There is no general trend observable in the market. However, traditional debt financing is either very expensive or otherwise not available for young companies.  Furthermore, the venture capital market is still developing, and local investors and founders alike have limited experience with hybrid structures, so these are therefore not frequently used. Considering the above, the most common form of financing for early-stage companies is through equity (either common, preferred or with limited voting rights).

In most cases, if a company requires additional financing after the first couple of equity financing rounds, it is common for its early investors to provide support, either through equity or debt, resulting in hybrid capital structures – usually in the form of mezzanine or hybrid financing forms such as subordinated loans, shareholder loans, or convertible debentures (obligaciones convertibles) – that limit the investor’s exposure while keeping the cost of debt at a manageable level.

Typical financing arrangements in a growth or private equity financing are granted through debt, in the form of senior secured loans from development banks, other multilateral institutions and non-banking institutions. This is in contrast to venture capital financing where debt is not accessible.

The main difference between debt financings at an early or venture capital stage and loans to growth companies, is that loans granted to growth companies aim to help them scale-up their operations and working capital without mezzanine/equity components, usually through senior secured loans with collateral over the borrower’s assets and account receivables.

In some sectors, such as Mexican non-banking institutions, it is common to obtain growth funding from development and through factoring or securitisation transactions (which can be listed or private).

At this stage, some companies, depending on their track record and credit ratings, could have access to public market financing through bond or debt issuances.

In summary, the following actions are required for any company to become a publicly listed corporation (sociedad anónima bursátil or SAB) and register its shares with the Mexican Securities Registry (Registro Nacional de Valores or RNV) of the Securities and Banking Commission (Comisión Nacional Bancaria y de Valores or CNBV):

• to amend the company’s by-laws in order to adopt the regime of a corporation (sociedad anónima) and the publicly traded form (SAB), in accordance with the General Law of Commercial Companies (Ley General de Sociedades Mercantiles or LGSM) and the Securities Market Law (Ley del Mercado de Valores or LMV);
• to analyse if a reclassification and/or restructure of the shares of the company is required to comply with the applicable law for registration with the RNV;
• to define the composition and duties of the board of directors;
• to define the composition and duties of the corporate practices committee and the audit committee; and
• to define the duties and liabilities of the chief executive officer and other executive officers.

It is important to note that authorisation of the CNBV is required to register the company’s shares in the RNV, and to carry out the company’s listing or initial public offering (IPO). The filing for such authorisation (the “authorisation filing”) must include a draft of the minutes of the shareholders’ meeting of the company approving all matters described above.

In Mexico, although the public equity markets are quite relevant, they have been decreasing in size during the last decade, with most public equity transactions being carried out abroad. Companies that had no access to foreign investors and thus had completely local offerings, usually had very poor trading volumes. Companies with a track record, a solid corporate governance structure, investment-grade credit ratings, and an elevated market cap (higher than the average of Mexican companies) are usually the ones that have access to a successful registration with the Mexican Stock Exchange (Bolsa Mexicana de Valores or BMV), which reviews all requirements to approve the listing. 

Additionally, it is important to note that another stock exchange was approved to operate in Mexico – the Mexican Institutional Stock Exchange (Bolsa Institucional de Valores) – but to date no SABs have been listed.

Growth potential and maximisation are the main drivers in a Mexican company’s decision to list its shares on a stock exchange.

Prior to insolvency, various restructuring mechanisms are usually implemented in Mexico. The most common one is liability management exercises aimed at refinancing debt at a lower cost, with extended maturity and better terms. Debt capitalisations are also common but are seen more frequently in distressed companies. Capital contributions or capitalisation of shareholder loans are also quite popular and have become more common as lower liquidity in the local equity market has driven the cost of equity upwards. Therefore, existing shareholders (particularly controlling shareholders) have become a more attractive source of financing, rather than going for a public offering.

The corporate governance of a company with multiple shareholders is usually done through a corporation (sociedad anónima) or an investment corporation (sociedad anónima promotora de inversión), where several protective provisions or protections can be included. These provisions include, among other things, minority or veto rights, deadlocks, preferential rights on capital increases, right of first offer, drag-along or tag-along provisions, put or call provisions, board of directors, independent members’ requirements, information rights, inspection rights, appointment of an external auditor, etc.

