Who are the key persons involved in the management of each type of entity in Mexico?
The most common commercial companies in Mexico are the limited liability company (sociedad de responsabilidad limitada) and the stock corporation (sociedad anónima).
With respect to limited liability companies, the general partners’ meeting serves as the company’s supreme governing body. It appoints one or more managers, who may be partners or external individuals. The meeting can revoke these appointments at any time without the need for the managers to conclude their official term.
If no managers are designated, all partners automatically participate in the management.
For stock corporations, the general shareholders’ meeting similarly handles the appointment and removal of directors, who also serve fixed term.
In stock companies with more than three directors, minority shareholders representing 25% of the share capital may appoint at least one director. This percentage drops to 10% for publicly traded companies.
In the same type of corporation, the shareholders’ meeting, board of directors, or sole administrator may appoint and revoke one or more general or special managers, who may or may not be shareholders.
These managers assist the directors in fulfilling their responsibilities. Only natural persons or individuals can be appointed as directors or managers.
The bylaws or shareholders’ meeting may require directors to provide a guarantee to cover potential liabilities arising from their duties.
Partners in a limited liability company or shareholders in a stock corporation may lose their limited liability protection if they are appointed as directors and commit unlawful acts against the company or other partners/shareholders.
How are the directors of the board appointed and removed? What influence do the entity’s partners and shareholders have over this?
The manager or board of managers of a limited liability company is appointed during incorporation. If this appointment is omitted, all partners who are natural persons automatically become managers. The bylaws or the general partners’ meeting must specify the term length for managers.
On the other hand, in the same type of companies, the partners’ meeting convenes at least once a year at the time specified in the bylaws to appoint and remove managers, among other business. However, the meeting may also remove and appoint managers at any time without waiting for the annual meeting.
For stock corporations, board appointments also occur at incorporation or thereafter during shareholders’ meetings. Directors may be shareholders or other individuals but must be natural persons.
Certain individuals cannot serve as directors, including public notaries, those declared bankrupt in commercial insolvency proceedings, and those convicted of property crimes.
Directors can be appointed or removed at any time, though this typically happens at the ordinary general meeting held within four months after the close of the previous fiscal year.
In exceptional cases, statutory auditors (those who oversee directors’ performance) may appoint administrators temporarily until the meeting makes official appointments. This occurs when the shareholders’ meeting has revoked the sole administrator or multiple administrators, or when a board lacks the necessary quorum for decision-making.
