Governing bodies of a joint-stock company: features, requirements and description

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The regulatory framework currently in force in Russia, which regulates the system of managing joint-stock companies, was formed on the basis of Western legislation. Of course, domestic norms take into account the specifics of the economic system of the Russian Federation.

Currently, joint-stock companies use a corporate governance system. It is based on a set of economic, legal and organizational measures. Let us further consider what management bodies can be in a public joint-stock company.

Views

According to current regulations, the governing bodies of a joint-stock company are:

• General Meeting of Shareholders.
• Supervisory Board (Board of Directors).
• The sole governing body. In a joint-stock company, the general director acts as it.
• Collegial body (board, executive directorate).
• Revision Commission.

Choice of administrative structure

The control structure is formed depending on the combination of the above controls injoint-stock company.

The choice of a specific administrative structure is considered one of the most important stages in the creation of an economic entity. Making the right decision will minimize the likelihood of conflicts between managers and shareholders, improve management efficiency.

It should be said that the founders of a company have certain advantages over shareholders. By choosing the management structure they need, by skillfully combining the management bodies of a joint-stock company, they will be able to get great economic benefits from the activities of the enterprise. However, any structure cannot exist forever. Shareholders have the right to change it if there are appropriate grounds. In any case, the activities and powers of the management bodies of a joint-stock company must correspond to the scale of the enterprise.

Thanks to the possibility established by law to combine different parts of the administrative system, shareholders can choose the most suitable model for them, taking into account the size of the company, the capital structure, and the specific tasks set for the business.

Control options

In practice, different administrative models are used. However, in each of them, the presence of 2 supreme governing bodies of a joint-stock company is mandatory: the general meeting and the sole body.

In addition, a control structure is included in all schemes. It is the audit committee. Its main task is to control the financial and economicoperations performed in the enterprise. In this regard, the audit commission is usually not considered as a direct management body of a joint-stock company. However, the effectiveness of the administrative system cannot be ensured without reliable control.

The difference between governance models is the combination of collegial and sole structure.

Three-stage scheme

It can be full or abbreviated. With this model, the supreme governing body of a joint-stock company is the meeting of shareholders. The full three-stage scheme can be used in any AO. This model makes it possible to tighten the control of shareholders over the activities of managers.

At the next level is the Supervisory Board. He controls the work of the sole and collegiate bodies.

As established by the Federal Law "On joint-stock companies", members of the collegial management structure cannot be more than 1/4 of the board of directors. At the same time, the entity acting as the general director cannot be appointed to the post of chairman of the board.

The full three-step scheme is mandatory for credit companies established in the form of JSC.

Abbreviated three-stage model

This scheme can also be used in any joint stock company. The difference between it and the model described above is the absence of a collegial governing body. Therefore, with this model, there are no restrictions on the number and status of board members.

BIn the abbreviated scheme, the influence of the CEO is much higher. In fact, he single-handedly manages the current affairs of the enterprise.

This model is quite common in joint-stock companies. This popularity is due to the fact that it allows you to balance the activities of the executive and control structures.

Other options

In some companies, the charter establishes the right of the board of directors to form executive bodies. This model is more suitable for large shareholders owning a controlling stake. The Council becomes the supreme management body of the joint-stock company, not directly participating in the current affairs of the enterprise.

Another model is a reduced two-tier administrative system. It can be used in companies with less than 50 shareholders. This model is typical for small companies in which the CEO is also the main shareholder.

Features of executive structures

The executive body is called the body of direct control, which is formed by decision of the board of directors or a meeting of shareholders. Its functions are defined in the legislation or the charter of the society.

Responsibility of the management bodies of a joint-stock company occurs in case of causing losses to the enterprise due to illegal actions or inactions.

The executive structure can be sole or collegial. In many societies, both types of governing bodies operate simultaneously. At the same time, in the statutes of suchcompanies, the competence of these structures is clearly delineated.

The entity performing the functions of the sole management body also acts as the chairman of the collegiate structure.

Creation and termination of bodies

The formation of administrative structures in a joint-stock company is carried out on the basis of a decision taken at the general meeting. The legislation, however, allows for the transfer of these powers to the board of directors.

The Council or the general meeting has the right at any time to decide on the early dissolution or suspension of the activities of the executive bodies. At the same time, an interim management structure should be created. An extraordinary meeting is convened to resolve these issues.

The formation of a temporary executive structure may be due to the impossibility of further implementation of its functions by the current governing body.

Competence of the CEO

The sole governing body acts on behalf of the company without a power of attorney. His powers include:

• Enforcement of decisions taken by the general meeting.
• Operational management of the current activities of the enterprise.
• Work planning.
• Approval of staffing.
• Hiring and firing employees.
• Issue of orders, orders.
• Concluding agreements, contracts, agreements, opening accounts, issuing powers of attorney, making financial transactions in an amount not exceeding 25%the value of the company's assets.
• Filing claims, participating in litigation on behalf of the enterprise.

This list, of course, is far from complete. The powers of the CEO must be enshrined in the company's charter.

Election/appointment of CEO

The sole body can be appointed/elected by the general meeting or the board of directors. In the first case, the position of the CEO will be more stable. The term of office for the appointment/election of a sole body may be 5 years.

Nominations can be made by shareholders holding at least 2% of voting shares. The charter may also stipulate other conditions for participation in the decision on the election/appointment of the general director. Only one candidate must be indicated in one application.

Board

This collegiate body manages the economic company on a par with the general director. The term of office of the board is 1 year. Usually, it includes persons in key positions: CEO, Ch. engineer, chief economist, etc.