By: Luis Gerardo Ramírez Villela
Corporate governance is fundamental in all corporations on a worldwide basis for the correct business operations and involves balancing the interests of the stakeholders of each corporation.
In Mexico and besides the specific provisions of the articles of incorporation and corporate bylaws, the Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) contain the main corporate governance principles.
The shareholders or partners – as the case may be, depending on the type of corporation – of a corporation will appoint the members of the Board of Directors or Managers – as applicable – or Sole Director/Manager, as well as the auditors of the corporation as they consider appropriate to maintain the governance structure. where appropriate, depending on the type of company in question – of a company will appoint the members of the Board of Directors or Managers – according to the case – o Administrator/Sole Manager, as well as the auditors of the company, when they deem it appropriate to maintain the corporate governance structure.
Those appointed by the shareholders/partners will be invested with all the powers of management and will have full or limited powers of attorney – as determined by the shareholders/partners – to act on behalf of the corporation. as determined by shareholders/partners – to act on behalf of and on behalf of the company.
In this respect, the Sole Director/Manager or Board – as the case may be – will be the responsible of the management of the corporation and thus, of its corporate governance. The Sole Director/Manager or Board may delegate some faculties to key officers of the corporation, such as the Chief Executive Officer (Director General), Chief Financial Officer (Director de Administración) and/or Chief Legal Officer (Director Jurídico) but in no way may reduce its obligation in accordance with the corporate bylaws or applicable laws. according to the case – will be responsible for the administration of the company and, therefore, for its corporate governance. The Administrator/Sole Manager/Manager or Board may delegate some powers to key officials of the company, such as the General Director, the Director of Administration and/or the Legal Director, but in no way may he deviate from his obligations in accordance with the bylaws or applicable laws.
Besides all corporate matters to be considered by the Sole Director/Manager or Board, corporate governance must also cover code of conduct and ethics, compensation, and risk management, as well as other strategic areas depending on each corporation business activities, such as environmental awareness, foreign trade duties, etc.
The main principles for corporate governance may be described as follows:
Transparency – Shareholders/partners of a corporation must have all necessary information and documentation to manage any risks or potential risks that could arise in the course of business.
Responsibility – The Administrator/Sole Manager/Manager or Board must inform and support the successful business performance of the company and advise key officials on how to carry out their respective functions for the benefit of business operations.
Accountability – The Sole Director/Manager or Board must explain the purpose of a company's activities and the results of its conduct.
It should be noted that having a good corporate governance will result in a successful business operation with transparent rules and controls that will lead its employees to leadership.
