Source: Royal Decree 609/2023, of July 11, 2010 | Public Treasury.

Effective: As of September 19, 2023

In Spain, Decree 609/202 Decree 609/2023 was published, issuing the Regulation for the creation and operation of the Central Public Registry of Definitive Beneficial Ownership in Spain to extend the applicable regulation on the identification of the Ultimate Beneficial Owner (UBO) of Spanish legal entities or entities or structures with or without legal personality ( trust type trusts and similar), including when they have eventual commercial operations or are owners of land in Spain and whether or not they are administered in Spain or in other member countries of the European Union (EU).

In this sense, in Spain, as in most of the world, including Mexico, mandatory regulations have been established which, although they may change from one country to another, have the common objective of identifying, tracking and monitoring locally and internationally the individuals who control and obtain the final profits of the companies, in order to avoid money laundering and financing for criminal activities. Therefore, it is necessary to collect the information with which such individuals are identified, since in addition to being mandatory, it currently implies an international tax compliance, with which multinational companies may exchange the identification and control information that they integrate in each of the countries in which they operate and thus expedite the compliance to which they are obliged in such countries. The Spanish Decree and regulations establish, among others, the following: 

• Incorporate information obtained from other databases that are centralized in said registry and by the transfer of data between it and the different registries of legal entities.

• Failure to comply with the obligation to identify and inform the Central Registry of Real Estate Titles will result in the closure of the registry. 

• To be reported are names, date of birth, identification documents and their countries of issue, countries of residence, nationality, e-mail addresses and criteria that qualify them as UBOs. 

• With respect to trusts or similar, the identity of settlors, trustees, protectors, beneficiaries and any other individuals who ultimately exercise control of the trust must be disclosed. 

• The information will be public and will be available for as long as the individual is a beneficial owner and for 10 years thereafter.

• The information may be accessed, provided that the legitimate interest is proven and the identity is proved, being able to know only the name, surname, month and year of birth, country of residence and nationality of the final or real beneficiaries; except when the beneficiary has privacy.

• Information on beneficial ownership must be provided to the new registry within 9 months of the entry into force of the Royal Decree, even if the sectoral registries have already been informed beforehand.

• Any change in its actual ownership must be reported to the Commercial Registry within 10 days, otherwise the commercial registration will also be cancelled.

1. Protocol amending the Double Taxation Avoidance Agreement between Germany and Mexico (DTAA).

In the evening section of the Official Gazette of the Federation (DOF) of August 4, 2023 DOF - Diario Oficial de la Federación, the Protocol to the DTA entered into by Germany-MX was published, in order to amend said agreement and implement the measures of the Multilateral Convention to prevent tax base erosion and profit shifting derived from regulatory loopholes or omissions used by multinational companies to obtain tax benefits.

Source: https://www.dof.gob.mx/nota_detalle.php?codigo=5697685&fecha=04/08/2023#gsc.tab=0 

Among its most relevant aspects, this Protocol modifies the following:

• It is established that the Convention has the objective of eliminating double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including the practice of treaty shopping that seeks to obtain the benefits provided for in this Agreement for the indirect benefit of residents of third States).

• Permanent establishment (PE): The activities exempted from constituting a PE will be conditioned to be auxiliary or preparatory activities, or activities that are not essential and significant.

• Dividends: A holding period of 365 days is established as a requirement to apply the reduced withholding rate of 5% of the gross amount of dividends, the beneficial owner of which is a company that directly owns at least 10% of the capital stock of the company paying the dividends. It is established that in order to calculate such period or term, changes in ownership due to corporate reorganization (merger or spin-off) of the company paying the dividends will not be taken into account.

• Capital gains: Gains from the disposition of shares or other comparable participation rights, such as partnership interests or trusts, may be subject to taxation in the source State if, at any time within 365 days preceding the disposition, those shares or comparable participation rights derive more than 50% of their value, directly or indirectly, from real property, located in the source State.

