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)
publicly traded companies (S.A.B.). As noted in 3.3 Board Composition , at least 25% of the members of the board of directors of such entities must qualify as independent directors, appointed on the basis of their experience, capabilities and professional reputation. An independent director is generally understood to be an individual who does not maintain any direct or significant relationship with the company, thereby enabling the proper and impartial discharge of their duties and mitigating potential conflicts of interest. With respect to conflicts of interest, directors are under a duty to disclose to the company any circumstance that may affect their independence or impartiality, and must abstain from participating in deliberations and resolutions in which they have a personal or direct interest. 3.6 Legal Duties of Directors/Officers Members of the board of directors and the officers of the company must act in the best interests of the company and in compliance with its by-laws, as well as with applicable laws and regulations. In this regard, they are expected to observe, among others, the following duties: • Duty of care – they must act in good faith and in the best interests of the company, rather than in their own personal interest. • Duty of loyalty – they must remain loyal to the company, conducting themselves in a manner that prioritises the company’s interests over their own or those of third parties, thereby avoiding any potential conflicts of interest. • Confidentiality – they must maintain strict confiden - tiality with respect to the company’s information and any matters that come to their knowledge by virtue of their position as directors or officers. Directors have a duty to remain adequately informed regarding matters relevant to the proper discharge of their functions and the sound operation of the com - pany. Additionally, directors may incur liability to the com - pany, its shareholders or third parties for damages
arising from a breach of their duties. In certain cir - cumstances, such liability may be joint and several among members of the management body, particu - larly in connection with decisions adopted collectively. In this regard, liability may arise from, among other things: • adopting decisions in breach of applicable law or the by-laws; • failure to comply with duties of oversight or super - vision; • undisclosed conflicts of interest or the improper receipt of personal benefits; or • engaging in acts that cause harm to the company, its shareholders or third parties. From a regulatory perspective, directors are also sub - ject to various tax and administrative obligations, and liability may arise under the Federal Tax Code in spe - cific cases of non-compliance. They must also comply with applicable anti-corruption and compliance regu - lations, including the General Law of Administrative Responsibilities ( Ley General de Responsabilidades Administrativas ), which provides for sanctions in con - nection with misconduct such as bribery, misuse of information or conflicts of interest. In the case of publicly traded companies (S.A.B), the applicable regime is more stringent and includes enhanced duties of care and loyalty, as well as addi - tional obligations relating to disclosure, corporate governance and the operation of board committees. 3.7 Responsibility/Accountability of Directors Directors primarily owe their duties to the company, ensuring its proper operation in accordance with the duties described in 3.6 Legal Duties of Directors/ Officers . Indirectly, such duties extend to the share - holders, to the extent that their interests form part of the overall interests of the company. Directors are not required to prioritise or take into account the interests of other parties; however, in the course of the company’s operations, situations may arise in which it is appropriate to consider such interests in connection with specific objectives or
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