In Mexico, the structure of a corporation is based on a clear separation of functions: (i) the Shareholders’ Meeting, responsible for making fundamental decisions; (ii) the Directors, responsible for managing and implementing those decisions; and (iii) the Statutory Examiner, whose primary function is to monitor and supervise the corporation. This distribution is not a mere corporate formality, but an essential internal control mechanism aimed at protecting the company’s assets, strengthening accountability, and ensuring transparency toward shareholders and interested third parties.
The Role of the Statutory Examiner within Corporate Governance.
In accordance with the General Law of Commercial Corporations (“LGSM”), the surveillance of the company is the responsibility of one or more Statutory Examiners, who may be Shareholders (Partners) or third parties outside the Company. Pursuant to Article 166 of the LGSM, their primary function is to monitor, at all times, the company’s operations and, specifically, the duties of the Directors.
To fulfill this mandate, Mexican Law grants them various audit powers, including:
- Financial supervision: The power to require the management to provide the company’s financial information, including financial statements and periodic earnings reports.
- Accountability: The obligation to submit an annual report to the Ordinary General Meeting regarding the accuracy, sufficiency, and reasonableness of the information presented by the management body.
- Management Control: The right to attend, with voice but no vote, meetings of the Board of Directors and Shareholders’ Meetings, in order to monitor the legality of the actions and resolutions adopted.
The Incompatibility Between Surveillance and Representation.
A particularly relevant point, reinforced by case law, is the prohibition against a Statutory Examiner simultaneously acting as attorneys-in-fact of the Company. If the Statutory Examiner were to act as an attorney-in-fact, they would be required to oversee their own actions, thereby undermining the very nature of the oversight function.
This incompatibility stems from the very nature of the position and is explained by three fundamental elements:
- Unlimited Surveillance: The Statutory Examiner´s duty of oversight encompasses all acts of the company, including those performed by agents. If the auditor were to act as an agent, he or she would have to oversee his or her own actions, which undermines the function of control.
- Continuity in Office: The supervisory function is permanent as long as the Statutory Examiner remains in office. It is not legally feasible for a Statutory Auditor to temporarily suspend their status to act as a representative and subsequently resume their supervisory function.
- Internal Scope: The Statutory Examiner´s authority pertains to the internal affairs of the company and seeks to protect the interests of the shareholders. By contrast, the mandate is intended to represent the company before third parties and to establish external legal relationships. Blurring these two spheres compromises the independence of the supervisory body.
Independence of the Supervisory Body.
To ensure the independence of the supervisory body, Article 165 of the LGSM establishes certain restrictions on who may serve as a supervisor. Specifically, the following individuals may not serve in this capacity:
- People disqualified from engaging in commercial activities.
- Employees of the company.
- Blood relatives of the directors in the direct line without limitation of degree, collateral relatives within the fourth degree, and relatives by marriage within the second degree.
Note for Notarial Practice.
In practice, it is the responsibility of Notaries Public to verify that the corporate acts they authorize or record comply with the applicable legal framework. In this regard, the appointment of a Commissioner as the company’s legal representative may render the granted power of attorney ineffective and raise questions regarding the validity of acts performed under such authority.
Responsibilities and Scope of the Position.
Finally, it is important to note that the Statutory Examiner is not jointly and severally liable for the Company’s tax obligations, as he or she lacks the authority to manage or represent the Company before the authorities. His or her responsibility is of an organizational and professional nature and consists of diligently performing his or her oversight function and promptly informing shareholders of any irregularities detected.
Failure to comply with these obligations may give rise to civil liability to the Company for breach of the applicable duties of care.
The proper delineation of functions within corporations is not merely a formal requirement but an essential element for preserving the integrity of corporate governance. The independence of the Statutory Examiner and the incompatibility between their oversight function and the representation of the Company constitute legal safeguards aimed at preventing conflicts of interest and strengthening internal control mechanisms.
We can summarize that in Mexico, the classic structure of the corporation continues to rest on the separation between the Shareholders’ Meeting, the Board of Directors, and the Statutory Examiners. However, by 2026, this framework has evolved toward more sophisticated corporate governance models, in which oversight is no longer limited to the legally required examiner but is complemented by external audit, internal controls, compliance, and the best practices in transparency.
Given the growing complexity of regulations, it is vital that companies comply with the provisions of the General Law on Commercial Corporations. At VAHG, we work closely with our Clients to review and adapt their corporate documents and practices to this legislation, ensuring that every aspect of their corporate governance is in compliance. This not only minimizes the risk of legal penalties but also strengthens the company’s reputation among its stakeholders.
One of our core objectives is to help our Clients prevent legal risks. By implementing appropriate governance structures and complying with current regulations, companies can prevent internal conflicts, fraud, and malpractice that could result in legal consequences. At VAHG, we believe that effective prevention begins with a thorough assessment of current practices and the identification of areas for improvement.
At VAHG, our mission is to guide companies, investors, and corporate bodies in the process of structuring and reviewing their corporate governance frameworks. We are committed not only to complying with the General Law of Commercial Corporations, but also to creating a framework that ensures the optimal functioning and long-term sustainability of Corporate Governance practices.
| Elvia Rios Saldaña|Partner
Corporate Governance +52 (33) 38171731 Ext. 228|erios@vahg.mx |
Luis Andrés Estrada Intriago | Senior Associate
Corporate Governance +52 (33) 38171731 Ext. 224 | lestrada@vahg.mx |
Pablo Méndez Fernández|Paralegal
Corporate Governance
+52 (33) 38171731|pmendez@vahg.mx
**The publication of this document does not constitute legal, accounting or professional advice of any kind, nor is it intended to be applicable to particular cases. This document refers to laws applicable in Mexico.