Management in joint-stock company.

The supreme organ of a joint-stock company is the general meeting of its shareholders. An executive body (personal or collective and personal) is created to manage its current operation and is thus accountable to the general meeting of its shareholders. The company's personal management body may be elected from non-shareholders of the company and can be a corporation.
Powers of general meeting of shareholders.

The following issues are within the competence of the meeting of shareholders:

- alteration of the company's charter;
- reorganisation or liquidation of the company;
- election of the board of directors;
- amount of shares that can be issued;
- increasing or reduction the company's charter capital;
- formation the company's executive body, unless these powers were delegated to the board of directors;
- election of auditor of the company;
- approval of the company's annual returns;
- split and consolidation of shares;
- acquisition and redemption of allotted shares;
- participation in holding companies, financial-industrial groups, and other associations of commercial organisations.

The general meeting of shareholders may not take decisions on issues outside its competence as established by the federal law on joint-stock companies.

General meeting of shareholders.

A company must hold the general meeting of shareholders once a year (annual general meeting of shareholders).

The annual general meeting of shareholders must be held not earlier than two months and not later than six months after the end of the company's financial year. The annual general meeting of shareholders elects the board of directors, inspection commission and the company's auditor. It also reviews the company's annual reports presented by the board of directors.

An extraordinary general meeting of shareholders is held by decision of the board of directors by its own initiative or according to demand of the company's inspection commission (examiner) or an auditor or a shareholder (shareholders) who owns 10 per cent of the company's voting shares as of the date the demand was placed.

Voting

Voting at the general meeting of shareholders is based on the principle of, one voting share - one vote, except the cumulative voting to the board of directors.

Board of directors

In a company with over 50 shareholders a board of directors must be created. The board of directors has a wide competence management of the company's activities. Members of the board are elected by the general meeting of shareholders for the period until the next annual meeting of shareholders. If an annual meeting of shareholders is not held the board's competence is restricted to the issues related to preparation and holding of a general meeting of shareholders.

Persons elected into the board can be re-elected an unlimited amount of times. Only an individual can be a member of the board. Board members do need to be shareholders. Members of the collective executive body may not comprise more than 25 per cent of the board. The company's chief executive officer may not be the chairman.

The number of members in the board is determined by the company charter. However, the board may not be less than five people; in an open company with over 1,000 shareholders who own the company's ordinary and other voting shares the board of directors may not be less than seven people; and in a company with over 10,000 shareholders owning the company's ordinary and other voting shares, it may not be less than nine members.

Executive body.

Management of the current activity of the company is conducted by one individual director or by a collegial directorate together with an individual director. Executive bodies report to the board of directors and the general meeting of shareholders. The charter of a company with an individual director and collective directorate must determine their competence. It is assumed that executive bodies have authority over all questions left outside the competence of the general meeting and the board of directors.

Responsibility of the company management.

Similarly as with an LLC, company management must act in the interests of the company reasonably and in good faith. A company or its shareholders are entitled to demand compensation for losses caused to the company by the company's board, or chief executive.

Inspection commission.

In order to exercise control over the financial and economic activity of a company, the general meeting of shareholders elects the inspection commission (examiner) of the company. The competence of the inspection commission (examiner) of a company is determined by the company charter.

Audit.

Examination of company's annual returns is obligatory for open joint-stock companies. Closed joint-stock companies must examine financial activity through an independent auditor in cases established by law.

 

 

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