Corporate governance is fundamental in all corporations on a worldwide basis for the correct business operations and involves balancing the interests of the stakeholders of each corporation and furthermore comprehends the standards used by all corporations to pursue integrity and accountability in its business operations.
Having an internal corporate governance framework requires every employee to understand the importance of safeguarding sensitive data and confidential information, as well as carrying out orderly and organized business activities within any organization.
By following best practices in corporate governance, any corporation will be able to maintain effective internal control processes and avoid corruption practices and breach of internal and external applicable laws and regulations.
In Mexico and besides the specific provisions of the articles of incorporation and corporate bylaws, the Mexican General Law of Commercial Corporations (Ley General de Sociedades Mercantiles) contain the main corporate governance principles.
Likewise, other applicable laws related to anticorruption that would apply would include, without limitation, the Mexican General Law of the National Anticorruption System (Ley General del Sistema Nacional Anticorrupción), the Mexican General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas) and some other specific laws related to the specific industrial sector of each corporation.
Considering that corporate governance involves stakeholders such as employees, managers, shareholders, and investors, all of them will be required to take active roles in learning the internal and external regulations applicable to the nature of business activities of each corporation and therefore it is necessary to implement specific internal supervision mechanisms for tracking and reporting misconduct actions.
Some typical solutions would consist in (i) performing internal and external periodical due diligence processes to identify how the areas are working together and any potential risks which could have an impact on the business operations, (ii) creating clear communication lines for external and internal stakeholders to communicate any concerns from an accounting, legal or operative natures and ensure that the compliance officers appointed for such purposes by the board of directors address such problems before they escalate into more significant issues, and (iii) implementing evaluations and questionnaires to verify knowledge of internal and external regulations.
The above, notwithstanding the implementation of code of conduct and ethics, compensation, and risk management, as well as other strategic internal regulations, such as environmental, foreign trade, etc.
It might also be advisable to create specific workshops with external advisors on each specific topic to be imparted periodically to its stakeholders. With all these steps in place every corporation could be preventing fraud and corruption acts that could impact their business operations.
It should be noted that having a good corporate governance will result in a successful business operation with transparent rules and controls that will lead its stakeholders and the corporation itself to leadership and recognition within its industrial sector.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.