There are some statutory minority rights provided for in the LGSM which are more often addressed and regulated on a contractual basis through a shareholders’ agreement and/or in the company’s by-laws. Mexican law provides for a shareholder-centric approach, as opposed to a board-centric one, and therefore the shareholders’ meeting is the only corporate body authorised to amend the by-laws.

Depending on the level of participation, veto rights are usually granted to minority shareholders to avoid dilution, debt, changes in business, mergers or spin-offs, insolvency, liquidation and other relevant matters.

As for access to information, individuals who personally sit on the board and/or are appointed a trusted member, may review the company’s financial statements on a quarterly basis. It is also common to have an audit committee for the surveillance of all audit-related matters, with audited financial statements reviewed and delivered to the board on an annual basis. Depending on a shareholder’s participation, it is also common to have the right to designate one or more officers of the company.

Depending on the size and development stage of the company, investors may provide both debt and equity financing. In the case of early-stage companies, it is common for investors to offer a combination of equity and debt funding. Additionally, it is customary for investors to provide further capital to their target companies, with a focus on fostering success. Typically, shareholder loans in early-stage or growth-stage companies are considered a favourable mechanism by all shareholders and are generally approved unanimously. However, the capitalisation of such loans requires an equity valuation of the stock before it can be approved.

This practice is less frequent in more mature companies. This is not only due to the larger financing amounts involved, which often require a syndicate of creditors for private loans, but also because mature companies usually have access to international credit markets. Consequently, it is more challenging for existing shareholders to compete with the terms available in these markets.

In Mexico, equity financing is primarily associated with shares or securities representing shares issued by Mexican companies. Corporate law is governed at the federal level, and there are primarily two dominant legal forms of entities: the publicly listed company (sociedad anónima or SA) and the public limited company (sociedad de responsabilidad limitada or SRL). The key distinction is that the SA is designed as a capital entity, whereas the SRL is characterised by the relevance of its equity holders, similar to a partnership, and consequently, Mexican corporate law mandates corporate authorisation in order to admit new partners and transfer equity interests, and it limits the number of partners in an SRL to 50. This limitation is also why an SRL cannot be publicly traded.

Although both entity types recognise equity participation, the market for securities has predominantly developed for the SA. Nonetheless, the range of financing options remains limited, with most firms adhering to tax structuring for efficiency, rather than seeking a diverse pool of investors with varying risk profiles within the capital structure.

The equity financing market in Mexico largely operates in the private sector, and Mexican companies are increasingly hesitant to raise capital through public markets via initial public offerings (IPOs). Even firms already listed on public exchanges often seek alternatives, such as contributions from existing shareholders or delisting shares, before seeking equity from private investors.

On the other hand, venture capital has experienced steady growth in recent years, and private equity has become well established in the Mexican market. International private equity firms are active participants, and the number of Mexican private equity firms has increased over the past decade. However, the Mexican securities market is the notable deviation from the equity financing model seen in most developed economies. Companies typically progress from venture capital to private equity, and then from one private equity firm to another. Only those companies with a robust financial position that are capable of accessing US capital markets tend to advance beyond the Mexican private equity arena.

The entities providing equity financing to Mexican companies, such as venture capital, growth capital, or established company phases, typically vary depending on the company’s stage of development. During the venture capital stage, key players include family offices and venture capital funds, which have significantly increased their presence in Mexico. As companies progress to the growth stage or reach a more mature phase, they generally seek equity financing from private equity firms. In this sector, international private equity firms play a significant role, with Mexican private equity firms also expanding their presence in recent years.

Mexican family offices have increasingly opted to invest in private equity firms rather than investing directly in target companies. Additionally, Mexican pension funds (administradoras de fondos para el retiro or “AFOREs”), which were previously unable to invest directly in the private market, now participate in private equity through structured securities known as trust certificates for investment projects (certificados bursátiles fiduciarios de proyectos de inversión or “CERPIs”). This shift has further disincentivised capital market transactions, as AFOREs were previously the most significant domestic investors, and their involvement through private equity firms has impacted the dynamics of the capital markets.

In Mexico, the mid-market segment is the most active in seeking equity financing due to its substantial size. Similarly, venture capital is experiencing growth, and, given its nature and risk profile, it is predominantly financed through equity, as is common in other jurisdictions.

