What the statutory auditor does: powers and duties (art. 294 LGS)
Article 294 of the General Companies Law lists the powers and duties of the statutory auditor: overseeing management by examining the books at least every three months, attending board and shareholders' meetings with a voice, checking the directors' guarantee, reporting to the shareholders' meeting and calling it where appropriate, among others.
What article 294
Article 294 sets out the powers and duties of the statutory auditor, the corporation's private oversight body.
The powers and duties of the statutory auditor, without prejudice to the others that this law determines and those conferred on him by the bylaws, are:
1) To oversee the company's management, for which purpose he shall examine the books and documentation whenever he deems it advisable and, at a minimum, once every three (3) months;
2) To verify, in the same manner and frequency, the cash holdings and securities, as well as the obligations and their fulfilment; he may likewise request the preparation of trial balances;
3) To attend, with a voice but without a vote, the meetings of the board of directors, the executive committee and the shareholders' meeting, to all of which he must be summoned;
4) To check the establishment and subsistence of the directors' guarantee and to seek the measures needed to correct any irregularity;
5) To submit to the ordinary shareholders' meeting a written and reasoned report on the company's economic and financial situation, giving an opinion on the annual report, inventory, balance sheet and income statement;
6) To supply, to shareholders representing no less than two percent (2%) of the capital, at any time they so request, information on matters within his competence;
7) To call an extraordinary shareholders' meeting when he deems it necessary, and an ordinary meeting or special meetings when the board of directors fails to do so.
Source: Law 19,550, art. 294 — InfoLEG (updated official text)
Commentary
The statutory auditor is the corporation's legality-control body: he neither manages nor decides, he oversees. His duties combine accounting control (periodic examination of the books, opinion on the balance sheet) with control of the legality of management (attendance at meetings, checking the directors' guarantee).
Two powers are especially useful for minorities: the duty to inform shareholders representing at least 2% of the capital, and the power to call shareholders' meetings when the board fails to do so. The statutory auditor is liable for breaching these duties (arts. 296-297).
Distinctions often confused
Practical impact
The statutory auditor is a channel of control and information for minorities (2% threshold). A statutory auditor who breaches his duties is liable; his report on the balance sheet should be reasoned and timely.
Frequently asked questions
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