Responsibility of the Board of Directors
The corporate governance framework should stipulate the company’s strategic guidelines, effective management control by the Board of Directors and the accountability of the Board of Directors to the company and its shareholders.
A. The members of the Board of Directors should perform their duties in good faith, with due diligence, care and reserve, always looking out for the best interests of the company and its shareholders, having complete information.
B. When the decision of the Board of Directors could affect different groups of shareholders in a disparate manner, the Board of Directors should act fairly with all shareholders.
C. The Board of Directors must at all times take into account the interests of stakeholders, always ensuring compliance with the law.
D. The Board of Directors should perform certain key functions, namely:
1. Evaluate, approve and direct the corporate strategy; establish objectives and goals as well as major action plans, monitoring, control and risk management policy, annual budgets and business plans; monitor their implementation; and supervise major expenditures, investments, acquisitions and disposals.
2. Select, control and, when necessary, replace senior executives, as well as determine their compensation.
3. Evaluate the remuneration of senior executives and members of the Board of Directors, ensuring that the procedure for electing directors is formal and transparent.
4. To monitor and control potential conflicts of interest between management, the members of the Board of Directors and shareholders, including the fraudulent use of corporate assets and abuse in transactions between interested parties.
5. Ensure the integrity of the company’s accounting systems and financial statements, including an independent audit, and the existence of appropriate control systems, in particular, control of financial and non-financial risks and compliance with the law.
6. Monitor the effectiveness of the governance practices in accordance with which it operates, making changes as necessary.
7. Oversee the information policy.
E. The Board of Directors should be able to exercise, independently of management, objective judgment on corporate matters. To this end, it should take into account that:
1. The Board of Directors may form special bodies according to the needs and dimension of the company, especially the one that assumes the auditing function. Likewise, these special bodies may refer, among others, to the functions of appointment, remuneration, control and planning. These special bodies shall be constituted within the Board of Directors as support mechanisms and shall preferably be composed of independent directors, in order to make impartial decisions in matters where conflicts of interest may arise.
2. The members of the Board of Directors shall devote sufficient time to their responsibilities. The Board of Directors shall meet with a frequency that ensures the adequate and permanent follow-up of the company’s affairs, and that is in direct relation to the company’s corporate interest. It uses the technological means permitted by law when face-to-face meetings among its members are not possible.
3. The number of members of the Board of Directors of a company should ensure a plurality of opinions within the same, so that the decisions adopted therein are the result of an appropriate deliberation, always observing the best interests of the company and its shareholders.
F. The members of the Board of Directors must have access to accurate and relevant information on a regular basis in order to carry out their responsibilities. Information regarding the matters to be discussed at each meeting should be made available to the directors in advance so that they can review it, except in the case of strategic matters that require confidentiality, in which case it will be necessary to establish mechanisms that allow the directors to adequately evaluate such matters. Following clearly established and defined policies, the Board of Directors decides on the hiring of specialized advisory services required by the company for decision making.
G. The remuneration of directors should be set in direct relation to their dedication and professional experience, and moderation should be the main premise when setting such remuneration. Such fees should generate incentives to align the interests of the directors with those of the shareholders.
H. The operability of the Board of Directors must consider that:
1. New directors should be instructed on their authority and responsibilities, as well as on the characteristics and organizational structure of the corporation.
2. The principal directors should inform the alternate and substitute directors of the matters discussed at the Board meetings, so that their possible intervention does not hinder the normal course of the Board’s decisions, considering that they may replace any vacancy, absence or impediment at any time. Likewise, the alternate and substitute directors shall inform the principal directors that they temporarily replaced, regarding the sessions in which they participated.
3. The procedures to be followed by the Board of Directors in the election of one or more replacements, if there are no alternate directors and the vacancy of one or more directors occurs, in order to complete their number for the remaining term, when there is no provision for a different treatment in the bylaws, must be established.
I. The functions of the Chairman of the Board of Directors, Executive Chairman if applicable, as well as the Chief Executive Officer must be clearly delimited in the bylaws or in the internal regulations of the corporation in order to avoid duplication of functions and possible conflicts.
The organizational structure of the company should avoid the concentration of functions, powers and responsibilities in the persons of the Chairman of the Board of Directors, the Executive Chairman, if applicable, the Chief Executive Officer and other officers holding managerial positions. With respect to the functions, powers and responsibilities of the General Management, the following should be considered:
1. Management must have sufficient autonomy to carry out its functions adequately within the guidelines established by the Board of Directors.
2. Management shall act under the same principles of diligence, loyalty and discretion that the Board of Directors has.
3. The Chief Executive Officer must comply with the approved policy of providing information to the Board of Directors or to individual directors, without prejudice to the responsibilities established in the bylaws.
4. The General Manager must respect the powers and roles of the other managers in such a way that there is no concentration of such powers and roles.
5. It is recommended that Management receive at least part of its compensation based on the company’s results, in order to ensure that its objective of maximizing the company’s value for the benefit of its shareholders is achieved.