Every day, thousands of multinational companies rely on powers of attorney to conduct the day-to-day administration of their Mexican businesses. A company's ability to initiate and defend itself in litigation, pay taxes or issue checks are but some of the functions Mexican proxies (or poderes) facilitate. However, the failure to scrutinize powers granted and to monitor proxy-holders themselves may leave a company susceptible to abuse.
American, and particularly Texas-based, in-house counsel increasingly are tasked with the issuance, administration and revocation of international powers of attorney. As such, these in-house lawyers must understand the strengths and limitations of these crucial proxies.
Akin to its Texas equivalent, a Mexican power of attorney allows for the representation of an individual or organization unable or unavailable to represent itself. However, this is where the similarities end. Unlike in Texas, where an individual may have actual, implied or apparent authority to act on behalf of a company, Mexican law requires a formal granting of agency to undertake most judicial acts.
Without the existence of apparent authority, Mexican companies are forced to utilize powers of attorney licensing individuals to act in their stead. As such, Mexican powers of attorney are employed much more frequently and touch the commercial operations of almost every aspect of a Mexican company's business.
A Mexican entity's commercial transactions — whether simple, such as paying bills or acquiring goods or assets, or complex, such as opening and maintaining bank accounts, representing an entity at meetings or representing a company before judicial bodies — all require the existence of a valid power of attorney. Companies and individuals not wanting to be saddled with executing every underlying deal document (as required under Mexican law) or with signing each pleading in a suit often delegate these tasks to a designated proxy-holder.
In Texas, a valid power of attorney simply requires the grantor to execute the proxy in front of a notary. Although Texas proxies may be recorded, such recording is permissive. By contrast, the issuance of a power of attorney in Mexico is a much more formal process. Mexican proxies must be signed by a grantor and, in certain situations as prescribed under the Mexican Civil Code, require attestation by two witnesses. A Mexican notary public typically must oversee the execution of the power of attorney.
Unlike their Texas equivalent, Mexican notary public powers are expansive and extend well into the realm of legal review and counsel. Whereas Texas notaries' authority mirrors that of a county clerk, Mexican notaries are considered aides to the administration of justice. As such, Article 42 of the Notary Law for the Federal District of Mexico entrusts them with "interpreting, redacting and giving legal shape" to the intentions of individuals requesting their assistance.
After verifying that the requisite procedural requirements are met, a Mexican notary public then registers the proxy as a public deed. Texas in-house counsel must be mindful that certain Mexican powers of attorney must be recorded in specific public registries. For example, proxies for commercial papers must be recorded in the Public Registry of Property and Commerce (theRegistro Público de la Propiedad y del Comercio).
In Texas, the scope of a power of attorney is restricted by its context. Texas courts strictly scrutinize the interpretation of any power conferred upon an agent and exclude the exercise of unwarranted powers.
Unlike its Texas counterpart, a power of attorney in Mexico may be of either specific or general application. Article 2554 of the Mexican Federal Civil Code identifies three types of proxy: the power over disputes and collections (or pleitos y cobranzas) to act as legal representative and to collect money on behalf of its grantor; the power to conduct administrative acts (or actos de administración) on behalf of the grantor; and the power to perform acts of control (oractos de dominio) over the proxy-holder's legally owned property, including the sale or transfer of land, capital and/or stock.