• Special Cases: The Convention is established to be applied in specific cases so that it is not interpreted to prevent a Contracting State from applying the provisions of its domestic legislation on the prevention of tax evasion or avoidance, including the provisions on thin capitalization and preferential tax regimes.

2. Technical assistance is not a business benefit for purposes of the DTA between the Netherlands and Mexico. 

By means of jurisprudence thesis No. IX-J-SS-70, of the Federal Court of Administrative Federal Justice (TFJA), which is visible in the TFJA Magazine of June 2023(Biblioteca CESMDFA | | TFJA), it was resolved that the income obtained by a resident of the Netherlands for technical assistance will not be considered business profits.

In this respect, the thesis indicates that, if the concept of technical assistance is not included in the Convention or within the income regulated separately in the same, it does not mean that such income is business profits and, therefore, in the terms of the Convention itself, the meaning attributed by domestic legislation must be considered and observed.

In this sense, the domestic legislation, on the one hand, defines technical assistance as an independent personal service and, on the other hand, establishes that it is not a business activity; Therefore, according to the case law, for purposes of the Convention, the income derived from such assistance should not be considered business profits, but in addition, the income obtained by a tax resident of the Netherlands, due to technical assistance services, should be directly taxed in Mexico under the terms of article 167 of the Income Tax Law (LISR), that is, as royalties, subject to the withholding of 25%, tacitly establishing that such income will not even be subject to the Convention.

However, we find the tax treatment determined and, in general, the whole thesis debatable, since, among other aspects, in our opinion there is a confusion between the activity that triggers the income, the nature of the income obtained from such activity and the treatment applicable to it, in the sense that if the case law considers that income from technical assistance is not business profits and should be taxed as royalties, the Convention would be applicable and not only the domestic legislation, which, contradictorily to what it intends, is not interpreted accurately at all.

For companies operating in multiple jurisdictions, it is necessary to understand, manage and address the challenges and effects of international taxation in terms of both domestic and international regulations, as well as the assumptions that by virtue of their operations affect tax residency, double taxation, preferential tax regimes, anti-abuse rules, controlled foreign company (CFC) rules, inter-company transactions, transfer pricing, international asset and financial structures, among others, preferential tax regimes, anti-abuse rules, controlled foreign company (CFC) regulations, inter-company transactions, transfer pricing, international asset and financial structures, among others, in order to have legal certainty about their strategy and thus be able to optimize their tax burden.

Common tax structures and best practices for complying with tax requirements in different countries include income tax regimes, value-added taxes (VAT), capital gains taxes, and various import and export taxes. These regimes vary from country to country and can affect both individuals and companies.

It is also common to find tax incentives and exemptions for certain activities or economic sectors. In that sense, in order to comply with international taxation requirements, a thorough understanding of the applicable regulations, the support of experts and a proactive approach to ensure compliance and effective tax management is indispensable; within the best practices for this, we have the following:

a) Professional Advice: Having specialized and local tax advice is essential to understand the complexity of the tax regimes in each country and to comply with tax obligations properly.

b) Regulatory Knowledge: Keeping informed about current tax laws and keeping abreast of regulatory changes and updates is crucial to ensure ongoing compliance, including knowledge of applicable tax treaties, such as double taxation, exchange of information, transfer pricing, tax compliance of foreign accounts, among others.

c) Accurate Accounting: Accurate and detailed accounting is essential to calculate and declare taxes correctly, avoiding errors that may result in penalties.

d) Timely Compliance: Comply with the deadlines established for the corresponding formalities or procedures, as well as for the filing of returns and payment of taxes generated; in order to avoid legal accessories such as updating and surcharges, the imposition of fines or even the commission of tax offenses.

e) Strategic Tax Planning: Implementing strategic tax planning can help optimize the tax burden in a legal and ethical manner.

f) Withholding Tax: Understand withholding tax requirements when conducting international business transactions or paying foreign suppliers.

g) Retain Documentation: Keep all tax records and documents in order and available for tax audits or reviews.

h) Adaptability: Since tax regulations may change, it is essential to be adaptable and adjust to new requirements.

