Sources of corporate governance rules and practices

Primary sources of law, regulation and practice

What are the primary sources of law, regulation and practice relating to corporate governance? Is it mandatory for listed companies to comply with listing rules or do they apply on a ‘comply or explain’ basis?

The main source of law is the General Law of Business Organisations (LGSM), which sets forth the legal framework and operational rules applicable to commercial corporations and companies, including corporate governance matters. Although the LGSM governs six types of commercial companies and corporations, in practice, the two most commonly used are stock corporations (SAs) and limited liability companies (SRLs).

The Securities Market Law (LMV) sets forth the legal framework and operational rules applicable to the following types of SAs:

  • investment promotion stock corporations (SAPIs) (which shall be organised in accordance with the general provisions of the LGSM with a specific and more flexible regime with regard to a regular SA); and
  • listed companies under the form of publicly traded corporations (SABs) or publicly traded investment promotion stock corporations (SAPIBs).

The General Provisions Applicable to Issuers and Other Participants of the Securities Market (the CUE), which set forth the specific regulatory rules under which listed companies and other market participants shall operate.

For the purposes of clarity, listed companies shall be understood as those SABs or SAPIBs in which shares are registered with the National Securities Registry and listed on the Mexican Stock Exchange.

In addition, it is important to note that it is mandatory for listed companies to comply with the listing rules provided under the applicable regulation.

There are specific corporate governance provisions applicable to certain regulated entities, such as banks, financial corporations, insurance companies and other financial institutions, which are set forth in the relevant laws and regulations governing those entities.

Additionally, there are voluntary codes, such as the Best Corporate Practices Code (CMPC) issued by the Mexican Business Coordinating Council, which contains recommendations addressed and applicable to all companies, whether commercial, civil or non-profit, regardless of their size or whether they are listed on the stock market. Despite the fact the CMPC is voluntary for non-listed companies, its compliance is mandatory for listed companies, pursuant to the CUE.

Responsible entities

What are the primary government agencies or other entities responsible for making such rules and enforcing them? Are there any well-known shareholder groups or proxy advisory firms whose views are often considered?

In the case of non-listed companies, there is no governmental agency responsible for enforcing corporate governance rules; however, compliance with this regulatory framework is monitored by shareholders, external auditors, credit rating agencies and lenders; in case of conflicts or disputes, the enforcing authority would be the competent judicial court (whether federal or local). The entity responsible for amending the LGSM or the LMV is the federal legislative power known as Congress of the Union, composed of the Chamber of Deputies and the Senate.

On the other hand, the National Banking and Securities Commission (CNBV) is the entity in charge of the surveillance of listed companies and similar that shall issue and amend any secondary regulations such as the CUE.

In Mexico there are no shareholder groups or specific proxy advisory firms whose views are often considered. Shareholders follow the advice of their boards and legal advisers.

Rights and equitable treatment of shareholders

Shareholder powers

What powers do shareholders have to appoint or remove directors or require the board to pursue a particular course of action? What shareholder vote is required to elect or remove directors?

Shareholders appoint and remove directors and approve the reports prepared by the board regarding the status of the company and its course of action. Unless otherwise provided in the by-laws of a certain company, the shareholders may appoint and remove members of the board of directors (or sole director) by a majority vote. Pursuant to article 144 of the LGSM, in case there are more than three members of the board of directors, the by-laws shall provide the rights of the minority shareholders to appoint members of the board, but in any case, the shareholders representing 25 per cent of the capital stock of the company have the right to appoint at least one member. In SAPIs, the shareholders representing 10 per cent of the capital stock of the company shall have the right to appoint at least one member of the board of directors, and the removal of such member by the remaining shareholders (that is the non-appointing shareholders) may only take place if the shareholders are going to remove all members of the board of directors.

Pursuant to article 182 of the LGSM, the shareholders’ meeting shall appoint, remove or ratify the members of the board of directors or sole directors, at least on a yearly basis.

Shareholder decisions

What decisions must be reserved to the shareholders? What matters are required to be subject to a non-binding shareholder vote?

