Luis Burgueño - The New Organic Structure of the Publicly Traded Corporation
The recent amendments to the Stock Exchange Act (Ley del Mercado de Valores) constitute a substantial modification of the corporate governance regime and the structure of the corporate bodies of publicly traded corporations, redistributing the corporation's management, direction, control and oversight functions. The recent amendments to the Stock Exchange Act (Ley del Mercado de Valores) constitute a substantial modification of the corporate governance regime and the structure of the corporate bodies of publicly traded corp
Bibliography: Luis Burgueño Colín: The New Organic Structure of the Publicly Traded Corporation, in Temas Selectos de Derecho Bursátil Contemporáneo (Mexico, Porrúa 2008) pp. 85-114. SUMMARY Until the enactment of the new Stock Exchange Act (LMV), and despite the evolution that financial markets had undergone in Mexico and worldwide, publicly traded companies (SAB) remained corporations governed by the General Law of Commercial Companies of 1934 and a few isolated provisions contained in securities legislation and the regulations of the National Banking and Securities Commission. It was necessary to modernize the regulation applicable to publicly traded corporations, in order to bring it into line with best corporate practices and the current need to protect investors, recognizing the existence of conflicting interests between the corporation's managers and owners and between majority and minority shareholders. The new LMV establishes a genuine restructuring of the corporate bodies of the SAB, especially of the board of directors. First, the LMV expressly regulates the figure of the chief executive officer, to whom it entrusts the management and conduct of the corporation's business, elevating the chief executive officer to the level of a mandatory corporate body. The board of directors ceases to be in charge of the day-to-day management of the corporation and now handles directing the general strategy of the corporate business and the definition of accounting policies, for their execution by the chief executive officer. In turn, the board sees control and oversight functions added to its duties—previously the responsibility of the statutory examiner (comisario)—whose functions are reassigned to the audit and corporate practices committees and the independent external auditor. Thus, the board of directors is at the same time a body of management (with the chief executive officer) and of control and oversight. This is, without a doubt, the most important legislative reform in corporate matters since the LGSM of 1934 and will have a profound influence on the practice of Mexican corporate law. Bibliography: Luis Burgueño Colín: The New Organic Structure of the Publicly Traded Corporation, in Temas Selectos de Derecho Bursátil Contemporáneo (Mexico, Porrúa 2008) pp. 85-114. SUMMARY Until the enactment of the new Stock Exchange Act (LMV), and despite the evolution that financial markets had undergone in Mexico and worldwide, publicly traded companies (SAB) remained corporations governed by the General Law of Commercial Companies of 1934 and a few isolated provisions contained in securities legislation and the regulations of the National Banking and Securities Commission. It was necessary to modernize the regulation applicable to publicly traded corporations, in order to bring it into line with best corporate practices and the current need to protect investors, recognizing the existence of conflicting interests between the corporation's managers and owners and between majority and minority shareholders. The new LMV establishes a genuine restructuring of the corporate bodies of the SAB, especially of the board of directors. First, the LMV expressly regulates the figure of the chief executive officer, to whom it entrusts the management and conduct of the corporation's business, elevating the chief executive officer to the level of a mandatory corporate body. The board of directors ceases to be in charge of the day-to-day management of the corporation and now handles directing the general strategy of the corporate business and the definition of accounting policies, for their execution by the chief executive officer. In turn, the board sees control and oversight functions added to its duties—previously the responsibility of the statutory examiner (comisario)—whose functions are reassigned to the audit and corporate practices committees and the independent external auditor. Thus, the board of directors is at the same time a body of management (with the chief executive officer) and of control and oversight. This is, without a doubt, the most important legislative reform in corporate matters since the LGSM of 1934 and will have a profound influence on the practice of Mexican corporate law. Bibliography: Luis Burgueño Colín: The New Organic Structure of the Publicly Traded Corporation, in Temas Selectos de Derecho Bursátil Contemporáneo (Mexico, Porrúa 2008) pp. 85-114.
