Corporate and Compliance legal considerations in Mexico: ESG Regulatory Compliance

By: Luis Gerardo Ramírez Villela

Environmental, social and corporate governance (ESG) standards help shareholders and investors not only manage potential risks within the company in which they participate but also identify opportunities for improvement in relation to the environmental, social and corporate governance principles that apply within a company for the generation of clients and compliance with applicable legal provisions.

In this sense, the specific area in charge of the ESG strategy must ensure that there are specific internal regulations for each area of compliance with the applicable internal and external regulations, and for such purposes a program must be created to ensure compliance with the following:

  1. Disclose the applicable external and internal regulations;
  2. Provide training to the company's directors, officers and employees;
  3. Implement ESG regulations in the company's policies;
  4. Create a global sustainability framework to which all business operations must adhere;
  5. Create and implement ethical policies in the areas of environment, society and corporate governance;
  6. Submit monthly, quarterly, half-yearly or annual reports in order to verify compliance for each work area; and
  7. Conduct an annual internal audit in order to identify any potential risks and be able to correct those risks identified within a specific period of time.

The importance of maintaining strict monitoring of regulatory compliance and ESG principles is vital to (i) improve the credibility of society and be seen as a “socially responsible company”, (ii) avoid fines or sanctions of any nature, (iii) reflect a positive impact on the environment, (v) show an impact on its participation with society, and (v) improve its corporate governance.

It is important to mention that of the points mentioned in the program, greater attention should be given to training since in this way sanctions can be avoided.

Training will be of great importance and may be provided through training courses by experts in each subject and through interviews with the area in charge of regulatory compliance.

Each of the points must be reviewed with their advisors and have officials in charge of supervision by work area in order to achieve adequate management and ensure that the corresponding ESG program is up to date for the benefit of corporation.

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Müggenburg, Gorches and Peñalosa's restructuring practice includes representation of corporate debtors, hedge funds, in various industries, etc., in restructuring proceedings and bankruptcy equivalents (insolvency proceedings).

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We provide services in acquisitions, sales, mergers, spin-offs, reorganizations and co-investments, representing national and foreign clients operating in various industrial and commercial sectors.

Corporate /Transactional

At Müggenburg, Gorches y Peñalosa we provide legal services in all aspects of corporate law practice. Our group of professionals in this area has years of experience providing services to both national and international clients, with the most diverse needs and the highest standards of demand and sophistication in the service. Among our clientele are leading companies in their sectors worldwide, such as automotive, cosmetics, hotels and tourism, food industry, aeronautical industry, computer programs and systems, suppliers of the oil industry, technology, among others.

We advise our clients on the constitution of Mexican companies (commercial and civil) and associations, attending to the needs derived from the industry and/or commerce segment in which they focus their activities and their medium and long-term plans, also providing services for compliance with the regulatory requirements that may apply, including those derived from direct foreign investment, economic competition and obtaining the necessary licenses and permits for its operation. Our services also extend to the provision of corporate services within the ordinary course of business of our clients, including advice on the preparation, review and negotiation of all types of civil and commercial contracts, and the custody, updating and maintenance of corporate books. . We also provide services related to the opening and management of branches in Mexico of foreign companies.

We represent national and foreign corporate and/or investment groups in the acquisition of, and/or merger with, Mexican business entities, and on other occasions we also represent acquired Mexican entities. In both cases, we provide legal audit services to foresee possible contingencies of the operation, locate areas of opportunity and help determine the value of the company to be acquired. Likewise, in representing the acquirer, we prepare the legal documentation of the operation (specifically contracts for the sale of shares and/or association, with all its annexes and accessory contracts), and we carry out their negotiation with the counterparty. Likewise, in these cases we participate directly in the processing and obtaining of any authorizations, permits, licenses and concession titles required for the operation of our clients, and we advise on notices and notifications to government entities, including notifications of resolutions and opinions of the Federal Economic Competition Commission.

We provide advisory services for corporate restructuring and reorganization, also including international corporate groups with a presence in Mexico. In these cases we have worked in coordination with groups of financial and accounting advisors both from Mexico and abroad, and we have coordinated legal audits of subsidiaries of entities acquired in several Latin American countries (Argentina, Brazil, Chile, Colombia and Peru, among others, with local legal advisers in each case).

We advise on operations of association in participation, "joint-ventures", preparation and negotiation of agreements between shareholders, merger and spin-off of legal entities, establishment of trusts of any type, constitution of guarantees on any type of property, repurchase of shares by of companies listed on the Mexican Stock Exchange, as well as in the structure of purchase option plans and other types of specialized corporate operations.

We also provide services for the development of mechanisms that allow the efficient and effective anticipation and management of potential conflicts between shareholders; in this regard, we have represented groups of shareholders of Mexican companies in the implementation of corporate actions to defend their interests against the rest of the shareholders and the Company itself on internal corporate control issues, generally in coordination with litigation areas in matters commercial and civil.

Depending on each particular project or operation, we rely on other specialty areas of the Firm, in order to provide comprehensive services, under the highest standards of quality and efficiency.

Mergers & Acquisitions

We provide services in acquisitions, sales, mergers, spin-offs, reorganizations and co-investments, representing national and foreign clients operating in various industrial and commercial sectors.

Restructuring (Corporate and Financial)

Müggenburg, Gorches and Peñalosa's restructuring practice includes representation of corporate debtors, hedge funds, in various industries, etc., in restructuring proceedings and bankruptcy equivalents (insolvency proceedings).