Pursuant to the LGSM, the shareholders’ or partners meeting is the supreme body of any commercial entity, therefore, such body has full power and authority to approve any matter concerning the company’s affairs. Whereas some matters may be resolved by either the shareholders’ meeting or the management body (whether a board of directors or a sole director), the following decisions are reserved to the shareholders:

  • the approval of financial statements and the annual report prepared by the management body the company;
  • the appointment and removal of the members of the board of directors and the statutory examiner;
  • extension of the company’s duration;
  • early dissolution;
  • increase or decrease of the capital stock;
  • change of the corporate purpose;
  • change of nationality;
  • transformation;
  • merger;
  • issuance of preferential shares;
  • share redemption or repayment;
  • bond issuance;
  • amendments to the by-laws; and
  • any other decision reserved to the shareholders pursuant to the by-laws of the company.

Under Mexican law, there are no specific matters that shall be submitted to a non-binding shareholder vote; however, the by-laws of any company may include provisions regarding the voting restrictions applicable to certain type of shares.

Disproportionate voting rights

To what extent are disproportionate voting rights or limits on the exercise of voting rights allowed?

Pursuant to article 91 VII(c) of the LGSM, companies may include in their by-laws provisions regarding the issuance of shares that:

  • do not confer or confer limited voting rights;
  • grant non-economic rights other than the right to vote or exclusively the right to vote; or
  • grant the veto right or require the favourable vote of one or more shareholders, regarding the resolutions of the general shareholders’ meeting.

Whereas some restrictions for excluding shareholders from profit sharing apply for the SA and the SRL, there is no such restriction for SAPIs.

Shareholders’ meetings and voting

Are there any special requirements for shareholders to participate in general meetings of shareholders or to vote? Can shareholders act by written consent without a meeting? Are virtual meetings of shareholders permitted?

In accordance with article 186 of the LGSM, a shareholders’ meeting shall be formally called through a notice published in the electronic system set forth by the Ministry of Economy, at least 15 calendar days in advance. However, pursuant to article 188 of the LGSM, the shareholders’ meeting shall be deemed legally installed when the totality of the shares representative of the capital stock of the company are present or duly represented in the shareholders’ meeting, regardless of the publication of the call.

Pursuant to article 192 of the LGSM, shareholders may be represented at the meetings by a proxy, who may be or may not be part of the company, but in any case, a proxy cannot be a member of the board of directors or a statutory examiner.

In addition to the foregoing, companies may include in their by-laws additional requirements for shareholders to participate or vote in the shareholders’ meeting (eg, shareholders shall present their share certificate or shall be duly registered in the shareholders’ registry book of the company).

Article 178 of the LGSM sets forth that the by-laws may provide that resolutions adopted outside a shareholders’ meeting, by unanimous consent of the shareholders, shall have, for all legal purposes, the same validity as if they were adopted in a shareholders’ meeting, to the extent they are confirmed in writing.

Shareholders’ meetings may be conducted remotely (including virtual meetings); however, the resolutions adopted in those meetings shall be approved by unanimous vote and confirmed in writing; otherwise, resolutions adopted through remote or virtual meetings may be null, inasmuch as article 179 of the LGSM provides that shareholders’ meetings shall take place in the corporate domicile of the company.

Shareholders and the board

Are shareholders able to require meetings of shareholders to be convened, resolutions and director nominations to be put to a shareholder vote against the wishes of the board, or the board to circulate statements by dissident shareholders?

The authority to call a shareholders’ meeting corresponds to the board of directors or sole director, as applicable. In SAs, shareholders who represent at least 33 per cent of the shares representing the capital stock of the company, may request the board of directors, sole director or the statutory examiner to issue the relevant call and in case of refusal or failure to do so, such shareholders may request it through a judicial authority. In SAPIs, a request may be made by the shareholders representing at least 10 per cent of the capital stock of the company.

Controlling shareholders’ duties

Do controlling shareholders owe duties to the company or to non-controlling shareholders? If so, can an enforcement action be brought against controlling shareholders for breach of these duties?

Under Mexican law, there are no specific provisions regarding special duties, such as fiduciary duty, owed by the controlling shareholders in favour of the company or the non-controlling shareholders. However, shareholders representing 25 per cent of the capital stock of a SA or 20 per cent of the capital stock of a SAPI may oppose the resolutions approved by the shareholders’ meeting through a judicial procedure, provided they have voting rights with respect to the matters approved through such disputed resolutions.

