The First Chamber of the Honorable Supreme Court of Justice of the Nation (“SCJN”) recently issued a ruling regarding the scope of civil liability for directors and members of the management bodies of commercial companies in Mexico. In Direct Amparo in Review 7767/2023, the SCJN ruled on the circumstances under which partners or shareholders of a company may bring direct civil actions against directors.
Key points of the decision:
(i) Direct and Personal Liability: partners or shareholders may bring civil actions directly against directors or members of the management body when they suffer direct and personal harm, provided that such harm does not derive exclusively from damage or loss caused to the company.
(ii) Non-Contractual Source: the individual action is only admissible when the harm has a non-contractual origin, that is, it does not arise from internal agreements or company's bylaws. This occurs, for example, when directors act unlawfully or negligently, directly affecting the rights or individual assets of a partner. Examples of direct harm include the unjustified refusal to register a partner in the shareholders’ ledger, denial of access to corporate information, or failure to distribute dividends to a specific partner.
(iii) Distinction between Derivative and Individual Actions: the derivative action pertains to claims for damages to the company’s assets, generally brought by the company itself or by a qualified minority of partners. In contrast, the individual action allows a partner to claim direct damages to their own assets. The latter has been expressly recognized as admissible under Mexican law as a result of this decision.
Implications for Companies and Directors:
(i) Directors and members of management bodies now face greater exposure to civil liability claims from individual partners, and not only from the company itself.
(ii) Partners have a clearer legal avenue to claim direct and personal damages caused by unlawful or negligent acts of directors.
(iii) It is recommended that companies review their corporate governance practices and ensure that directors are fully informed of the scope of their liability.
It is important to note that the decision issued by the SCJN constitutes relevant precedent in this area but does not necessarily reflect the position or opinion of this firm. Furthermore, the interpretation and application of this precedent may vary depending on the criteria adopted by different courts in specific cases. Therefore, each situation should be analyzed individually, considering the circumstances of the case and the evolution of judicial precedents in this area.
For any questions or comments, you may contact our expert team.
Awards
.svg){kind=small}
