Corporate Governance in Latin America: Why Formalizing a Board Could Save Your Company

Mexico City, 14 of April 2025. 

The first episode of Smart Governance Talks, the new podcast from Smart Governance Lab, puts an uncomfortable truth on the table: most Latin American companies operate without a strong board of directors, despite evidence that the absence of one reduces an organization’s longevity and value.

In the conversation, IPADE professor Andrés Alcántara dispels the myth that bringing directors together once a month is the same as having a board.

“That’s just an operational meeting,” comments Andrés.

Alcántara. Alcántara recounts a striking anecdote: a diversified company forgot it had acquired another company because the decision was made informally, without a vote or minutes.

“When the majority shareholder asked who had approved the acquisition, everyone looked at one another, and no one had documentary evidence,” he says, illustrating the risks of improvisation.

The guest insists that resistance to boards sometimes stems from the fear of airing “dirty laundry” in front of an independent third party. However, he argues that an outside board member brings objectivity and specialized knowledge the company lacks internally. He also points out that mature markets already consider board institutionalization “non-negotiable” and warns that the region must pick up the pace to remain competitive.

For companies that have yet to take the leap, Alcántara recommends starting with an assessment of weaknesses, identifying an expert, and documenting every decision from day one.

“To learn to swim, you have to swim; to learn how to run a board, you have to run a board,” he concludes.

Hear the full story and get a practical guide to setting up your own board by listening to the full episode here: https://youtu.be/0cn-Sd7kG1E