Shareholder responsibility

Can shareholders ever be held responsible for the acts or omissions of the company?

Shareholders or partners of a SA, SRL or SAPI are protected by a corporate veil, whereby shareholders or partners are only liable up to the amount of their contributions; in other words, their liability is limited to the loss of their participation in the company. However, in case a company is not duly registered with the Public Registry of Commerce (RPC), shareholders or partners may be held jointly liable for certain acts and omissions of the company in violation of tax and criminal laws (piercing of the corporate veil).

Corporate control

Anti-takeover devices

Are anti-takeover devices permitted?

Yes. There are no specific provisions that prohibit anti-takeover devices.

Issuance of new shares

May the board be permitted to issue new shares without shareholder approval? Do shareholders have pre-emptive rights to acquire newly issued shares?

Pursuant to the LGSM, any issuance of new shares shall be approved by the shareholders’ meeting. Regarding the pre-emptive rights to acquire shares, article 132 of the LGSM sets forth that shareholders will have a pre-emptive right to subscribe the newly issued shares in the event of an increase in the capital stock, in proportion to the number of their shares.

Furthermore, the LGSM and the LMV expressly allow shareholders agreements limiting or setting forth additional requirements in connection with such pre-emptive rights.

Restrictions on the transfer of fully paid shares

Are restrictions on the transfer of fully paid shares permitted and, if so, what restrictions are commonly adopted?

Yes, legal entities are allowed to include in their by-laws restrictions for the sale or transfer or shares, such as requiring the prior approval of the shareholders’ meeting or the board. Additionally, by-laws may include further share transfer rules, such as tag-along, drag-along, put and call options and such other similar rights and obligations.

Furthermore, in the SRL, the transfer of equity quotas to a person alien to the company shall be approved in advance by the partners’ meeting.

Compulsory repurchase rules

Are compulsory share repurchases allowed? Can they be made mandatory in certain circumstances?

Put and call options are valid; however, under Mexican law, compulsory repurchase agreements are not allowed, under article 2303 of the Federal Civil Code.

Dissenters’ rights

Do shareholders have appraisal rights?

As a general rule, article 91, section VII of the LGSM provides that the by-laws of a company shall include the scenarios for shareholders to exercise their retirement right and provisions regarding the mechanisms to be followed in case of a deadlock where the shareholders fail to reach an agreement with respect to certain specific matters, inter alia.

Also, article 206 and 228-bis of the LGSM establish that any opposing shareholder with respect to resolutions adopted by the shareholders’ meeting in connection with the change of the corporate purpose, the change of nationality, the transformation of the company, or spin-off, shall have the right to sell their stock and obtain the reimbursement of their shares, in proportion to the company’s assets.

In a SRL, partners have the right to retire from the company when a person alien to the company is appointed as a member of the board or sole manager, to the extent the retiring partner has voted against such appointment.

Responsibilities of the board (supervisory)

Board structure

Is the predominant board structure for listed companies best categorised as one-tier or two-tier?

Under Mexican law, listed companies shall have a board of directors and at least two committees (Audit Committee and Corporate Practices Committee) that are entitled to carry out different activities regarding, among others, the supervision of corporate governance and the assistance provided to the board of directors in connection with corporate matters.

The aforementioned committees may be integrated by the independent members of the board of directors of the listed company.

Board’s legal responsibilities

What are the board’s primary legal responsibilities?

The board of directors is in charge of all matters concerning the management of the company. In accordance with article 157 of the LGSM, directors shall have the responsibilities inherent to their mandate and those arising from their obligations pursuant to law and the by-laws.

Board obligees

Whom does the board represent and to whom does it owe legal duties?

The board of directors represents the company and owes legal duties to it.

The directors are jointly and severally liable with the company with respect to:

  • the trustfulness of the contributions made by the shareholders;
  • the compliance with the legal and statutory requirements in case of the payment of dividends;
  • the existence and maintenance of the accounting, control, registration or information required by law; and
  • the fulfilment of the resolutions adopted by the shareholders’ meetings.
Enforcement action against directors

Can an enforcement action against directors be brought by, or on behalf of, those to whom duties are owed?

