Source: Müggenburg, Gorches y Peñalosa
In accordance with the provisions of the Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles), the directors are responsible for the representation of a company, being able, therefore, to carry out all the operations inherent to its corporate purpose, except as expressly established by the law itself or the corporate bylaws.
The position of director can fall on either shareholders or partners or people outside of the company. Consequently, the fact that a director is, at the same time, a shareholder/partner of the company, does not affect his responsibilities as director of the same.
The directors of a limited company may be liable to third parties when they perform acts that are not foreseen in the company’s purpose or when they act exceeding the powers conferred on them.
Likewise, the directors will have the inherent responsibility to their mandate and the derivative of the obligations that the law and the statutes impose on them. In principle, the directors do not incur any personal or joint liability for the obligations of the company, but they respond personally and severally to it and against third parties, for the non-execution or poor performance of their position and for the violation of the laws, statutes or regulations.
In particular, the directors are jointly and severally liable with the company for:
- the veracity of the contributions made by the shareholders or partners;
- the compliance with the statutory and statutory requirements established with respect to dividends paid to shareholders or partners;
- the existence and maintenance of the accounting, control, registration, filing or information systems that the law prevents; and
- the exact fulfillment of the agreements of the shareholders’ or partners’ meetings, as the case may be.
Solidarity evidently occurs in a collegiate administrative body. By virtue of solidarity, each of the directors responds for all the damages and losses caused to society.
On the other hand, the director who in any transaction has an interest opposed to that of the company, must express it to the other directors and abstain from all deliberation and resolution. The director who contravenes this provision will be responsible for the damages and losses caused to the company.
The prohibition that to deliberate and resolve is imposed on the directors who, in a given matter, have an interest contrary to that of the company, is intended to prevent the personal interest of the directors from prevailing over the interest of the company.
The directors of a company in Mexico are in charge of the realization of the corporate purpose of the company, for which the law or the bylaws must establish the rights and obligations of the directors, related to the decision-making related to said function.
That is, the directors, through the Board of Directors, constitute the administrative body of the company.
Regarding the information related to the business of the company, the directors have, not only access to such information, but also the obligation to generate it.
In this regard, the Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) establishes the obligation of the companies, through their directors, to submit to the shareholders’ meeting, annually, a report that refers, at least, to:
- the progress of the company’s businesses, describing the policies followed by the directors and, where appropriate, the main existing projects;
- the main accounting policies and criteria followed in the preparation of financial information; and
- the financial statements of the company.
The responsibility of the directors can only be demanded by agreement of the General Assembly of Shareholders, or by the shareholders that represent 25% of the share capital when the following assumptions are fulfilled: (i) the demand includes the total amount of the responsibilities in favor of the Company and not only the personal interest of the promoters, and (ii) that, where appropriate, the stakeholders have not approved the resolution adopted by the General Shareholders’ Meeting about not having to proceed against the defendant administrators.
Those directors who are, at the same time, shareholders, will not be able to vote in the shareholders meetings that decide on their responsibility, nor in the meetings that approve their management.
Symbiosis focuses its efforts in terms of export promotion, assistance with direct investment, and internationalization of Canadian companies. With deep cultural and business ties with the region and an understanding of the challenges presented to Canadian clients doing business in Mexico. Our team is positioned to timely and efficiently assist clients in providing counsel and the legal tools to assist in their positioning in Mexico. For further information, please contact us or book a call/video conference with a member of our team, it would be our pleasure to meet you and talk about your project.
