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)
at fault and who have duly recorded their dissent in respect of a given decision will not incur liability. 3.10 Payments to Directors/Officers The remuneration, fees or benefits granted to direc - tors or officers are determined in accordance with the provisions set forth in the company’s by-laws or, as applicable, by resolution of the shareholders’ meeting. Typically, the general shareholders’ meeting is respon - sible for approving the compensation schemes appli - cable to members of the board of directors, while the board itself, in accordance with the company’s inter - nal policies, determines or approves the remuneration of senior management. In the case of publicly traded companies (S.A.B.), compensation schemes are subject to a higher level of oversight, with the involvement of the company’s auxiliary committees, which must act in line with appli - cable corporate governance policies, guidelines and practices. With respect to S.A.P.I, although there is greater flex - ibility, these matters are generally regulated in the by- laws or in shareholders’ agreements. As regards restrictions, compensation must be aligned with the functions performed, be reasonable in amount and not give rise to conflicts of interest. Any compensation that may directly benefit a member of the board must adhere to principles of transparency and, where applicable, require the relevant director to abstain from participating in the corresponding approval, in accordance with the duties set out in 3.7 Responsibility/Accountability of Directors . Failure to comply with the applicable requirements for the approval of compensation may result in the nul - lity or challenge of resolutions adopted by the share - holders’ meeting. In the case of an S.A.B., such non- compliance may additionally give rise to significant administrative sanctions. As a rule, Mexican law does not require the disclosure of compensation schemes for directors or officers, except in the case of an S.A.B., which is required to disclose certain relevant information regarding such
schemes to the National Banking and Securities Com - mission through periodic reports and the applicable annual report.
4. Shareholders 4.1 Companies and Shareholders
The relationship between a company and its share - holders is primarily governed by the company’s by- laws and the General Commercial Corporations Act. In certain cases, particularly in the context of corporate governance practices, such relationship may also be regulated through a shareholders’ agreement. Through the shareholders’ meeting, the owners of the company, namely, the shareholders, exercise their rights and fulfil their obligations, which may vary depending on the class of shares or the provisions set forth in the by-laws. This is particularly relevant in the case of S.A.P.I. where greater flexibility exists to establish differentiated rights and restrictions. Mexican law does not establish specific rules gov - erning the manner in which this relationship must be conducted; however, in practice, principles such as equitable treatment among shareholders, access to information and respect for minority rights are gener - ally observed. With respect to the shareholders’ register, while com - panies are required to be registered with the Public Registry of Property and Commerce ( Registro Público de la Propiedad y del Comercio ), such registry cannot be regarded as a comprehensive or fully reliable public record of share ownership, as the General Commer - cial Corporations Act does not require all transfers of shares to be recorded there. Nevertheless, companies are required to maintain a share registry book, which records the ownership of shares and any transfers of shares; this book is maintained internally by the com - pany. In the case of publicly traded companies (S.A.B.), share ownership may be administered through spe - cialised institutions, thereby allowing for an adequate level of traceability; however, from a legal standpoint, this does not constitute a public registry as such.
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