MEXICO Law and Practice Contributed by: Allan Kaye Trueba, Mariana Santillán Trejo and Rebeca Sanchez, Aziz & Kaye Abogados, S.C.
Members of the board of directors are appointed and removed by the general shareholders’ meet - ing. In publicly listed companies, the board of directors must approve the election, appoint - ment, and removal of the chief executive officer and their compensation. Approval by the board is also required for the guidelines for appointing and compensating other high-ranking officers. 4.5 Rules/Requirements Concerning Independence of Directors Independence There is no mandatory independence require - ment for the members of the board of private companies. In publicly listed companies, at least 25% of the members of the board must be inde - pendent. The independent directors and, if applicable, their respective alternates, should be chosen based on their experience, capacity, and pro - fessional reputation. They must fulfil their duties without conflicts of interest and without being influenced by personal, financial, or economic factors. The independence of directors will be evaluated by the general shareholders’ meeting during their appointment or ratification. The following individuals do not qualify as inde - pendent. • High-ranking officers or employees of the company (or any entity of the company’s cor - porate group), as well as their statutory audi - tors, who have held these positions within the past 12 months. • Individuals with significant influence or control over the company (or any entity within the company’s corporate group). • Shareholders who are part of the controlling group of the company.
• Customers, service providers, suppliers, debtors, creditors, partners, directors, or employees of entities that have significant business relationships with the company. A business relationship is considered significant if the company’s sales to or purchases from the entity account for more than 10% of the entity’s total sales or purchases during the prior 12 months or if a loan amount is greater than 15% of the assets of the company or its counter-party. • Individuals related by blood, marriage, or civil union up to the fourth degree, as well as spouses or partners of the individuals referred to in the preceding paragraphs. Conflicts of Interest If a member of the board of directors has a con - flict of interest with respect to a particular trans - action, they are required to disclose this to the other directors and abstain from voting on the matter. Any director found to violate this provi - sion will be held liable for any damage or losses incurred by the company. The Code suggests that, upon acceptance of the appointment as board member, each individual submits a statement to the Company disclosing potential conflicts of interest. Additionally, it is suggested that the board member with the con - flict of interest be excused from board meetings while the matters in question are discussed. The same principle applies for publicly listed companies. According to the Securities Market Law, board members (and the secretary) are prohibited from participating in the discussion of such matters, and their absence shall not affect the required quorum for the board to be considered legally convened. Breaching this rule and failure to disclose the conflict of interest is
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