Should this trend persist, and as the market matures, it is anticipated that the venture capital segment will expand relative to the mid-market segment. The size and stage of companies are primary factors influencing the structure and documentation mechanisms for financing. Beyond the venture capital sector, the capitalisation structure largely depends on the financial requirements of the companies, aiming to achieve an optimal balance that benefits equity holders.

The equity finance market in Mexico is mature and well established; however, it has been experiencing a decline in recent years. According to Banco de México, the number of listed companies in Mexico has decreased since 2020, dropping to a total of 133 listed entities. Notably, the only Mexican company that went public in the first half of 2024 did so in the United States through the New York Stock Exchange.

Several factors have contributed to the ongoing decline in Mexico’s public equity markets, including global economic conditions such as elevated interest rates. However, the legal framework has also had an impact on this trend. The weakened regulatory environment, coupled with recent amendments to the Mexican Securities Market Law (Ley del Mercado de Valores), have exacerbated the imbalance, tilting it in favour of incumbent management and controlling shareholders. These legal changes are likely to further drive the decline in equity market activity in Mexico through 2025.

In Mexico, privately allocated equity significantly surpasses its public counterpart. As detailed in this document, numerous factors contribute to this disparity, with one of the primary reasons being the inability of mid-market firms to access the public markets. The public equity market in Mexico is predominantly reserved for the largest companies, which can attract foreign-qualified institutional buyers, either through private offerings or by listing on a US exchange.

Despite facing economic challenges, largely influenced by political factors and decisions that have weakened the rule of law, the private equity market in Mexico continues to thrive, drawing both local and international investors. Private equity is increasingly establishing itself as a prominent investment class in Mexico, characterised by both world-class global players and emerging local participants. By contrast, the public equity markets are confronting a markedly different reality, with a bleak outlook for the foreseeable future.

Private equity deals in Mexico are typically sourced through a bilateral process. However, as the private equity scene has grown, the bidding process has become an increasingly attractive way to source deals, given the increased likelihood of maximising value extraction for companies. This is a clear example in Mexico of the way that the market has benefited from a well-established and sophisticated investor and adviser scene. On the other hand, public equity deals are always sourced through an underwriter.

In Mexico, the typical exit strategy for equity investments primarily occurs within the private market. Unlike more developed economies, where public market exits are common, the Mexican market does not typically follow this path due to its current status. The method by which investors realize the value of their investments often depends on the stage at which they invested.

Early-stage investors, such as venture capital firms, generally exit by selling their stakes to private equity firms, family offices (though this is becoming less common), or strategic buyers. Conversely, private equity firms that invest at a later stage of a company’s development typically exit by selling to another private equity firm, a family office (also less common), or a strategic buyer. This approach contrasts with more developed jurisdictions, where mid-market investors often realise value through a public exit, such as an initial public offering (IPO) or shortly thereafter.

Similar to other developed jurisdictions, debt financing holds greater significance for companies in Mexico compared to equity financing. Outside of the venture capital sector, the capitalisation structure is primarily driven by the financial needs and strategic considerations necessary to achieve an optimal balance for the benefit of equity holders.

Investor decisions are fundamentally economic and financial, with legal considerations generally affecting only the risk premium associated with debt or equity. In essence, these legal considerations should not differ significantly between Mexican and international jurisdictions.

Public Deals

The timeline varies depending on several factors. For public deals, it can take anywhere from four months to a year. The key factors include the company’s readiness from a corporate governance standpoint, whether the deal is structured as an international private or registered offering (which may involve dual listing), and the time it takes for the CNBV to conduct its review – a process that has notably lengthened under the current administration.

Private Deals

For private deals, the duration mainly depends on the deal’s complexity, whether regulatory approvals, including antitrust, are needed, and whether the deal is conducted through a bidding process or a bilateral negotiation.

Mexico’s investment landscape is characterised by sector-specific regulations designed to protect national interests and manage foreign involvement. Certain industries, such as oil exploration, national energy management and nuclear energy are reserved exclusively for the Mexican state due to their strategic importance. Additionally, some sectors, like development banks and select professional and technical services, are reserved for Mexican nationals or companies, with foreign investment prohibited.

There are also specific limits on foreign investment. For example, co-operative production companies allow a maximum of 10% foreign ownership, while industries like newspaper publishing, agricultural land ownership, and port administration permit up to 49% foreign ownership. In other sectors, surpassing the 49% ownership threshold requires approval from the Foreign Investment Commission. This applies to areas such as port services, educational and legal services, and railway construction and operation.

