By Jorge F. Millan
Texas Border Business
The manager of a corporation in Mexico, is the person in charge of directing the company or is authorized to enter into agreements on behalf of the business entity with respect to its business operations.
They are considered legal representatives of the company or business establishment or even of their owners. As such they can legally obligate any one of them in the course of its transactions.
Additionally, in accordance with the Federal Labor Law and mandatory precedents issued by the Federal Courts of Appeals, managers legally assume the labor responsibility of the corporation towards its employees and factory workers. The shareholders are equally jointly liable from the labor point of view in the event that the company does not comply with its obligations.
This is why it is very important to establish the manager´s authorities through general or special powers of attorney. These powers can be for litigation and collections, for carrying out acts of administration such as obtaining permits from government entities or signing certain types of agreements to mention a few.
The power of attorney that is the most complete is called: “Acts of Dominium”. The person who enjoys this type of authority can do anything including selling the corporation unless this action is reserved to the shareholders or to the Board of Directors.
A company or a business entity must have governance. This term is employed for the structure of the powers of attorney that the corporation has granted during its lifetime.
The importance of regularly reviewing the governance in a company is of the outmost importance. It can be for revoking powers of attorney granted to undesirable persons or because they are no longer employees or because their responsibilities in the company have changed. As important as it sounds, there are still corporations, some large but especially small, that do not keep a close check on who enjoys what. If governance is not kept in order and updated regularly, that company may face ugly legal consequences. That is why this article started with defining some of the authorities a manager should and should not enjoy.
A resolution taken by the majority vote established in the Deed of Incorporation for a General Meeting of Shareholders or by the Board of Directors should express the authorities of a power of attorney to be granted to an employee or a manager.
This resolution needs to be certified by a Mexican Notary Public and contrary to public belief, it is optional to record the Notary Deed or not with the Public Registry of Commerce.
In this respect, the banks will not open accounts if the Deed has not been recorded. This practice is either the result of the lack of legal knowledge of the lawyers in their legal department or because they follow old bureaucratic practices that have not been updated since 2009. Whatever the reason is, the recording of a Deed containing a power of attorney has become a nightmare for many companies.
In conclusion, the recommendation contained in this article is to specify clearly what a manager is legally authorized by the company to do.
Jorge F. Millan, is a bilingual (Spanish/English and English/Spanish) and bicultural attorney at law, licensed to practice in México, with vast domestic and international experience as in-house and outside counsel for various corporations and individuals. He can be contacted at: lawmillan@serv.net.mx.