Civil compensation is not a form of payment of VAT.

A few months ago, in March 2023, in resolving contradiction of criteria 413/2022, the Second Chamber of the Supreme Court of Justice of the Nation (Listado de Comunicados (scjn.gob.mx)) ruled that from the interpretation of articles 1, 1-B, 5, 17 and 18 of the Value Added Tax Law (LIVA), the compensation, applicable in civil matters, is not a form of payment of the value added tax (VAT), nor does it give rise to a request for a refund of the balance in favor or crediting of the tax; since the compensation only determines when the VAT obligation arises, but does not generate its crediting, since in order to do so the VAT must have been effectively paid to the tax authorities. 

Likewise, it was determined that, in accordance with the provisions of the tax laws, offsetting only occurs in the relations between taxpayers and the tax authority, not between the former and the latter, since article 2192, section VIII, of the Federal Civil Code, establishes that the offsetting of tax debts does not proceed. Therefore, the civil compensation is a way to determine the moment in which the consideration for the services rendered and for which the obligation to pay the tax is understood to have been effectively collected, but it does not serve to pay the tax. In this sense, it should not be held or considered that the civil compensation is a form of payment of VAT, since this would be equivalent to confusing the moment in which the obligation to pay the tax arises, with the extinction or conclusion of that same obligation. That is to say, it is equivalent to leaving it to the will of the individuals who render independent services to extinguish the obligation to pay VAT by means of civil compensation, which, as previously mentioned, is prohibited by the Federal Civil Code.

In this sense, it was resolved that the jurisprudence criterion that should prevail is thesis number 2a./J. 19/2023 (11a.), under the heading "VALUE ADDED TAX. THE CIVIL OFFSET IS NOT A MEANS FOR ITS PAYMENT NOR CAN IT GIVE RISE TO A CLAIM FOR BALANCE IN FAVOR OR CREDITING (LEGISLATION IN FORCE FOR THE 2019 AND 2020 FISCAL YEARS)", published on Friday, May 12, 2023 in the Semanario Judicial de la Federación and, consequently, it is considered of mandatory application as of Monday, May 15, 2023. Detail - Tesis - 2026404 (scjn.gob.mx), for all jurisdictional bodies in matters or controversies on this subject.

From the criterion in question, it is understood that the court considers that the primary or main debt is the civil debt and that the tax is a tax debt, which is not covered by the offset, so that the individual must pay the tax to the tax authorities, without taking into account the transfer of the tax and, if applicable, the debtor owes its creditor a global or total debt that includes the tax; However, as mentioned above, the jurisprudence already exists and is mandatory, so it is important to take it into account and, if applicable, avoid offsetting transactions that credit or transfer VAT, since it is understood that the jurisprudence can be invoked and is applicable, the tax authority will be able to reject the refunds granted in which verification powers have not been exercised, in addition to making observations of the creditable VAT determined in the monthly payments, and even if it were to deny the creditable VAT, it would also intend to reject ISR deductions related to such VAT.

No VAT crediting in the capitalization of liabilities

Likewise, on May 12, 2023, the Tenth Collegiate Court in Administrative Matters of the First Circuit published in the Judicial Weekly of the Federation an isolated thesis, in which it was determined that, in order for the crediting and refund of the VAT credit balance, the tax must be paid in cash, bank transfer or check, which is also complied with when the tax is declared and filed with the tax authority, without authorizing the payment of the tax through the capitalization of liabilities or debts, through the issuance of shares, since this is not authorized by article 1-B of the LIVA. In this sense, if the tax is intended to be covered through the issuance of shares, it does not comply with the requirements to consider it as effectively paid and, therefore, the refund of the tax credit balance that may be generated or its crediting is not applicable. Thesis: I.10o.A.21 A (11a.) (scjn.gob.mx)

In this regard, it is necessary to take into account that the cited criterion is an isolated thesis and not jurisprudence, therefore, although it is true that it is not a mandatory criterion, it is also true that it guides the jurisdictional bodies in the matters or controversies on the subject and they may apply them, as long as there are no criteria to the contrary that are mandatory. 

