Limited liability company : management.

General Meeting of Shareholders.

The supreme organ of a company with a limited liability is the general meeting of its shareholders, and to ensure that the rights of the shareholders are maintained 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.

The competence of the general meeting of the company shareholders is determined by the company's charter within restrictions established by law. The following powers are the exclusive competence of the general meeting and cannot be delegated to other management bodies:

- determining major directions of activity and participation in associations of commercial organisations;
- alteration of the company's founding documents, including changing the size of the company's charter capital;
- formation of the management bodies and termination of their powers;
- election and termination of the powers of the company's auditor;
- approval of annual reports and balance sheets;
- distribution of the company's net profit among the company shareholders;
- issue of bonds and other securities;
- reorganisation and liquidation of the company.

A regular general meeting of shareholders must be convened on dates set by the company's charter and at least once a year. A regular general meeting is called by the company's executive body.

The company's charter must set the time for holding a regular general meeting at which the yearly results of the company's activity are to be approved. The aforementioned general meeting must be held not earlier than two months and not later than four months after the end of the fiscal year.

An extraordinary general meeting of shareholders is held in cases specified by the company's charter, and also in any other instances where the interests of the company and its participants require such a general meeting to be held.

An extraordinary general meeting of company participants is called by the company's executive body on its initiative or if so demanded by the board of directors (supervisory council), by the auditing commission, by the auditor, and also by the company shareholders whose aggregate votes make no less than one tenth of the total number of votes in the company. The company's executive body is obliged, within 5 days from the date of receiving the demand to hold an extraordinary general meeting, to consider that demand and make a decision on the holding of an extraordinary general meeting.

A decision of the general meeting of company shareholders may be made without holding an actual meeting by way of an absentee vote (interview). Such voting may be conducted via mail, telegraph, teletype, telephone, e-mail, or other communication ensuring the authenticity of transmitted and received messages and their documentary confirmation. An exception is an approval of the annual financial statements, which must be done at a meeting.

Each shareholder has the number of votes which is proportional to his share in the company's charter capital.

Decisions about alteration of the charter including change of the charter capital and on other issues as set forth by the company's charter are made by a two-thirds majority of the total number of votes, unless a greater number of votes for such a decision is required by company's charter. Decisions on alteration of the founding contract, reorganisation or liquidation of the company are made unanimously by all the company participants. Other decisions are made by a majority of the total number of votes, unless a greater number of votes is required by the company's charter.

The company's charter may require a cumulative voting on the election of members of the company's board of directors (supervisory council), members of the collective executive body and/or members of the auditing commission. In such a case the number of votes belonging to each company participant is multiplied by the number of persons being elected for the company's management, and a participant is free to give all the votes thus obtained for one candidate or divide them between two or more candidates. A candidate who obtains the highest number of votes is deemed to be elected.

Decisions of the general meeting are made by open vote, unless a different principle of decision-making is provided by the company's charter.

Board of directors.

The law does not require a collective management body. The company's charter may provide for the formation of the board of directors (supervisory council) of the company. The competence of the company's board of directors (supervisory council) is determined by the company's charter.

The company's charter may provide that within the competence of the board of directors (supervisory council) falls the formation of executive bodies of the company, termination of their powers, making decisions on big transactions, preparation and holding the general meeting of company shareholders. Members of the company's collective executive body may not compose more than one fourth of the board of directors (supervisory council) of the company. The chief executive may not simultaneously be the chairman of the board of directors (supervisory council).

By decision of the general meeting of shareholders, members of the board of directors (supervisory council) of the company, while performing their duties, may be paid remunerations and/or be compensated for expenses incurred. Amount of the remuneration and compensation are determined by the general meeting of company shareholders.

Director General.

The personal executive body of a company (director general, president, etc.) is elected by the general meeting of the company shareholders. It is not necessary that the company director be a shareholder.

The company's personal executive body:

- acts in the company's name without a power of attorney, representing its interests and concluding its contracts;
- ssues letters of authority entitling representation in the company's name, including powers of attorney and substitution;
- issues orders on appointments of company's employees to positions, their transfer and dismissal, applies incentive measures, and imposes disciplinary penalties;
- exercises any other powers not delegated to the competence of the general meeting, board of directors (supervisory council) and collective executive body of the company.

Responsibility of the company management.

Members of the company's board of directors, the personal executive body, members of the collective executive body and, equally, managers in exercising their rights and fulfilling their duties must act in the company's interests reasonably and in good faith. A company or its shareholder is entitled to demand compensation in court for losses caused to the company by the company management.

Auditor.

The company's charter may provide for election of an auditor of the company. In companies with more than 15 shareholders it is required by law. The company's auditor has an access to all company's documents. At the auditor's demand all management bodies and shareholders must give necessary clarifications in oral or written form. The company's auditor must audit the annual reports before those be approved by the general meeting of shareholders.

At the shareholder's demand an examination must be made by a professional auditor, unrelated to the company. The auditor's fees are paid by the shareholder who demanded the investigation. An LLC is subject to a statutory audit in cases established by law.

 

 

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