Yes. Article 161 of the LGSM provides that an enforcement action regarding the liability of the directors may only be claimed as agreed by the shareholders’ meeting, in which the shareholders may appoint the individual that shall be in charge of enforcing the corresponding actions and remedies. Subject to the fulfilment of certain conditions, (ie, not having voted against taking an action against directors and claiming the total amount of the liability in favour of the company, and not only the one related to their personal interest) minority shareholders representing at least 25 per cent of the capital stock of the company may directly enforce a civil liability action against directors, in accordance with article 163 of the LGSM; in SAPIs, such action may be enforced by shareholders representing at least 15 per cent of the capital stock.

Care and prudence

Do the board’s duties include a care or prudence element?

Generally, members have a fiduciary duty towards the shareholders and partners and the company. They have the responsibilities and duties that are inherent to their position, towards the company, shareholders or partners and third parties (which includes, in a broader sense, care and prudence elements). In terms of applicable laws and the corresponding by-laws of the company, board members shall protect and look out for the company’s interests and refrain from participating in decisions in which they have a conflict of interest.

Board member duties

To what extent do the duties of individual members of the board differ?

There are certain positions within the board of directors that may have additional duties or responsibilities. For example, pursuant to article 143 of the LGSM, the chair of the board of directors, unless otherwise provided in the by-laws, has a tie-breaking vote in resolutions adopted by the board of directors; and, in accordance with article 148 thereof, the chair of the board of directors shall be in charge of the formalisation and execution of the resolutions adopted by the board of directors.

In addition to the foregoing, the by-laws of the company may set forth specific duties for various positions within the members of the board of directors (chair, secretary, etc). However, there are no statutory rules in this regard.

Delegation of board responsibilities

To what extent can the board delegate responsibilities to management, a board committee or board members, or other persons?

Under article 147 of the LGSM, the director and member of the board positions are personal and shall not be performed through representatives. However, the board, as a collegiate body, may create committees or design specific members to perform certain acts and assume determined liabilities on its behalf; nevertheless, the foregoing does not limit the board’s legal and statutory liability. Furthermore, the board or sole director may confer powers of attorney to other persons to be exercised on behalf of the company for the performance of diverse responsibilities (within the scope of the board’s respective authority), which may be revoked at any time.

Non-executive and independent directors

Is there a minimum number of ‘non-executive’ or ‘independent’ directors required by law, regulation or listing requirement? If so, what is the definition of ‘non-executive’ and ‘independent’ directors and how do their responsibilities differ from executive directors?

Under the LGSM there is no requirement to appoint non-executive or independent members of the board of directors.

Pursuant to the LMV, at least 25 per cent of the members of the board of directors of listed companies shall be independent.

An independent director is a person that has no considerable influence in the company (since he or she cannot be a shareholder of the listed company), nor any power of command, and is not part of the management team of the listed company. Therefore, the independent director is impartial towards the company, not having any conflict of interest or personal interest and is appointed as independent expert based on his or her expertise, capacity and professional reputation.

In addition, the LMV establishes that none of the following persons may be appointed as an independent director:

  1. relevant officers or employees of the company or companies that are part of the group of which the listed company is part, as well as the examiner of the aforementioned companies;
  2. persons with considerable influence or control over the listed company or companies that are part of the group of which the listed company is part;
  3. persons that are part of the group of people that maintain control over the listed company;
  4. clients, service providers, debtors, creditors, partners, directors or employees of a company that is a relevant client, service provider, debtor or creditor; and
  5. persons with familiar or affinity relationships with any of the persons listed in sections (i) to (iv) above.
Board size and composition

How is the size of the board determined? Are there minimum and maximum numbers of seats on the board? Who is authorised to make appointments to fill vacancies on the board or newly created directorships? Are there criteria that individual directors or the board as a whole must fulfil? Are there any disclosure requirements relating to board composition?

In case of non-listed companies, management may be entrusted to a sole director or manager, or to a board. The board shall be composed of at least two members. In case the board has three or more members, the by-laws shall determine the rights that minority shareholders shall have for the appointment of members, but, in any case, the minority representing at least 25 per cent of the capital stock shall appoint at least one member. For listed companies, this percentage shall be 10 per cent; for SAPIs, shareholders that jointly or individually hold 10 per cent of the shares with voting rights (even if limited or restricted) may appoint or revoke a member of the board.