Chronology

• Subscription: October 14, 2017
• Approval: June 18, 2022 DOF - Diario Oficial de la Federación (Official Gazette of the Federation)
• Entry into force: July 2, 2023
• SHCP Announcement: July 5, 2023
• Implementation: January 1, 2024

What is it?

The Pacific Alliance is made up of Chile, Colombia, Mexico and Peru, which signed the "Convention to Standardize the Tax Treatment provided for in the Double Taxation Avoidance Agreements signed between the States Parties to the Pacific Alliance Framework Agreement", with the purpose of modifying the bilateral double taxation avoidance agreements signed between countries, in order to contribute to the economic reactivation of the region.

What does it establish?

The convention establishes the following:

1. Pension Funds

It recognizes pension funds as residents for purposes of the application of the agreements to avoid double taxation, so that such funds may apply the benefits of such agreements and will be considered effective beneficiaries. For such purposes, the following are considered pension funds:

Interest and capital gains

Equalizes the tax treatment for interest income and capital gains from the sale of shares through a stock exchange that is part of the Latin American Integrated Market (MILA) and received by pension funds.

a) Interest: It is established that interest from any of the member countries whose recipient is a recognized pension fund also from any of the member countries, will be taxed in the country of residence of the recipient and not of the source; however, it may be taxed in the country of source, but the tax may not exceed 10% of the gross amount of the interest. However, the tax treatment of the treaties may be applied when the interest is taxed at less than 10% of the gross amount of the interest or is exempt in the member country from which the interest arises due to the legal nature of the debtor.

b) Capital gains: Capital gains obtained by a recognized pension fund of a member country from the sale of shares representing the capital of a company that is a resident of a country that is a Party to the Convention through a stock exchange that is part of the Latin American Integrated Market (MILA), can only be subject to taxation in the country mentioned first (residence).

It should be noted that, with respect to Peru and Mexico, the convention will apply, although the protocol to the double taxation avoidance treaty between those countries is not applicable when the recipient of the interest income or capital gains, as applicable, being a resident of one of those countries, is not subject to taxation or is exempt with respect to such income under the laws of the country of residence.

Source: Convention-para-homologar-el-tratamiento-impositivo.pdf (alianzapacifico.net)

Pacific Alliance Double Taxation Avoidance Convention entered into force and will start to apply as of January 1st - Pacific Alliance (alianzapacifico.net)

CONVENTION TO AVOID DOUBLE TAXATION OF THE PACIFIC ALLIANCE ENTERED INTO FORCE AND WILL BEGIN TO APPLY FROM NEXT JANUARY 1 | Secretaría de Hacienda y Crédito Público | Government | gob.mx (www.gob.mx)

The integration of sustainability into financial decision making has become an important trend in recent years, driven by the growing awareness of environmental and social challenges. Speaking specifically of the financial sector, it is important to take on this responsibility and initiate this transition in business models, products and services, integrating their management with that of their risk management and compliance frameworks.

Responsible investment: Financial sustainability implies considering environmental, social and governance (ESG) aspects as a financial indicator that investors look for in business models when making investment decisions, in addition to seeking opportunities that are financially profitable in the long term and aligned with sustainable principles.

Reporting and disclosure: Financial institutions should be transparent about their sustainable practices and performance. This includes disclosing information on ESG investments, risks related to climate change and other relevant factors.

Environmental and social risk management: Financial institutions must assess and manage the environmental and social risks associated with their activities. This implies considering the direct and indirect impacts of investments in terms of climate change, human rights, conservation of natural resources, among others.

Sustainable financing: Financial institutions can promote sustainability by offering financial products that encourage responsible practices. This includes financing environmentally friendly projects, renewable energy, energy efficiency, as well as loans to socially responsible companies.

Participation in dialogues and partnerships: The financial sector can play a key role in promoting sustainability by engaging in dialogues with governments, non-governmental organizations and other relevant stakeholders. This helps to generate common standards, share best practices and promote the adoption of sustainable approaches across the sector.

