MEXICO Law and Practice Contributed by: Fernando Hernández G., Elvia Ríos Saldaña, Ana Karen Inzunza Sánchez and Luis Andrés Estrada Intriago, Vázquez Aldana, Hernández Gómez & Associates (VAHG)
1. Corporate Governance Requirements 1.1 Corporate Forms and Governance Requirements The principal types of corporate organisations in Mex - ico are the following: • Variable Capital Stock Corporation ( Sociedad Anónima de Capital Variable – S.A. de C.V. or S.A.); • Mexican Corporation for the Promotion of Invest - ment with Variable Capital ( Sociedad Anónima Pro- motora de Inversión de Capital Variable – S.A.P.I. de C.V. or S.A.P.I.); and • Mexican Limited Liability Company with Variable Capital ( Sociedad de Responsabilidad Limitada de Capital Variable – S. de R.L. de C.V. or S. de R.L.). In Mexico, the following laws constitute the main legal framework governing corporate governance: • General Commercial Corporations Act ( Ley General de Sociedades Mercantiles – L.G.S.M.) – This is the principal regulation and the foundation for all Mexican companies, including S.A. de C.V. and S. de R.L. de C.V. • Securities Market Law ( Ley del Mercado de Valores – L.M.V.) – This is the strictest law regarding cor - porate governance in Mexico. The L.M.V. applies exclusively to publicly traded companies, including S.A.P.I., the Mexican Investment Promotion Cor - poration with Variable Capital ( Sociedad Anónima Promotora de Inversión Bursátil – S.A.P.I.B.) and the Mexican Publicly Traded Stock Corporation ( Sociedad Anónima Bursatil – S.A.B.). • Law of Credit Institutions ( Ley de Instituciones de Crédito ) – This law specifically regulates the financial and banking sector, requiring much more rigorous internal controls and risk management for financial entities. • General Provisions issued by the National Banking and Securities Commission ( Comisión Nacional Bancaria y de Valores – C.N.B.V.) – This specifies the reporting and transparency obligations for pub - lic companies which are considered as regulated entities.
As to the companies with shares that are publicly traded, the L.M.V. sets the following additional man - datory requirements regarding corporate governance, which may be regulated by the shareholders either in the by-laws of the company and/or in a shareholders’ agreement: • S.A.P.I.s must be managed by a board of directors, therefore it is not possible to elect a sole director. • To appoint the S.A.P.I.’s board of directors, each shareholder (or group of shareholders) holding at least 10% of the shares may appoint one director. • For an S.A.P.I.B., there must be at least one inde - pendent director. • For an S.A.B., the management is entitled to a board of directors and a general director. • The board of directors of an S.A.B. must be com - prised of at least 25% independent directors. • An S.A.B. requires the creation of auxiliary com - mittees to assist the management of the company, such as audit and corporate practices committees. • An S.A.B. requires duties of loyalty and diligence from its directors. 1.2 Corporate Governance Legislation and Regulation See 1.1 Corporate Forms and Governance Require- ments . 1.3 Companies With Publicly Traded Shares See 1.1 Corporate Forms and Governance Require- ments . 1.4 Stock Exchange Requirements Developments In December 2023, the Securities Market Law was amended, with one of the main objectives being to “democratise access” to financing offered by the stock market, especially to medium and small com - panies, through the procedure set for “ Emisoras Sim- plificadas ” (simplified issuers). These types of com - panies can operate by means of an S.A. instead of an S.A.P.I.B., meaning they do not have to comply with the corporate governance requirements set for the latter (therefore no requirements are set for publicly traded corporations).
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