Board of Directors or Supervisory Board is a management body in business companies, which include joint stock companies and limited liability companies. This is an electoral body, its members are elected by general meetings of shareholders or members of companies. There are certain rules for the election of the Board of Directors.
Instructions
Step 1
Any person - an individual can be elected a member of the Board of Directors. Moreover, he may not even be a shareholder or participant in this company. But in terms of interaction with the executive body, there are some restrictions. If it is collegial, then the number of its members should not exceed one fourth of the quantitative composition of the Board of Directors. If the executive body is represented by one person, then this person does not have the right to occupy the chair of the Chairman of the Board of Directors.
Step 2
Election of the Board of Directors is mandatory for joint stock companies with more than 50 shareholders. The number of members of the Board of Directors must not be less than 5 people. If the number of members of the Council is more than 1000 people, then the minimum number of members of the Council is 7 people, if more than 10,000 - at least 9 people. In joint-stock companies with more than 1000 people, the election of the governing body is made only by cumulative voting, for LLC - both by cumulative voting and by determining a simple majority among those who voted at the general meeting.
Step 3
The current legislation contains practically no restrictions on the procedure for the election and formation of the Board of Directors of an LLC, therefore, its activities and the procedure for election are regulated by the charter of a particular LLC and internal documents approved by the general meeting of participants.
Step 4
The board of directors of joint-stock companies is elected annually; shareholders with at least 2% of shares have the right to nominate their candidates. In this case, the personal consent of citizens elected to the Board of Directors is mandatory. It is better if it is received in advance in writing in order to exclude a subsequent refusal and repeated voting.
Step 5
The participants in the meeting have the right to receive full information about each candidate: their age, education received, positions they have held over the past five years. The information that is provided additionally is stipulated by the internal documents of the company, for example, the regulation on the Board of Directors.
Step 6
When a simple vote is taken, shareholders vote with their shares for the candidates they elect. In this case, the members of the Board of Directors are those who have received the largest number of votes.
Step 7
To protect the rights of shareholders with a small number of shares, cumulative voting is used, in which the number of votes held by each shareholder is multiplied by the number of seats on the Board of Directors. This makes it possible for any shareholder to give their votes entirely to one candidate or to distribute them among several. This voting procedure guarantees the opportunity for a minority shareholder to become a member of the Board of Directors or delegate their candidate to it.
