Board of Directors creation and maintenance
DEFINITION OF THE SUPERVISORY BOARD (BOARD OF DIRECTORS)
The Board of Directors (Supervisory Board) is an elected body that deals with management, strategic planning and a number of other functions in the company, provided for by law or by-laws.
It is created at the request of owners, founders or shareholders, as well as in cases stipulated by the legislation of the Republic of Belarus.
The possibility of creating a supervisory board should be provided for in the charter of the legal entity. Otherwise, it will not be legitimate. As a rule, the supervisory board is formed in large companies, in which there are many owners, directors and shareholders.
In joint stock companies, the number of shareholders in which is 50 and more, the supervisory board is created without fail.
DIFFERENCE OF THE SUPERVISORY BOARD FROM THE BOARD OF DIRECTORS
In the legislation, two terms are used simultaneously: the supervisory board and the board of directors. The difference in these terms lies in their origin. The supervisory board is typical for the German legal system, and the board of directors, in turn, for the Anglo-American.
The legislator permits the use of any of the proposed names. However, it is incorrect to use two terms simultaneously.
QUANTITATIVE COMPOSITION OF THE BOARD OF DIRECTORS
In the Republic of Belarus, the exact quantitative composition of the Supervisory Board is not legally fixed. Each organization establishes it individually and fixes it in local regulations (for example, the regulation on the supervisory board), the organization’s charter.
WHO CAN BE A MEMBER OF THE BOARD OF DIRECTORS
Only individuals can be members of the Supervisory Board. The directors of the company cannot make up more than a quarter of the total number of members of the supervisory board. If the owner of the enterprise is one person, then he cannot be a member of the supervisory board of his own organization.
The re-election of the same board members can occur more than once. However, by the decision of the general meeting of participants, shareholders or the owner, the powers of the members of the supervisory board may be terminated early.
If one or several members of the council left its membership for objective reasons, the supervisory council will continue its activities anyway, except for cases when more than half of its members have left the council or, if it is necessary to make a decision by all members of the supervisory council. In such a situation, additional board members are elected within 15 days.
The Supervisory Board elects a chairman who is responsible for convening and holding meetings. It can be re-elected in the manner prescribed by the charter of the legal entity, and if not provided, then by a majority vote.
COMPETENCE OF THE BOARD OF DIRECTORS
The competence of the Supervisory Board is enshrined in the Civil Code, the Law “On Business Companies”, the charter of the organization, and is also determined by the general meeting or the owner.
The exclusive responsibilities of the council are:
- Approval of the norms that resolve the issues of the organization (within its competence);
- Preparation for planned general meetings;
- Making decisions related to the company’s activities (within its competence);
- Election or re-election of its chairman and other bodies of the company;
- Analysis of the likelihood of a legal entity being declared insolvent as a result of assuming certain obligations;
- Making decisions on major transactions;
- Selection of a property appraiser and approval of a contract with him;
Employees and members of the company provide unimpeded access to the information necessary for the supervisory board, within the framework of their competence and conditions provided for by law and the charter.
The good thing about the supervisory board is that its members often have the external experience, and they are also independent of the company and can look at certain issues more objectively.
Members of the supervisory board are not paid for the performance of their duties, but they can be paid or compensated for their expenses. The issue of payments is decided by the general meeting, if this is not fixed in the charter of the organization.
SUPERVISORY BOARD MEETING
The Supervisory Board does not work on a daily basis but meets as needed. However, the gathering takes place more often than the general meeting.
Meetings of the Supervisory Board can either be scheduled according to the schedule, for example, on the 10th day of each month, or take place as issues related to the competence of the Board arrived.
The exact procedure for holding meetings is not regulated by law.
As a rule, at least half of the members of the supervisory board must be present at meetings, but the charter may also stipulate the need for a larger number of people to be present.
Each member of the council has one vote, and in case of an equality of votes, the one that belongs to the chairman will be decisive.
CHAIRMAN OF THE BOARD OF DIRECTORS
To organize the activities of the Supervisory Board, a chairman is elected by its members. He is elected simultaneously with the selection of other members of the supervisory board.
As a rule, voting takes place in an open way, but, at the request of any of the council members, it can also take place in secret.
The chairman is responsible for the decisions made if due to them the society has suffered losses. He is an official and performs organizational and administrative functions. However, the Belarusian legislation does not provide for specific norms that govern the responsibility of members of the Supervisory Board and the chairman, in particular. In Russian law, only those members of the supervisory board who voted for the unlawful decision bear responsibility. This provision can be written in the charter of the organization.
If the chairman cannot, for any reason, start his duties, then another member of the supervisory board or his representative, who has the largest number of shares or stakes, can act as his replacement.
The list of responsibilities within the competence of the chairman of the council is fixed in the charter. Its functions generally include organizing and chairing meetings; nominating candidates for the election of a director; control over the implementation of the adopted decisions of the supervisory board; reply to letters on the activities of the supervisory board.
The instructions of the chairman, which relate to the collection of documents and information, preparation and other actions necessary for the upcoming meeting of the supervisory board must be carried out without fail by officials of a particular organization.
BOARD OF DIRECTORS’ REPORT
The Supervisory Board meets, as a rule, at least once every three months. At the meetings, the director and the directorate are heard with reports on their activities.
Every year, the supervisory board meets at the end of the financial year to analyze the balance sheet of the enterprise, hear the profit and loss statement, as well as the auditor’s opinion and prepare the next meeting of the organization.
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