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)
Board Members , boards are commonly structured to include individuals with diverse experience con - tributing to key areas of the company. On this basis, the participation of members of senior management, shareholder representatives and external profession - als provides a balance between internal knowledge and an objective external perspective. From a corporate governance standpoint, the appoint - ment of independent directors is recommended, par - ticularly in companies with multiple shareholders or more complex operations, where their involvement is instrumental to the proper functioning of the board. Additionally, as mentioned in 3.2 Board Members , the board of directors may be supported by specialised committees acting as auxiliary bodies, typically com - posed of individuals with relevant expertise depending on the matters assigned to each committee. In the case of publicly traded companies (S.A.B. and S.A.P.I.), the composition of the board is subject to the provisions set forth in the Securities Market Law, in particular: Publicly Traded Companies (S.A.B.) The board of directors must be composed of no more than 21 directors, of which at least 25% must be inde - pendent directors, appointed based on their experi - ence, capabilities and professional reputation. Direc - tors may appoint their respective alternatives, who must meet the same requirements. A secretary must also be appointed, who may not be a member of the board, and whose duties and responsibilities are set forth in the Securities Market Law. The board of direc - tors must be supported by at least two specialised committees, acting as auxiliary bodies, in the areas of corporate practices and audit. Investment Promotion Corporations (S.A.P.I.) These entities may adopt the provisions applicable to S.A.B.s under the Securities Market Law with a degree of flexibility, allowing them to structure their board in a manner that best suits their specific needs. Additionally, the following should be considered when determining the composition of the board:
• Clear policies and criteria for the appointment, ten - ure and, where applicable, removal or replacement of directors, should be established. • A qualified majority should be provided for in respect of key decisions, in order to prevent dis - ruption to the ordinary course of business. • The number of board members should allow for efficient and effective decision-making. 3.4 Appointment and Removal of Directors/ Officers Members of the board of directors or officers of the company are usually appointed by the general share - holders’ meeting, in accordance with the provisions set forth in the company’s by-laws, the General Com - mercial Corporations Act and, where applicable, the Securities Market Law. Appointments may be made from among the share - holders or from individuals external to the company, and such members may be appointed or removed at any time in accordance with the by-laws or by a reso - lution of the general shareholders’ meeting. Mexican law establishes, as a key restriction for serv - ing as a director, that individuals who are legally dis - qualified from engaging in commercial activities may not be appointed. This includes undischarged bank - rupt individuals, and persons convicted of offences against property. Additionally, the by-laws may provide for further eligi - bility requirements, as previously noted in 3.2 Board Members and 3.3 Board Composition . In the case of a publicly traded company (S.A.B.), in addition to the foregoing, the Securities Market Law provides that under no circumstances may an individ - ual who has served as an external auditor of the com - pany, or of any legal entities within the same corporate group, be appointed as a director of a company within the group within the 12-month period following the audit. 3.5 Independence of Directors As a matter of law, there is no general statutory frame - work establishing rules or requirements regarding the independence of directors, with the exception of
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