Integration of ESG criteria in decision making: Financial institutions are increasingly incorporating ESG criteria into their risk analysis and decision making. This involves evaluating not only the financial aspects of an investment, but also the associated environmental and social impacts.

Innovation and development of sustainable financial products: The financial sector is driving innovation in sustainable financial products, such as green bonds, green loans and climate insurance. These products encourage the financing of sustainable projects and help investors manage climate change-related risks.

On May 8, 2023, the DECREE amending, adding and repealing several provisions of the Mining Law, the National Water Law, the General Law of Ecological Balance and Environmental Protection and the General Law for the Prevention and Integral Management of Waste, regarding mining and water concessions, was published in the evening section of the Official Gazette of the Federation (DOF), which enters into force the day after its publication, that is, on the 9th day of the month and year indicated.

The most relevant aspects of the reform are

• It is established that the Ministry of Economy may coordinate with the tax authorities in order to gather the necessary information to verify compliance with the obligations of the holders of mining concessions. 

• The obligation to verify the execution of works and exploitation works in an accounting and financial manner is added, including in the verification reports the delivery of statistical, technical and accounting information regarding the situation of the mining lot under concession, as well as the obtaining, production and benefit of minerals or substances that are the subject matter of the concession. Likewise, if any, the identification data of the concession holders that benefit minerals or substances (materiality figure and final mining beneficiaries) will be provided.

• Additional grounds for cancellation of mining concessions are added, including, among others, failure to pay taxes for two consecutive fiscal years; failure to submit required reports; failure to have the water concession for industrial use in mining in force; as well as the existence of an imminent risk of ecological imbalance.

• Mining concessions will be granted only for exploitation (not exploration) through public bids or contests carried out by the Ministry of Economy and will be limited to those places determined appropriate by the State, in addition, mining concessions cannot be granted in Natural Protected Areas.

• Free, prior and informed consultation with indigenous and Afro-Mexican peoples and communities is established to obtain the consent of such peoples and communities for the granting of the concession title. In addition, when the concessioned land is located in an indigenous or Afro-Mexican population or community, the concessionaire must pay a consideration of at least 5% of the net profit, and must also deliver a copy of the corresponding declarations to the community in question. The resources of the consideration will be deposited in an account to be administered by the community in accordance with the operating rules issued by the Ministry.

• Concessions may only be per mineral or substance. The concession title must specify each mineral or substance to be exploited. However, more than one mineral may be exploited, but it must be provided for in the concession title. After the concession title has been granted, if there is any other mineral in the lot, the concession may be requested and extended in the respective title with the corresponding payment.

• The duration and extension of mining concessions is reduced from 50 to 30 years, of which the first 5 years will be for pre-operational activities. Concessions will be extended for one single occasion, for a term of 25 years, for a total of 55 years, as long as they do not apply any assumption or cause for cancellation and they request it within 2 years and up to 1 year before the end of its term, and have the necessary authorizations and permits for its operation from all the authorities involved, such as the Ministry of Environment and Natural Resources (SEMARNAT), the National Water Commission (CONAGUA) and even from the state and municipal authorities, as well as the water concession for industrial use in mining. After the 55 years of the concession, or once the extension is concluded, the holder of the concession may participate in the bidding of the same mining lot, in which case it will have preference for the determination of the ruling if it equals the highest proposal; this concession will be granted for a non-extendable term of 25 years.

• The Ministry of Economy is empowered to initiate a judgment of annulment against administrative resolutions and concessions that harm the public interest; therefore, it may revert a resolution previously issued in favor of a private party and that is contrary to the Mining Law.

• The exploration of the territory for the search of minerals will be exclusive of the State through the Mexican Geological Service. However, private parties may inform the Ministry of Economy about the existence of minerals or substances in an unassigned or concessioned lot, so that it may determine the convenience of ordering the exploration and, if applicable, enter into a collaboration agreement with the private parties to carry out the exploration. If in the lot there are minerals to be explored and they can be the object of a concession, a contest may be held in which the private parties that carried out the exploration have the right to obtain it if they offer at least 90% of the highest proposal and comply with all the requirements. That is to say, those concessionaires that participate in a bidding process for lots neighboring the lot they have a concession for will have preference to match the highest bid.

