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)
In the case of limited liability companies (S. de R.L.), there is no board of directors as such. Management is entrusted to one or more managers, who may act individually or collectively, in which case they are commonly referred to as a management board. The structure, powers and operating rules of such a body is set out in the by-laws, allowing for a greater degree of flexibility in its organisation. 3.2 Board Members Mexican law does not establish a specific allocation of roles among the members of the board of direc - tors; in practice, it is customary to provide for the appointment of an individual to act as chairperson of the board. The role of each member of the board of directors may vary depending on the provisions set forth in the company’s by-laws and, where applicable, on internal policies or corporate governance practices. Board members typically assume the following roles. • Chairperson: Acts as the representative of the board in dealings with third parties and is respon - sible for chairing and co-ordinating its meetings. The chairperson generally has a casting vote in the event of a tie, where so provided in the by-laws. • Secretary: Responsible for corporate governance and the corporate records of the board. Duties typ - ically include preparing meeting notices, drafting and safekeeping minutes, and maintaining corpo - rate books. The secretary may be a member of the board or, alternatively, the company may appoint an external professional to perform this role. • Directors (board members): The remaining mem - bers of the board actively participate in decision- making, contributing experience and judgement to the company’s operations and strategy. These members generally include – (a) members of senior management; (b) representatives of the shareholders; and (c) external professionals. Additionally, the board may be supported by special - ised committees for the handling of specific matters. Such committees are typically composed of members
of the board and may, where appropriate, include independent directors. Notwithstanding the foregoing, the different roles within the board do not entail a substantive distinction in terms of the legal duties and liabilities of its mem - bers. All directors are subject to the same duties of care and loyalty and, accordingly, may incur liability to the company, its shareholders or third parties for dam - ages caused in the performance of their functions. In certain cases, such liability may be joint and several, particularly where it arises from decisions adopted collectively or from failures in oversight. In addition, board members may be subject to tax- related liabilities pursuant to the Mexican Federal Tax Code under specific circumstances set forth in appli - cable law, as well as to other regulatory obligations arising from their position. In the case of S.A.B. and S.A.P.I., the composition and functions of the board are subject to additional provi - sions set forth in the L.M.V. In particular, for publicly traded companies, such provisions are mandatory and, among other features, require the participation of independent directors and the establishment of specialised committees as set forth in 1.1 Corporate Forms and Governance Requirements . In the case of S.A.P.I.s, such provisions are adopted with greater flexibility through their by-laws, allowing them to tailor their corporate governance framework to their specific needs. 3.3 Board Composition As noted in 3.1 Board Structure , Mexican law does not establish strict guidelines for the composition of the board of directors; accordingly, such composition is determined by the provisions set forth in each com - pany’s by-laws. In this regard, and considering that the board, as pre - viously mentioned, is a collegiate body, it is generally recommended in practice that it be composed of an odd number of members in order to facilitate decision- making and avoid deadlock. Similarly, taking into account the various roles that board members may assume, as described in 3.2
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