Only the shareholders’ meeting is entitled to make appointments to fill vacancies on the board, and pursuant to article 155 of the LGSM, exceptionally, in the event of vacancies resulting in the lack of a quorum for adopting resolutions, the statutory examiner of the company may appoint provisional members. There are no specific provisions or differences in connection with newly created directorships.

Pursuant to the LMV, the board of directors of listed companies shall be integrated by a maximum of 21 members. As per article 24 of the LMV, the board of directors may appoint provisional members in exceptional vacancy cases, whenever a member is not replaced by the shareholders within a 30-day period or in case such vacancy results in lack of quorum for adopting resolutions.

Other than the prohibition to appoint individuals banned from commercial activities as member of the board, Mexican law does not set forth any additional guidelines, criteria or requirements to appoint members to the board.

Notwithstanding the foregoing, the CMPC suggests appointing different persons as chair of the board of directors and CEO. The CEO is the person in charge of carrying out and conducting the business of the listed company and the entities that the listed company controls, in accordance with the LMV and the strategies and policies issued by the board of directors thereof; the board’s chair is the person in charge of the management of the listed company and not specifically of conducting its business.

In 2016, a bill to amend the LGSM and the LMV was submitted to the Senate, pursuant to which at least one-third of the members of the management bodies of companies shall be of a different gender than the rest. Also, in 2017, another bill was submitted to the Senate, proposing to amend the LMV so that listed companies may opt for gender equality policies within the integration of their boards of directors; in that event, at least 20 per cent of board members shall be of the least represented gender. As of this date, those bills have not been approved.

Board leadership

Is there any law, regulation, listing requirement or practice that requires the separation of the functions of board chair and CEO? If flexibility on board leadership is allowed, what is generally recognised as best practice and what is the common practice?

There is no law or regulation on this regard. However, separating the function of board chair and CEO is generally recognised as best practice. The rationale behind this practice is that the CEO is supposed to be supervised by the board.

Board committees

What board committees are mandatory? What board committees are allowed? Are there mandatory requirements for committee composition?

Pursuant to the LGSM, there are no mandatory board committees; however, companies may create board committees as permitted by their by-laws.

According to article 25 of the LMV, the board of directors of listed companies may be assisted by one or more committees created for that purpose. The committee or committees that carry out activities in connection with corporate practices and auditing shall be exclusively integrated by independent directors and by a minimum of three members appointed by the board of directors. In case of listed companies that are controlled by a person or group of persons that hold 50 per cent or more of the capital, the corporate practices committee shall be integrated, at least, by a majority of independent directors.

Board meetings

Is a minimum or set number of board meetings per year required by law, regulation or listing requirement?

No. However, in accordance with the LGSM and the LMV, the shareholders must hold at least one annual shareholders’ meeting, within the first four months of each year, approving, among other matters, the report submitted by the board or management body of the company, with respect to the company’s performance in a calendar year, as well as the policies adopted by directors and, as applicable, the main existing projects of the company. Thus, although there is no specific requirement for a formal board meeting, it is customary that the board gathers at least once a year, in order to discuss and prepare the foregoing report to be submitted for the shareholders’ approval.

Board practices

Is disclosure of board practices required by law, regulation or listing requirement?

No. However, regarding listed companies, because they are obliged to disclose certain documents and resolutions that contain the appointment, structure, functions and duties of the board (ie, an annual report and shareholders’ resolutions), such information is thereby disclosed. Additionally, there are some specific resolutions that listed companies are required to disclose in certain events (eg, authorisation for launching a tender offer).

Remuneration of directors

How is remuneration of directors determined? Is there any law, regulation, listing requirement or practice that affects the remuneration of directors, the length of directors’ service contracts, loans to directors or other transactions or compensatory arrangements between the company and any director?

Other than the obligation for the shareholders’ meeting to annually review or determine the remuneration for the members of the board of directors (pursuant to article 181 of the LGSM), there are no specific rules or provisions, nor listing requirements, regarding the determination of such remuneration.

Although there are no specific provisions or listing rules governing the directors’ service contracts, article 182 of the LGSM states that members of the board shall be appointed, removed or ratified on an annual basis. Additionally, article 154 of the LGSM provides that directors will continue in the performance of their duties even when the term for which they were appointed has expired, until their replacements have been appointed and have taken office.