In general, foreigners are allowed to invest in and hold the same stock and equity securities as domestic shareholders in public companies. However, there are exceptions in certain sectors, such as equity ownership in companies that own land used for agriculture, livestock or forestry, as previously mentioned.

There are no restrictions on transferring dividends into or out of Mexico, allowing profits to be repatriated freely. However, to prevent money laundering, the Ministry of Finance and Public Credit enforces regulations on the deposit and exchange of foreign currency in Mexican banks.

To invest in a public company, any foreign investor must work with a Mexican bank or brokerage firm. Before executing a brokerage agreement (contrato de intermediación), the investor must meet all anti-money laundering (AML) and know your customer (KYC) requirements set by the bank. AML regulations are outlined in the Mexican Criminal Code, the Federal Law for the Prevention and Identification of Operations With Resources From Illegal Sources, the Securities Market Law, and the General Provisions referred to in Article 212 of the Securities Market Law. In summary, these regulations impose key obligations on Mexican banks acting as brokerage firms to ensure compliance with AML and KYC requirements, which are subject to routine inspections by the CNBV.

In almost any equity offering, the documents are governed by Mexican law, except in international offerings, where the purchase agreement or other documents may be subject to foreign law, typically New York law. Since the CNBV authorises these documents, they must meet specific requirements. Additionally, under Mexican law, for a submission to jurisdiction to be valid, it must be based on the residence of the parties, the place where the obligations are fulfilled, or the location of the asset. According to recent precedents in equity offerings in Mexico, all such offerings are governed by Mexican law.

On 28 December 2023, a decree was published that reformed and added several provisions to the Mexican Securities Market Law and the Investment Funds Law (Ley de Fondos de Inversión). The amendments include, among other changes:

• the introduction of a new simplified procedure for registering securities in the RNV;
• the removal of certain requirements for the cancellation of securities registration;
• changes to the corporate regime of issuers;
• modifications to poison pill provisions;
• new regulations on ESG (environmental, social, and governance) standards;
• simplified procedures for CERPIs and CKDs (certificados de capital de desarrollo);
• a stronger supervisory regime for investment advisers; and
• the inclusion of hedge funds.

It is also anticipated that new regulations will be issued requiring all public companies to meet specific ESG criteria to align with international standards and the investment requirements of certain qualified investors.

Dividend payments and profit distributions made by a Mexican company to a non-resident investor are generally subject to a 10% income tax withholding. This withholding may be reduced or even eliminated if a tax treaty for the avoidance of double taxation applies.

In general, capital gains from the transfer of shares are subject to income tax for both Mexican residents and non-residents with a permanent establishment in Mexico. The taxable gain is calculated as the difference between the sales price and the tax basis of the transferred shares. Capital gains are considered sourced in Mexico if the share issuer is a Mexican-resident entity, or if more than 50% of the underlying book value of the shares is attributable, directly or indirectly, to real property located in Mexico. Non-residents are typically taxed at 25% of the sales price or, if certain conditions are met, at 35% of the capital gain. If the 35% method is chosen, the non-resident seller must comply with several formalities, including appointing a Mexican-resident legal representative, ensuring that the seller’s income is not subject to a preferred tax regime, and obtaining a formal determination of the tax basis of the shares from a registered public accountant, who must submit a report to the Mexican tax authorities. The acquisition price will be used to determine the basis of the shares in a subsequent sale.

Capital gains from the sale of shares through a recognised stock exchange are generally subject to a 10% tax rate. However, the sale may be exempt if the seller is resident in a jurisdiction with which Mexico has a double tax treaty in force and if certain formalities are met.

In general, Mexican target companies remain liable for taxes owed by former shareholders in a share acquisition if the company registers the acquiring shareholder in its registry and does not receive proof of tax withholding compliance or proof that the seller has paid all taxes arising from the sale. Therefore, for a foreign acquiror, it is crucial to ensure that the seller complies with all income tax payment obligations.

There are no additional taxes or duties relevant to investors making investments in Mexican-resident entities. Public grants or tax relief are generally not available.

