The Boards of Directors are a very useful tool to improve the quality of the operation of private companies or public institutions, since they provide support, advice and preparation, so that said organizations achieve their proposed objectives in a more practical way.
Said Board functions as a collegiate body, where several people with the positions of directors have certain powers in the company to carry out auditing, evaluation and compensation functions. All this is to support the General Directorate in the development of strategies, management, surveillance and control of the processes, guidelines, agreements and policies that the organization has.
In Mexico, the General Law of Commercial Companies, although it does not impose as a legal requirement the constitution of Boards of Directors, provides recommendations and facilities for companies to manage the creation of these bodies in order to enhance the performance of their company through a code of good practice.
Precisely in the Third Section of this enforcement law at the federal level, it states that for the administration of commercial companies, when there are two or more administrators, a Board of Directors must be created.
It is important to know that in the case of companies that wish to project themselves to be listed on the Stock Market, there it is a legal requirement to have the Board of Directors legally trained, since this means that the company has strong control and management within it, guaranteeing its optimal performance for the stock market
Experts in business consulting and corporate law suggest some important aspects that must be considered so that the gestation of this body is achieved successfully.
First of all, you have to plan for the creation of a Board of Directors, with informal meetings, so that gradually in medium-term periods, it can be consolidated and has a legal structure that properly constitutes it. It is not recommended to implement it suddenly, because this could cause deficiencies in your processes and diminish the interpersonal relationships of the members involved.
It is very important that if the decision to create said body has already been made, the advice of a good firm of lawyers specializing in Corporate Governance is required, so that all the legal mechanisms that regulate the Board can be supported, and can also set norms and guidelines for their functions and appointments. Another important point, from the legal aspect, is that we must consider the implementation of certain legal locks to guarantee the protection of confidential information, since in many meetings, the Board of Directors will deal with sensitive information to carry out its analyzes, which will not it must be allowed to leak out to third parties outside the organization.
As such, there is no exact number of directors that must be met for the creation of the body. Experts suggest between 3 to 21 people to train such an apparatus. Of course, the number of directors that the Board of Directors must have, it is recommended that it should be an odd number, so that there is a decisive vote at the time of decision-making, thus in this way draws and prolongation are avoided of certain processes. In any event, in the event of a tie, the General Law of Mercantile Societies establishes that in the event of a tie, "the Chairman of the Board will decide with a casting vote."
For this reason, within the legal documents that support the Board of Directors, the hierarchy and functions of each director must be defined. The main appointments are those of President and Secretary, in addition to the corresponding ones depending on the nature of the organization.
There are two types of directors, independent directors and equity directors. In order to have an efficient team, it is recommended that of the total members of the Board, 25% or more be independent in nature, in order to balance the strategic visions.
To clarify the definitions, independents are those who do not have any direct relationship with the company, or with any organization that is related to it, that is, they are external consultants who come to provide a panorama outside the interior of society. While the patrimonial, are directors who represent the shareholders, depending on their percentage of participation.
According to article 143 of the General Law of Commercial Companies, the Boards of Directors in order for them to function legally, at least half of its members must be present at their sessions, so that they have the legal power to make decisions.
If you need help to structure your Board of Directors, at Defend Abogados ® we are experts in the constitution of these bodies, both for public institutions or private companies as well as for corporations, real estate agencies, distributors, tourist chains, among others.
*REMEMBER: all Defend Abogados ® consultancies already include IVA.
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