Prohibition on a director competing with the company (Art. 273 LGS)
Article 273 of the General Companies Law prohibits a director from competing with the company without the express authorization of the shareholders' meeting, under the liability set out in Article 59.
What article 273
Article 273 sets out the director's prohibition on competition.
The director may not participate, on his own account or on behalf of third parties, in activities that compete with the company, except with the express authorization of the shareholders' meeting, under penalty of incurring the liability set out in Article 59.
Source: Law 19,550, Art. 273 — InfoLEG (updated official text)
Commentary
This is a specific application of the duty of loyalty (Art. 59): the director may not use his position to compete with the company he manages. Only the shareholders' meeting may authorize it; otherwise, he is liable for the damages.
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