CORPORATE GOVERNANCE

Some background information

• 1996: Mexico "Code of Corporate Principles and Best Practices", (Consejo Coordinador Empresarial). 
• 1999: "Principles of Corporate Governance" (Organization for Economic Cooperation and Development (OECD)).

What is corporate governance and what is it for?

• Known as "corporate governance" or "good corporate practices".
• It consists of the rules, procedures, guidelines, manuals and in general regulations that a company implements internally for its operation as an individual legal entity and as that legal fiction that aims to perform a function within the society of a country and that its interaction is not only with other legal entities, but with governments, customers, suppliers in order to provide a service, products, economic or social activity that is used by them. 
• Through its self-regulation, it allows not only the correct operative functioning for which it was created, but also provides an element of trust, commitment, good practices, but above all responsibility of the moral entity, generating in the stockholders the confidence that the services or goods they offer or receive from the governed society are supported in their processes and that they have mechanisms to demand rights or settle their obligations, even for the governments of the countries they represent the certainty that these governed companies have mechanisms for the fulfillment of fiscal obligations, social security, responsibility before society and the environment.
• It regulates the vulnerable activities carried out by legal entities in the countries, as well as controls the reporting of these activities, holding accountable the legal entities and individuals that own, benefit from or control them.

Guiding principles of corporate governance a:

• Transparency: obligation to reflect with certainty the accounting, tax, legal and administrative information of an organization, on the one hand, for better decision making by internal agents (shareholders, partners, administrators and managers with decision-making powers) and, on the other hand, for the management of such information by obligation imposed by national legal frameworks, by external agents (investors, clients, suppliers and governments), through the implementation of clear, documented internal procedures, administered by specialized bodies for the best operation and practices of any area of the entity. 
• Responsibility: based on the operation of the members that integrate the directive, administrative or decision-making bodies within a company, which details the scope of the functions, self-regulation mechanisms of the interaction between the bodies and the individual responsibility of each person for the function he/she performs, without leaving aside the civil, commercial, ecological and even criminal responsibility of the entity or company. In this regard, it is convenient to have manuals of conduct, ethics, equality among people, as well as procedures that regulate the internal and external conduct of the entity. 
• Independence: vital for the self-regulation of the company's internal management bodies, containing the procedures and scope of activities, responsibility, but above all of the so-called "stockholders" or third parties who are not internal agents of the company, but who, due to their daily interaction and importance in the relationship with them, have or influence the life of the company, such as customers and suppliers. Legal certainty and clarity are sought for decision making in order to avoid pernicious elements such as corruption, bad practices and influences for the legal entity. 
• Administration: essential activity for the daily operation of legal entities; it refers to the implementation of operating rules that allow interaction in processes and procedures between the company's bodies, ranging from the rules for the board of directors, agreement between partners, governing bodies and all departments, from production, treasury, to human resources. The elaboration of codes and manuals is vital, but their implementation and supervision is complementary to effective governance.

Why do I need corporate governance?

To obligate and bind the legal fiction that is the entity with internal and external agents not only to respond in case of liability, but also to exercise rights affecting the negotiation. 

For the self-regulation of a legal entity for the benefit of its decisions and administration; operation and responsibility, as well as from an individual perspective, for the benefit of every human being who works, interacts or is linked for any reason to society, ensuring their human rights, personal information and the environment to improve opportunities with customers and international suppliers in the long term and intangible as a better organization in the short term.

Is it an investment or an expense?

It is an investment because, in spite of the economic and human resources required for its implementation, in the long run it will represent a tangible benefit for society, reflected in better business opportunities such as entry into regulated and strict markets where only certified companies participate and with controls inherent to corporate governance; It may also represent a lower grade or risk rating for the financing requested by the entity, since rating agencies and participants in the financial sector (with corporate governance) base the amounts available for credit on risk control, so that the lower the risk, the greater the opportunity for low-cost financing.

It is unquestionable that corporate governance is not only a tool that helps to maximize the operability of a company, but that guarantees its operation and viability over the people, this means that self-regulation is synonymous with a smooth operation regardless of the person in charge of decision making, because such decisions do not depend on the person who is in charge but on the internal procedures, or the corporate governance itself that will guarantee the jobs and operation of the company as well as its subsistence.