Corporate Governance

Structuring boards of directors

You want to set up or reorganize your company's board of directors and define how many members it will have, how functions are distributed, and what rules govern its meetings and decisions.

In one line

This page covers the design of the management body of stock corporations (board of directors) and its interaction with management in limited liability companies (SRL). It does not cover the specific appointment of officers before the registry or liability disputes, which are addressed in other sections.

First steps

Review the bylaws to define the number of directors and the length of terms.
Check whether the company falls under article 299 of the LGS and its requirement of a plural board.
Distinguish oversight functions from day-to-day executive management.
Provide for alternates and a vacancy regime.
Adopt internal rules for the body's operation.
Define the system for minutes and remote meetings.

What defines the structure of a board

The board of directors is the management body of a corporation (SA). The General Companies Law 19,550 (LGS) allows for a single director or a plural board, as set out in the bylaws, and requires a minimum of three directors in companies under article 299 subject to permanent state oversight.

Structuring a board involves deciding the number of members, the length of terms, the alternate-director regime, how deliberations and voting take place, and any delegation of executive functions. These decisions are set out in the bylaws and in the board's internal rules.

Composition, functions and committees

A clear structure distinguishes the oversight function, which belongs to the collegiate body, from day-to-day executive management, which may fall to directors with special functions or appointed managers. Delimiting these responsibilities helps assess performance and assign accountability.

In larger organizations it is advisable to set up specialized committees (audit, risk, compensation) that prepare and organize the board's decisions. The design must respect the quorums, majorities and non-delegable powers set out in the LGS and the bylaws.

Internal rules and meeting dynamics

The LGS requires the board to meet with the frequency set by the bylaws and, at a minimum, once every three months. Internal rules governing notices, agendas, minutes and remote participation give decisions greater security and make them easier to prove.

Properly documenting deliberations and votes is key to demonstrating the body's diligence and to protecting its members against potential challenges.

Common mistakes

Copying bylaw clauses without tailoring them to the company's size and activity.
Failing to provide for alternates, which can paralyze the body in the event of a vacancy.
Confusing the collegiate management function with day-to-day executive management.
Omitting proper recording of minutes and decisions.
Ignoring the quorums and special majorities set out in the bylaws.

Frequently asked questions

Can the board consist of a single director?

In corporations, the LGS allows for a single-director board, unless the company falls under article 299, in which case the board must be plural with a minimum of three members.

How often must the board meet?

The LGS requires it to meet with the frequency set by the bylaws and, at a minimum, once every three months.

Can day-to-day management be delegated?

Yes. The board can assign executive functions to some of its members or appoint managers, always respecting the body's non-delegable powers.

Can directors participate remotely?

The bylaws may allow for remote meetings using means that ensure simultaneity and the recording of what was deliberated.

This page is informational and does not replace professional advice on your specific case. It does not imply any promise of results.

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