Luis E. de Garate: Evolution of the Code of Best Practices for Corporate Governance in Mexico

Recently, the Business Coordinating Council (CCE) published the new version of the Code of Best Practices in Corporate Governance for our country and taking advantage of the event, this article addresses the evolution of said document and its importance for companies in Mexico.

Corporate Governance Codes have been key in the professionalization of business administration, promoting transparency and trust among investors, employees and society. At an international level, organizations such as the OECD and the G-20 have established standards of social responsibility and sustainability. In Mexico, the Business Coordinating Council has led the evolution of the Code of Best Practices in Corporate Governance since its first version in 1999, adjusting it to the demands of the global environment.

The Code of Best Practices in Corporate Governance was created in 1999 by the CCE with the aim of strengthening the governance structure of Mexican companies and facilitating their access to financing under better conditions. Its first update in 2006 incorporated essential principles such as: Business ethics and social responsibility; Transparency in the disclosure of information; Improvements in the prevention of conflicts of interest; Strengthening the Board of Directors as a key body; and Succession plans to guarantee the stability and continuity of companies.

The Code established that the Board of Directors should assume a strategic role in business development, aligning corporate practices with international standards.

In the 2010 revised version, I was fortunate to participate through the invitation of Mr. Roberto Danel Díaz and this update introduced structural changes in response to global risks such as the 2008 financial crisis, climate change and technological acceleration. Key elements were reinforced such as: Separation of functions between the Board of Directors and operational management; Greater emphasis on the role of the Independent Director; Implementation of a formal succession plan and Risk management strategies with a more structured approach.

One of the most important changes was to reaffirm the applicability of the Code not only to public companies, but also to private ones, regardless of their size. This allowed strengthening the institutionalization of family businesses and strengthening their continuity.

In 2018, the Code was renamed the Code of Principles and Best Practices of Corporate Governance, broadening its scope and aligning it with the best international trends. The most relevant modifications include: Incorporation of the Principle of Honest and Responsible Conduct; Greater emphasis on diversity within the Boards of Directors, recommending the inclusion of women; Mechanisms for the prevention and resolution of disputes between shareholders and directors; and Creation of the Risk and Compliance function, independent of the audit.

This version reinforced the importance of sustainability and business ethics as pillars of modern Corporate Governance. Risk management ceased to be a reactive mechanism and became a strategic function of companies.

Code 2025 reflects the growing importance of sustainability, digitalisation and inclusion in the global business environment. Its main innovations include: Focus on sustainability and social responsibility; Regulation of virtual meetings of the Board of Directors; Greater emphasis on cybersecurity, data protection and digital transformation; Specific protocols for family businesses and their links with related parties and Stricter requirements on the transparency of financial and non-financial information.

This version recognizes that there is no single model of Corporate Governance, but that it must be adapted to the reality and complexity of each company. Its application seeks to prepare Mexican companies for the challenges of a global and, at the same time, regionalized economy.

The evolution of the Code of Best Practices for Corporate Governance in Mexico shows a change of focus: from a regulatory framework focused on control (1999-2010) to a strategy oriented towards sustainability and innovation (2018-2025). Its main trends include:

Ethics and Transparency: Since 2006, the importance of business ethics has been reinforced. In 2025, more robust mechanisms will be integrated to prevent improper operations and protect whistleblowers.

Risk Management: While in 2010 an administrative approach to risks was promoted, in 2018 and 2025 a proactive strategy has evolved, with specialized areas that guarantee the stability of the company.

Sustainability: Initially, the Code focused on financial stability and transparency. In the 2025 version, sustainability and social responsibility become fundamental pillars of Corporate Governance, aligning with international best practices.

Diversity and Inclusion: Since 2018, the inclusion of women on the Boards of Directors has been promoted. In 2025, the focus will be expanded to ensure greater gender diversity and equal representation in decision-making.

Code 2025 represents a key evolution in Corporate Governance in Mexico, consolidating companies under international standards and preparing them to face the challenges of the future. Its effective implementation will be crucial for business competitiveness in an increasingly demanding world.

The author is Luis Eugenio De Garate Pérez, Vice President of the Business Sector of ICPNL.

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