Remuneration of senior management

How is the remuneration of the most senior management determined? Is there any law, regulation, listing requirement or practice that affects the remuneration of senior managers, loans to senior managers or other transactions or compensatory arrangements between the company and senior managers?

There is no law or regulation governing the remuneration of senior management of non-listed companies.

Pursuant to the LMV, the board of directors of listed companies shall approve, among others, the appointment and remuneration policies with respect to the high-level ranked managers, as well as the policies for granting loans, credits or guarantees in favour of such managers; however, there is no regulation or guidelines regarding how such policies shall be determined.

D&O liability insurance

Is directors’ and officers’ liability insurance permitted or common practice? Can the company pay the premiums?

Directors’ and officers’ liability insurance is permitted but is not a common practice. There is no restriction for a company to pay the corresponding insurance premiums. However, as per public information (, hiring D&O liability protection insurance policies is becoming a more frequent practice for Mexican listed companies.

Indemnification of directors and officers

Are there any constraints on the company indemnifying directors and officers in respect of liabilities incurred in their professional capacity? If not, are such indemnities common?

There is no restriction for indemnifying directors and officers in this regard; however, it is not a customary practice.

Exculpation of directors and officers

To what extent may companies or shareholders preclude or limit the liability of directors and officers?

Companies or shareholders may limit the liability of directors and officers by offering certain immunity towards the company or the shareholders (ie, exempting them from claims for liability incurred in their professional capacity); this is common when the company or shareholders are willing to offer attractive incentives to certain individuals to accept being appointed as board members. Regarding liability toward third parties, this cannot be limited; however, the company and shareholders may reduce liability attributable to directors and officers through the implementation of robust corporate governance, ethics and compliance policies and programmes, including provisions stating that in case of breach of laws or company’s regulations, liability shall or may be attributed to other officers or members.


What role do employees have in corporate governance?

Under the LGSM or the LMV, there are no specific provisions regarding the role or obligations of employees in connection with corporate governance. However, on a case-by-case basis, companies may adopt policies or guidelines imposing specific obligations for its employees with respect to corporate governance activities.

Board and director evaluations

Is there any law, regulation, listing requirement or practice that requires evaluation of the board, its committees or individual directors? How regularly are such evaluations conducted and by whom? What do companies disclose in relation to such evaluations?

Even though it is not an evaluation of the board per se, pursuant to article 172 of the LGSM, the board of directors or sole director, as applicable, shall present to the shareholders’ meeting an annual report informing the company’s performance, its financial, accounting and commercial affairs, as well as main policies followed by the management body of the company. In addition, the statutory examiner of the company shall review and certify the veracity, sufficiency and reasonableness of the information presented by the board of directors. The statutory examiner’s report shall include an opinion regarding:

  • whether the accounting and information policies and criteria followed by the company were adequate and fit to the particular circumstances of the company;
  • whether those policies and criteria were duly applied in the information presented by the board of directors; and
  • if, as a consequence of the above, the information presented by the board of directors reflects in a truthful and sufficient way the financial situation and the results of the company.

In case of listed companies, on a yearly basis, the CEO, the corporate practices committee and the audit committee shall prepare and submit to the board of directors a report containing certain information regarding the financial situation of the listed company and an assessment of whether the policies (accounting, information, etc) and resolutions adopted by the board of directors and the shareholders of the company have been fulfilled during such year.

Once such reports have been reviewed by the board of directors, the latter shall submit each report, including an opinion regarding the information contained in the report prepared by the CEO, to the shareholders’ meeting, which shall review, discuss and, as applicable, approve the information contained therein.

In connection with the above, in terms of article 33 of the CUE, listed companies shall disclose: the reports prepared by the CEO and both committees; and the opinion issued by the board of directors in connection with the CEO’s report.

Disclosure and transparency

Corporate charter and by-laws

Are the corporate charter and by-laws of companies publicly available? If so, where?

Yes. Once incorporated, companies shall be registered before the RPC corresponding to their corporate domicile. The articles of incorporation and by-laws are recorded in said RPC. In practice, such registry only discloses excerpts of the main clauses of the by-laws of the companies to the public, upon request.

Company information

What information must companies publicly disclose? How often must disclosure be made?

