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Guest Opinion / Victor Manuel Peña Briseño: Corporate Negligence.


The Good Corporate Governance Practices, promoted by the Organization for Economic Cooperation and Development (OECD) and which in our country were collected by the Business Coordinating Council (CCE), forming the Committee on Best Corporate Practices and creating the Code of Best Corporate Practices: Nowadays, such are proving not to be enough for the entrepreneurs to become aware of the importance and seriousness of not only their economic function, but of their social function.

Sound management of the company is no longer an option; it is not just an ethical obligation in business. The large number of companies that have been managed in a negligent or fraudulent manner by their leaders, affecting thousands of clients, suppliers, investors, the banking and financial sector, the workers who work there, the Treasury and market in general, have forced the Mexican legislator to regulate this managerial activity in business and to classify certain actions as fraudulent or willful conduct that constitute crimes that deserve jail sentences and compensation for the damages caused to those who are affected.

Before continuing with these comments, it is essential to remember some recent cases in which improper or fraudulent management has damaged an important sector of society. We refer to the Ficrea case, a popular financial institution in Mexico that committed fraud to more than 4,370 of its clients for a total amount of more than 5,500,000,000 pesos. This is a sad example of how an unhealthy, negligent and misleading management can bankrupt a company in which thousands of its clients had put their trust and their savings into and today have been defrauded.

The latest reforms to the Commercial Bankruptcy Law (January 2014) establish two types of liabilities of the managers of a bankrupt company:

Liability to compensate damages. The insolvent merchant shall be paid damages by the members of its board of managers, as well as by the general manager; persons who, by reason of their employment, position or commission, adopt, order or perform acts, omissions or conduct that have caused or aggravated the insolvency of the company.

In order to avoid that the members of the Board of Managers or the relevant employees referred to in the previous lines are forced to compensate, these managers must always act in good faith, comply with the company’s bylaws on a timely basis and base their decisions or votes on information provided by a legal entity providing external audit services or independent experts, whose capacity and credibility do not provide reasonable cause for doubt.

New criminal liability. When the Bankruptcy Law was reformed in 2014, new offenses were also created for the managers of the company mentioned earlier. Many of the conducts that give way to the obligation to compensate damages, as discussed above, are also grouped as offenses that deserve a penalty of 3 to 12 years in prison. The law punishes any act or fraudulent conduct made before or after the creditors file for bankruptcy, that causes or aggravates the breach generalized in the payment of its obligations.

The penalties shall be imposed on members of the board of managers, sole manager, general director, relevant employees or legal representatives of the merchant who perform any of the behaviors categorized in the law, unless they act in the same terms in good faith and within the framework of legality we mentioned previously.

With this and other legal regulations punishing the management of companies who act in a fraudulent manner, we expect the professionalization of the management and that the entrepreneurs become aware that an inadequate management of their company could result in serious sanctions against them.

Ph.D. in Law

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