On May 18th, the Financial Market Commission (CMF, for its initials in Spanish) issued General Rule No. 566, introducing a series of amendments to General Rule No. 30 of 1989.

This amendment incorporates a new Section VI, which specifically regulates certain obligations applicable to the board of directors of publicly traded corporations, particularly regarding the appointment of external audit firms.

On one hand, requires that the deliberative process leading to the selection of the external audit firm be recorded in the board minutes. As well as -when submitting the matter to the shareholders’ meeting- the presentation of an express proposal to the shareholders, according to the following:

(i) Propose at least two external audit firms, providing the necessary information to support an informed decision, the reasons justifying each alternative, and a recommendation regarding the duration of the audit contract; or

(ii) When there is an existing contract in force, the board may propose its ratification to the shareholders’ meeting. Once the original term expires, the board must proceed in accordance with item (i) above.

This is without prejudice to the shareholders’ meeting’s authority to decide not to renew the contract, to terminate it early, or to agree on a shorter duration than that proposed by the board.

The board must record in its minutes the proposal to be submitted to the shareholders’ meeting, its grounds, the prioritization of alternatives, the deliberations held, and the resolutions passed. Where no discussion takes place, this must be expressly recorded in the board minutes.

The rule is effective as of its issuance date; therefore, its requirements must be immediately considered in upcoming annual shareholders’ meetings and in the preceding board meetings where the appointment of the external audit firm is discussed.

For questions or further information, please contact our corporate legal team.