MEXICO Law and Practice Contributed by: Allan Kaye Trueba, Mariana Santillán Trejo and Rebeca Sanchez, Aziz & Kaye Abogados, S.C.
• misuse relevant information that is not public knowledge; and • take advantage of or exploit, for their own benefit or in favour of third parties, without the corresponding waiver of the board of directors, business opportunities that relate to the company or legal entities that are controlled by the company, or in which the company has significant influence. 4.7 Responsibility/Accountability of Directors Directors owe their duties to the company, and, in the case of publicly listed companies, the legal entity controlled by the company or in which the company has significant influence. That is why any liability action, under the General Law of Business Companies or the Securities Market Law, is considered to be exclusively in favour of such entities, regardless of the person or group that initiates it. In publicly listed companies, members of the board of directors are not individually or jointly liable for damages or losses incurred by the cor - poration (or entities controlled by the company, or in which the company has significant influ - ence), provided they act in good faith and meet various conditions, which include the following: • they comply with the requirements estab - lished by law or the company’s by-laws; • they base their decisions or votes on infor - mation provided by high-ranking officers, the external auditor, or independent experts, whose capacity and credibility do not raise any reasonable doubt; • they base their decisions on the most appro - priate alternatives available at the time, to the best of their knowledge and belief, or where adverse consequences could not be foreseen considering the information available; and
• they adhere to the resolutions of the share- holders’ meeting, provided such resolutions do not violate the law. 4.8 Consequences and Enforcement of Breach of Directors’ Duties Under the General Law of Business Companies or the Securities Market Law, as applicable, the liability of directors may only be demanded by a resolution of the general shareholders’ meet - ing. Directors who have been removed due to alleged liability can only be reinstated if the judi - cial authority deems the action against them to be unfounded. Upon the resolution by the gen - eral shareholders’ meeting demanding their lia - bility, directors will cease to perform their duties. See 5.4 Shareholder Claims for information on requirements to initiate a liability action for pri - vate and publicly listed companies. 4.9 Other Bases for Claims/Enforcement Against Directors/Officers The liability of board members of publicly trad - ed companies for damages caused due to their lack of diligence shall be joint and several among those responsible for the decision or for prevent - ing the board from legally convening. This liability may be limited, as specified in the by-laws or by resolution of the general share - holders’ meeting, provided the actions in ques - tion are not fraudulent, in bad faith, or unlawful. Stock corporations may provide indemnifica - tions and insurance coverage for board mem - bers, except in cases of fraudulent, bad faith, or unlawful acts. Corporations and SAPIs are also permitted to expressly set forth in their by-laws limitations to the liability of the members of the board of directors or other high-ranking officers, provided
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