Exercise your responsibilities carefully as the penalties for failure to do so can be severe. You are jointly liable to the company, the shareholders and any creditors for the irregularities of other directors, if you were aware of their breach of duty and did not inform the company.
Liability cannot be restricted or limited. However, the shareholders meeting may approve the Board’s work and excuse its members from any liabilities and the company may approve such work each year following the annual report.
Money Laundry Regulations in Mexico are very specific and specify certain transactions that need to be notified to the authorities prior to their execution. Managers are responsible for complying with such regulations.
In relation to the local entity and local laws, Anti- Bribery Norms in Mexico are only applicable to deals with public officers.
Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations being placed upon your ability to continue in your role.
Further, any shareholder individually, or any third party suffering damages for illegal acts carried out by directors of a Mexican company can demand an indemnity for such damages. Shareholders also have a special action called “action for director’s liability” which can be brought against directors by the shareholders representing 25% of the capital structure.
An indemnification covenant to exclude personal liability is valid under Mexican law, but cannot be used to exclude liability in situations of malicious intent or fraud.
The statute of limitation for corporate action for Director´s breach is 5 years.
In Mexico, the position of a director is personal and cannot be delegated, however the board of directors, as a collective body, may appoint a delegate to execute its resolutions. The board can also appoint managers or grant powers of attorney to different people so that they can represent and act on behalf of the company.
The company should have a global insurance programme including directors’ and officers’ liability insurance. Where local regulations do not permit or recognise “non-admitted” or foreign insurance, such as in Mexico, a local D&O Insurance policy is issued.