Proven Best Practices for Running an AGM in Paraguay

Annual General Meetings (AGMs) are essential for maintaining transparency, compliance, and shareholder engagement in corporate governance. In Paraguay, the legal framework for AGMs is set out in the Civil Code, which mandates specific procedures and timelines. This guide provides a comprehensive overview to streamline the AGM process, enhancing efficiency and compliance.

Legal Framework

In Paraguay, companies must hold their Annual General Meeting within four months after the fiscal year ends, typically by the end of April for those with a December fiscal year-end. There are no provisions for postponing the AGM, making it crucial to adhere to this timeline to avoid penalties related to late filing of financial statements.

Calling the AGM

The Board of Directors (BoD) is authorized to call the Annual General Meeting, ensuring that all procedural requirements are met and the specific agenda is set. If the BoD denies a request to call the meeting, associates may seek authorization from a judge, who will then designate a person to preside over the meeting.

Notice Requirements

Annual General Meeting notices must be published in a widespread newspaper for five consecutive days. The meeting must be held no earlier than 10 days and no later than 30 days after the last day of publication. This ensures shareholders have adequate time to prepare and review the agenda.

Meeting Formats and Locations

Stock Corporations (S.A.)

• In-Person Meetings: AGMs must be held in person at the company’s registered address, promoting direct interaction and decision-making.

Limited Liability Companies (S.R.L.)

• Flexible Meeting Formats: S.R.L.s have more flexibility, with meeting procedures defined in their by-laws. If unspecified, they follow the same rules as S.A.s.

Quorum and Voting at AGM

For Annual General Meetings to be valid, at least one-third of the subscribed capital must be represented. Specific matters may require a higher quorum, up to 60% of voting shares. Voting rights are proportional to the number of shares held, and all shareholders, regardless of their share percentage, can challenge decisions made at the AGM.

Proxy Voting

Shareholders can appoint proxies to represent them at the Annual General Meeting. Directors, trustees, managers, or employees of the corporation cannot act as proxies. The proxy appointment must be in writing, specifying the proxy’s name, authority, and duration, and submitted before the AGM.

Agenda and Proposals for AGM

The BoD sets the initial agenda, including items such as financial statements, director appointments, and statutory requirements. Shareholders can propose additional items by submitting a written request to the BoD, which must review and include these items if they align with the company’s statutes.

Financial Statements and Reporting

Companies must prepare and submit financial statements, including balance sheets, income statements, and cash flow statements, following GAAP or IFRS standards. These must be approved by shareholders at the AGM and filed with the appropriate corporate surveillance entity.

Role of Trustees (Auditors) in AGM

Trustees oversee the company’s management, ensuring compliance with laws and regulations. They must present a comprehensive report on the company’s financial situation to the shareholders at the Annual General Meeting.

Compliance and Penalties

Non-compliance with AGM requirements can lead to significant penalties, including fines and legal actions. Ensuring timely and accurate filing of financial statements and adherence to all procedural requirements is crucial for maintaining corporate transparency and avoiding legal repercussions.

Simplifying AGMs

Leveraging solutions can streamline the AGM process, from automating notifications and document management to facilitating virtual meetings. These tools ensure compliance, enhance efficiency, and improve shareholder engagement.

By following these guidelines, companies in Paraguay can conduct AGMs effectively, ensuring compliance and fostering strong corporate governance. Embrace these strategies to navigate your AGM processes smoothly and efficiently.

For further insights and detailed guidance, explore Klea’s extensive resources on AGM management and solutions. Additionally, to further your knowledge and compliance, check out our blog post on how to Make Your Greek AGM Seamless and Compliant for tips and best practices tailored to AGMs in Greece.