Mexico has signed 61 double tax treaties, which are currently in force, covering jurisdictions in North America, South America, Europe and Asia. To benefit from these treaties, taxpayers must prove their tax residency in the relevant country, typically through a tax residence certificate or, if unavailable, proof of filing a tax return for the previous fiscal year (or, if that return is not yet available, for the year prior to that).

Taxpayers must adhere to the requirements specified in the applicable double tax convention, including beneficial ownership, limitation of benefits, and other anti-abuse provisions, which Mexico usually incorporates into its treaties.

Through these double tax treaties, non-Mexican residents can benefit from reduced tax rates or exemptions in Mexico and, in some cases, access the net basis regime for capital gains that may not be available under domestic law.

Additionally, Mexico ratified the Multilateral Instrument, which became effective on 1 January 2024. This means provisions such as the Principal Purpose Test are now in force and must be considered when structuring investments from abroad under the applicable double tax treaties.

Insolvency proceedings in Mexico are primarily structured around the firm’s debt holders. However, if a company chooses to voluntarily initiate a Mexican insolvency process (concurso mercantil), it must obtain the affirmative vote of its equity investors. Once the court declares the process resolved, equity holders no longer have any influence over the proceedings.

Equity investors are not considered creditors and, therefore, are not entitled to receive any distributions during the insolvency proceedings.

Uncalled capital commitments can be enforced by the liquidator if bankruptcy follows the insolvency proceeding.

The Mexican insolvency proceeding typically lasts from six months to one year. The bankruptcy phase, if it occurs, can continue indefinitely until the liquidator sells all the bankruptcy assets and satisfies the creditors’ claims.

Insolvency proceedings rarely result in recoveries for shareholders but offer a reliable alternative to bankruptcy, providing a means to potentially recover value for the company’s other stakeholders.

The primary tool under Mexican law for rescuing a company in financial distress is an insolvency proceeding. This process is governed by the Commercial Insolvency Law (Ley de Concursos Mercantiles) (the “Insolvency Law”), and involves two main phases: (i) a conciliatory or reorganisation phase, aimed at allowing the creditors and the debtor to agree on a reorganisation plan; and (ii) a bankruptcy phase, focused on liquidating the bankrupt entity.

The insolvency declaration of a debtor may be requested by the debtor itself, by its creditors or by the Federal Prosecutor’s Office (Ministerio Público).

“Insolvency Requirements”

A debtor will be declared insolvent and subject to reorganisation proceedings under the Insolvency Law to the extent it has “generally failed to perform its financial obligations”.

A debtor will be deemed to have “generally failed to perform its financial obligations” if it meets the following “Insolvency Requirements”:

(i) the debtor has failed to pay matured debt obligations that are due and payable to two or more creditors;

(ii) such due and payable debts have remained outstanding for a period of at least 30 days;

(iii) such debts represent 35% or more of the total outstanding liabilities of the debtor on the date of filing of the insolvency declaration request; and

(iv) the debtor does not have “current assets” with a value of at least 80% of the amount of its due and payable debt obligations on the date of filing of the insolvency declaration request.

If the insolvency declaration request is filed by any creditor or the Federal Prosecutor’s Office, all the above-mentioned requirements, (i), (ii), (iii) and (iv), must be met for the debtor to be declared insolvent.

If the insolvency declaration request is filed by the debtor, it will be declared insolvent if requirements (i), (ii) and (iii) are met, or if requirements (i) and (iv) are met.

Provisions of the Insolvency Law

The Insolvency Law provides that the debtor may also file the insolvency declaration request by declaring that the “general failure to perform its financial obligations” is imminent, meaning that the Insolvency Requirements mentioned above will inevitably materialise within the 90 days following the filing of the request.

In addition to the above-described test, a debtor will be presumed to have “generally failed to perform its financial obligations” when:

• no assets are found to perform a court-ordered attachment of assets;
• the debtor has failed to pay credits to two different creditors;
• the debtor engages in fraudulent acts to avoid payment of its obligations;
• the management of the debtor is not found;
• an insolvency agreement has been breached; or
• there is permanent shutdown of the work establishment of the debtor.

The Insolvency Law provides that a debtor that has “generally failed to perform its financial obligations” may request the court to initiate the insolvency proceeding directly at the bankruptcy phase (without going through the conciliatory stage), where the debtor considers a reorganisation plan with its creditors unviable. Pursuant to Article 21 of the Insolvency Law, creditors may also request for the insolvency proceeding to be initiated at the bankruptcy phase, in which case, the debtor’s acceptance of such request is required for the insolvency proceeding to commence at this stage.

