 of August 5, 2020. In it, the Registry modified its position and specifically indicated:
“1. Holding of assemblies and sessions by electronic means. As long as the statutes of a legal entity do not make it impossible to hold its assemblies using electronic means, their realization will be viable provided that the electronic medium used is capable of allowing the participation of all members of the entity, and that simultaneity, interactivity, and integrity of communication among all participants is guaranteed. The fulfillment of this situation must be recorded in the respective book. All aspects established in the statutes regarding the convening of assemblies and their holding must be respected, and such circumstances, as well as the technological means used, must be recorded in the respective book. The same shall apply to the holding of board of directors/administrative sessions.”
Therefore, we now have the possibility of proceeding with the registration of minutes from assemblies that have been held virtually, as long as the principles indicated above are met, according to OPINION C-298-2007 and in application of what is established in DIRECTIVE D.P.J.-001-2020.
Whether it was due to the health emergency or that the Legal Entities Registry was already contemplating the option of accepting the registration of minutes from virtual assemblies, it has been very positive that the Principle of Autonomy of Will has prevailed over a state restriction that did not actually protect any public interest. In this way, a solution could be provided that modernizes and streamlines the management and organization of legal entities in Costa Rica.