Pursuant to the Code of Commerce, it is mandatory for companies to be registered with the RPC. Each company shall have a commercial folio disclosing the following information:

  • corporate name;
  • corporate purpose;
  • duration;
  • corporate domicile and branches, if any;
  • public instruments evidencing its incorporation, transformation, mergers, spin-offs, dissolution and liquidation; and
  • at the company’s option, appointments, resignations or removals of officers, as well as the powers of attorney granted by the company (though registration of certain powers, such as powers for granting and issuing negotiable and credit instruments, is mandatory).

Additionally, as per a reform to the LGSM, published on 14 June 2018 in the Federal Official Gazette, which came into effect as of 15 December 2018, the SAs and SRLs must disclose the entries and registrations of shareholders or partners, respectively, and the transfer of shares or equity quotas that are recorded in the company’s shareholders’ registry book (for SAs) or in the company’s special partners’ book (for the SRLs). The corresponding disclosure must be carried out through publication in the electronic system for publications of commercial companies of the Ministry of Economy. In the case of publication made by SAs, the Ministry of Economy must keep the shareholder’s name, nationality and domicile confidential, save for those cases in which the judiciary or administrative authorities request the disclosure of the information for the due performance of their duties.

Hot topics


Do shareholders have an advisory or other vote regarding remuneration of directors and senior management? How frequently may they vote?

Although it is not common that shareholders have advisory or other vote regarding executive remuneration, the shareholders’ meeting is the supreme body of a commercial company; thus, it is entitled to vote on those matters. Normally, executive remuneration is part of the business plans prepared and approved by the board; those plans may be passed to the shareholders’ meeting for approval.

Shareholder-nominated directors

Do shareholders have the ability to nominate directors and have them included in shareholder meeting materials that are prepared and distributed at the company’s expense?

Shareholders may nominate directors, pursuant to the rules described in the answer to question 23. Under Mexican law, there are no specific proxy access provisions.

Shareholder engagement

Do companies engage with shareholders? If so, who typically participates in the company’s engagement efforts and when does engagement typically occur?

Yes. Mainly, engagement occurs in connection with shareholders’ meetings. Also, the relationship between the company and its shareholders is carried out through the board, the chair of the board and the secretary of the board.

Sustainability disclosure

Are companies required to provide disclosure with respect to corporate social responsibility matters?

Under the LGSM or the LMV, there are no obligations in connection with the disclosure of corporate social responsibility matters. However, under specific requirements arising from environmental laws, entities are required to report, among other items, their carbon emissions. Additionally, the Mexican Stock Exchange has implemented sustainability evaluations whereby companies must produce and submit sustainability reports in order to be rated in sustainability indexes and reports.

CEO pay ratio disclosure

Are companies required to disclose the ‘pay ratio’ between the CEO’s annual total compensation and the annual total compensation of other workers?

There are no requirements in this regard.

Gender pay gap disclosure

Are companies required to disclose ‘gender pay gap’ information? If so, how is the gender pay gap measured?

There are no requirements in this regard.

Update and trends

Recent developments

Please identify any new developments in corporate governance over the past year (including any significant proposals for new legislation or regulation, even if not yet adopted). Please identify any significant trends in the issues that have been the focus of shareholder interest or activism over the past year (without reference to specific initiatives aimed at specific companies).

The increasing sophistication and the implementation of programmes and policies relating to corporate governance continue to be trend among Mexican companies and international companies doing business in Mexico.

Governance policies are particularly focused on establishing and implementing risk controls and mechanisms to avoid liability from a tax, labour, anti-money laundering and anti-corruption standpoint.

Moreover, the new federal administration, which started operations when the new President, López Obrador, took office on 1 December 2018, has announced ambitious plans for focusing efforts on conducting exhaustive audits on companies for reviewing their tax compliance, detecting corporate schemes or practices aimed at avoiding payment of corporate taxes, as well as for detecting and sanctioning corrupt practices, with a particular emphasis on those companies that are government contractors.

In line with the foregoing, companies are adopting stricter measures to verify and ensure full compliance and alignment with applicable tax, anti-corruption and anti-money laundering laws.

Finally, topics such as gender equality, gender pay gap reduction, prevention, detection and remediation of conflicts of interest, as well as best practices for preventing, avoiding, detecting and sanctioning discriminatory practices, continue being the most significant and recurrent governance trends in the Mexican market.