• The transfer of concession titles is regulated, establishing that they may only be transferred when it is for the mining activity, with prior authorization from the Ministry of Economy, and the requirements covered by the original holder are met.

• The power of the Ministry of Economy to review compliance with the duties and obligations in mining matters is increased from 5 to 10 years, as well as to sanction non-compliance; in addition, fines are also increased.

• On the other hand, the figure of the water concession for specific use in mining is established. The mining concession is conditioned to the availability of water and, if applicable, to the mining water concession previously obtained.

• The term of the concessions for the use or exploitation of national waters in mining is equal to that of mining concessions. Likewise, in the water concession, the supply of water for human and domestic consumption is a priority in the granting of the water concession; if there is a shortage of water for the population, the volume of concessioned water may be reduced, including its cancellation, in order to guarantee the human rights to water and the environment.

• In addition, concessionaires are required to recycle at least 60% of the water granted.

• The figure of allocations in favor of parastatal entities is transformed, which may be in charge of the exploration or exploitation of minerals without competition and for an indefinite term in the case of minerals such as lithium and uranium, which are reserved to the State.

• Mining concessions may be subject to guarantees for compliance with the obligations of their holders, provided that the corresponding mine is in operation, prior authorization is obtained from the Ministry and the person in whose favor the guarantee has been issued demonstrates that he/she meets the requirements to be a concessionaire or, in the absence thereof, must assign the rights of the concession.

• Additional obligations are incorporated for mining concession holders, such as, among others, determining the social and environmental impacts of each mining concession, notifying the start of operations, reporting or submitting various reports on permits, authorizations, opinions on labor matters such as health and safety, and assigning mine managers.

• The assumptions of "afirmativa ficta" are eliminated, changing to "negativa ficta", so that if the Ministry of Economy does not respond to a procedure it will be understood as denied.

• It is added that the concession will be suspended when there are accidents or accidents within the mining lot, while the competent authority determines what is appropriate and requests the lifting of the suspension.

• A chapter on crimes is included in order to punish criminal conduct in mining matters, including, among others, the extraction, sale and trafficking of minerals or substances without having the respective concession, as well as causing harm to workers due to lack of physical safety, by failing to comply with their obligations in the area of mine safety.

• It adds and regulates the process of closure of the mining activity, which must include a work plan that establishes the obligations, procedures and actions to be carried out by the concessionaires and assignees for the repair, restoration, rehabilitation or environmental remediation and mitigation or social compensation, once the mining operations are concluded; such plan must be submitted within two years and up to one year prior to the closure of operations and be approved by the Ministry of Economy, with the opinion of the Ministry of Environment and Natural Resources, in relation to the corresponding Restoration, Closure and Post-closure Program. 

• The grounds for revocation of the water concession are broadened to include events or acts of public interest and failure to comply with the Restoration, Closure and Post-closure Program provided for in the General Law of Ecological Balance and Environmental Protection.

• Underwater mining and mining in protected natural areas is eliminated. 

• The regulation regarding the management of mining and metallurgical waste is integrated, limiting its final disposal in national protected areas, wetlands, watercourses and federal zones of national waters or in places where the path that the waste would follow in case of rupture would affect population centers. It also establishes the obligation to guarantee responsibility for the waste generated by mining activities.

• The free land scheme is eliminated, which will prevent the application for concessions in any part of the national territory indicated by private parties. The figure of first applicant is also eliminated.

• The definition of "Use or exploitation" is added, understood as the right to obtain and dispose of the resources derived from the exploitation and benefit of mining activities.

• The preferential nature of mining activity is eliminated and, therefore, the right of concession holders to obtain the expropriation of land for mining exploitation is eliminated. Expropriation must be reserved for cases of public utility.

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.