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Attorney at Law graduated at the University of Guadalajara; Top Company Management course at the Pan-American Institute of Top Company Management (IPADE); Master’s Degree in Public Management, with a specialty in Procedural Tax Law and in Administrative Law from the Pan-American University; PhD in Law from the University of San Pablo-CEU in Madrid, Spain; PhD in Law from the Pan-American University and Managing Partner of the Law Firm
“Peña Briseño, Peña Barba, Palomino Abogados.”

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“In a previous contribution for the “Revista Consejero Empresarial” (Entrepreneurial Advisor Magazine), a note was made on the legal consequences of a company’s management and how sound management is not only an option but an obligation imposed by a number of rules in our country where failure or noncompliance thereof may result in felonies that would deserve imprisonment. This time, several legal provisions ruling the performance of an entrepreneur’s management will be discussed, where lack of knowledge thereof and consequential failure would result in the enforcement of penalties that would have an impact on the pockets of partners, shareholders and even administrators.”


The topic will be addressed by providing examples of entrepreneurial behavior, which would not be analyzed from the point of view of recent legal provisions that enforce change in the way managerial or even financial decisions have been made up to this moment. Some directors are not still aware of this change and it is seen that judges and prosecutors are going to be more often seen in the forum who would, even ex officio, analyze the criminal and financial consequences of cases in their hands. Let us remember that the main purpose of punitive sentences on defendant companies for damages, moral damage included, is that of preventing companies from being apathetic or neglectful with their customers or even with their workers.

In view that this topic has been broadly discussed in different venues, it must only be recalled that under article 26, subparagraphs III and X of the Federal Tax Code, the following individuals are liable to taxpayers: liquidators and receivers of companies under liquidation or bankruptcy procedures when the obligations imposed by tax law are not complied with.

Partners and shareholders are, joint and severally, equally liable to taxpayers, for contributions incurred under that capacity, even if they are not currently partners or shareholders, that part of tax interest that cannot be secured with the assets of the company, when they fall in any of the events set forth by law. The liability will be equal to the proportion of shares they held in the capital stock during the period or on the date they had that capacity. This liability will be enforced on partners or shareholders who have or who have had actual control of the company for contributions incurred when they had that capacity. From the above, it is concluded that it is important to take every precaution as will be discussed below.



Labor and tax authorities have been skeptical of the use of outsourcing because they believe that subcontracting personnel has, in many cases, been used as a strategy to dodge labor obligations mainly affecting the income of institutions in charge of providing social security services, as is the case of the Mexican Institute of Social Security (IMSS). Last revisions of the law in this area impose a number of essential requirements:

i.- That subcontracting personnel (outsourcing) is not categorized as a fraud that would imply criminal liability on the entrepreneur; and

ii.- That the VAT reported by the company be creditable and as a result that this payment be deducted in the terms of the Income Tax Act. If the requirements are not met for the outsourcing to be lawful in the terms of the Federal Labor Act; of the IMSS Act; of the VAT Act; and of the Income Tax Act, as expenses of these salaries and wages are not deductible which comprise a relevant percentage of the expenditures of the company, there will be an impact on the pocket of an entrepreneur, along with an increase of the PTU (Workers’ Share in the Profits), with a serious financial outcome for employers.

iii.- Companies subcontracting personnel ought to register as withholders and make sure that their outsourcing providers are registered.

In the state of Jalisco, beginning on January 1, 2017, companies, in addition to withholding 2% of the Payroll Tax of employees working under an outsourcing structure in accordance with the Revenues Act of the State of Jalisco, will perform as the exchequer verifying that the outsourcing company complies with its tax obligations or, otherwise, this expenditure may not be deducted with the SAT (Tax Revenue Service). It is no longer an incentive for a company paying for an outsourcing service to be discharged from a worker’s tax burden.

Let us also recall that providing subcontracted services (outsourcing) is understood as a vulnerable activity in the terms of subsection b) of subparagraph XI of article 17 of the Federal Law for the Prevention and Identification of Transactions with Funds from Illegal Sources (Anti-money Laundering Act); therefore, provision of professional services must be identified, when there is no labor relationship, where management operations and managing funds, values or any other asset of customers are performed.



It has been fully discussed earlier that the last revisions of the Commercial Bankruptcy Law dated January 2014, which rules the legal procedure on financial restructuring and company bankruptcy, sets forth a special chapter (Title Eleven Bis), imposing new financial liabilities when filing for damages incurred against the same company or against other shareholders of the company, both to members of the Board of Directors and to the Director General and physical persons with a job, position or commission in the company, who knowingly adopt, order or execute acts, omissions or conducts that give rise to or harm the insolvency condition of the company, to the detriment of creditors or even to the same shareholders who have not performed such actions. The Bankruptcy Law sets forth what the liability is of the members of the Board of Directors and relevant employees for damages resulting from acts, omissions or conducts that have harmed the insolvency condition of the company or of the entrepreneurial group.


Likewise, in year 2014, new felonies were devised for company managers, which result in the obligation to compensate for damages. It is an innovation in Mexico that illegal actions committed by company management are regulated and penalized. By way of example, the case of a bank employee will be discussed who, taking advantage of her position diverted funds and millionaire deposits to the detriment of a local company. When this fraud was detected and the bank employee was sentenced to prison and to pay for damages, since she did not have enough funds, a civil action was redirected against the bank, which, in terms of the Federal Criminal Code, is required to account for the damages incurred by its employees within the scope of its performance. The case of a gas company will also be mentioned whose management gave instructions to its employees to paint and retouch damaged gas cylinders to conceal wear and tear, which resulted in the explosion of more than one cylinder causing the death of one person and serious injuries to entire families. In this case, a criminal suit will be brought against the company, as a legal entity, as well as against its administrators who will be liable for damages incurred, regardless of the fact that the person responsible for supervising the gas cylinders provided to customers ought to be held on criminal charges as is required by the case at hand.


In order to prevent from incurring in any personal and financial liability as mentioned herein above, the following measures are suggested:


a. Incorporation Charters or Company Bylaws should be amended to safeguard partners, shareholders and board members.

b. Detailed and special powers of managers in the Company Bylaws should be specified.

c. Whoever is responsible in the accounting, taxing, financial, supervision areas, etc. of the company should be stated as well as whoever is participating directly in the performance of actions incidental to the position held.

d. Members of the board must vote against, and this will be put on record in the minutes, when an appointment of the board is made and where illegal resolutions are made or when they are not in agreement. This is also applicable to partners and shareholders in the case of Records of Meetings of Shareholders.

e. Tax strategies must not be authorized where whoever makes the proposal does not make it in writing and where there is criterion to the contrary by tax authorities.

f. It must be ensured that the tax advisor and the person who is responsible for the accounting are external to the company, so that they are solely responsible for making tax returns and accounting entries.

g. Generally, to leave it in writing that partners or board members will not participate in the management of the company, and specify who will perform that role.

These are some suggestions to prevent partners or shareholders or board members from incurring in civil or criminal liability who do not partake in managerial actions. Do remember that you must always seek advice from persons who are specialist in each of these matters.

Taken from the magazine Consejo Empresarial, La Revista Mexicana de Asesoría Integral Corporativa, March-April 2017, Year 3 #19, 44-48.

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