The Insolvency Law provides that the debtor, its creditors and/or the verifier may request the insolvency court to grant precautionary measures to preserve the viability of the debtor’s operation, safeguard the public interest, protect the insolvency estate and/or protect the interests of the creditors.

The Insolvency Law also provides that the insolvency court may dictate the precautionary measures it deems necessary, at any stage of the insolvency proceeding, even in the absence of a request by the debtor, the creditors, or the verifier.

Precautionary Measures

The Insolvency Law does not provide for a general “automatic stay” upon the filing of the insolvency declaration request (such as that contemplated under a US Chapter 11 proceeding); however, precautionary measures may be granted, always at the discretion of the insolvency court, in response to a request by the above-mentioned petitioners and/or if the court deems them necessary.

These measures may include, among other things:

• a prohibition against making payments of matured obligations;
• a stay of foreclosure proceedings on the assets of the debtor;
• a prohibition on the debtor against disposing of assets or creating liens on assets;
• attachment of assets;
• control of the checking accounts; and
• prohibition against transferring cash or securities.

Role of the Insolvency Court

Upon acceptance of an insolvency declaration request, the insolvency court must request the Federal Institute of Specialists in Commercial Insolvencies (Instituto Federal de Especialistas de Concursos Mercantiles or “IFECOM”) to appoint a verifier within five days. Once the verifier has been appointed, the verifier has five days to designate a team. Once the verifier’s team has been designated, the insolvency court will order an inspection visit which must commence within the following five days. The purpose of the inspection visit is to have an independent verification of the financial situation of the debtor (confirmation of the Insolvency Requirements mentioned above). During the inspection visit, the verifier is entitled to review all legal, accounting and financial records of the debtor.

As mentioned, the verifier may request from the insolvency court the issuance of precautionary measures to preserve the insolvency estate and the rights of the creditors.

Within 15 days from the commencement of the inspection visit, the verifier is required to deliver a report on the inspection visit to the insolvency court. Copies of the report will be made available to the debtor, creditors and the Federal Prosecutor’s Office. Any of these entities have the right to submit any evidence and arguments to the insolvency court within a period of five days.

The insolvency court must issue a ruling regarding the insolvency declaration request within the five days following the end of the term to submit arguments/evidence described in the preceding paragraph. The insolvency court may only issue one of two possible rulings: either the court agrees that the requirements for the declaration of insolvency are met and therefore issues a ruling declaring the insolvency of the debtor and commencing the reorganisation proceedings; or the court rejects the insolvency petition. The court’s decision will be based on the factual information included in the verifier’s report.

The ruling will include, among other provisions, the following:

• the declaration of the opening of the reorganisation phase, unless the debtor agrees to direct bankruptcy/liquidation;
• an order to the debtor to suspend the payment of all indebtedness, except for those payments that are necessary for the continued operation of its business (eg, salaries and taxes);
• an order to suspend all foreclosure proceedings against the assets of the debtor;
• the date of commencement of the claw-back period;
• an order to IFECOM to appoint a mediator (conciliador) within five days following the issuance of the ruling;
• an order to the debtor to deliver its accounts and records to the mediator; and
• a notice to creditors requiring them to file their credit recognition requests.

An insolvency proceeding is the best option for a company in financial distress to protect its assets against foreclosure. The main purpose of the proceeding is to protect all creditors by signing an insolvency agreement, thus preventing one creditor from obtaining payment to the detriment of the rest of the creditors. Of course, sometimes companies may have access to other restructuring or insolvency mechanisms in other jurisdictions such as NY Chapter 11 or the UK Scheme of Arrangements.

Role of Equity Investors

As for the role of equity investors, other than for voluntary insolvency proceedings in which the equity investors approve the initiation of the insolvency proceeding, the management and attorneys-in-fact of the company are in the driver’s seat during such proceeding.

Equity finance providers and their appointed managers or directors must be cautious regarding their legal liability strategies. This is crucial to avoid being implicated in criminal actions related to fraudulent conveyance, or being considered joint obligors from a tax perspective.

For such purpose, it is always best to carefully review the company’s financial statements, have external auditors and audit committees, refrain from voting without sufficient information or if there is a conflict of interests, etc.