Executive body of a legal entity: individual entrepreneur, director or management company
The supreme governing body of a commercial organization is the general meeting of participants; if there is only one participant, then it exercises control.
Other management bodies include: the board of directors (aka supervisory board) and the executive body. It is the executive body that manages the current activities of a commercial organization.
The executive body may be collegial and (or) sole.
The collegial executive body may be the board or directorate, and the sole executive director or general director.
The executive body is accountable to the general meeting of participants and the board of directors and organizes the implementation of decisions of these bodies, as well as implements the solution of all issues beyond the competence of other management bodies.
Appointment of persons acting as executive body
The person exercising the powers of the sole executive body of a commercial organization, members of the collegial executive body, including the person who heads the collegial executive body, are elected by the general meeting of participants or by the board of directors (supervisory board) in accordance with the charter of this organization.
The powers of the sole executive body and members of the collegial executive body in accordance with the charter of a commercial organization may be terminated ahead of schedule by decision of the general meeting of participants in a business company or board of directors.
If the formation of the executive bodies of a commercial organization is carried out by the general meeting of participants, the charter may provide for the right of the board of directors to decide on the suspension of the powers of the sole executive body and the transfer of its powers to another person until the formation of a new sole executive body of the commercial organization.
At the same time, the board of directors is obliged to make a decision on holding an extraordinary general meeting of participants to resolve the issue of early termination of powers of the sole executive body and the formation of a new sole executive body.
A person exercising the powers of the sole executive body of a business company, as well as members of the collegial executive body of a business company may be elected and not from among its members.
By decision of the general meeting of participants, the powers of the executive body of a commercial organization may be transferred by agreement to another commercial organization (managing organization) or to an individual entrepreneur (manager).
A person exercising the powers of a sole executive body, or a person heading a collegial executive body, may not be a member of the board of directors. These persons shall be entitled to attend meetings of the Supervisory Board and make proposals on the issues under discussion without the right to vote when making decisions on these issues.
The rights and obligations of the sole executive body and members of the collegial executive body of a commercial organization are determined by the Law on Business Companies, labor legislation and the charter, as well as directly by labor agreements (contracts) or civil law agreements concluded by each of these persons with a commercial organization.
Conclusion of an agreement with a person acting as an executive body
An employment contract (contract), a civil law contract on behalf of a business partnership are signed by the chairman of the general meeting of participants in the business partnership at which the relevant persons were elected, or by another individual (participant) authorized by the decision of this meeting, and in the event a council is formed in the business partnership Directors (supervisory board) – by the chairman of the board of directors or another member authorized by that board.
The charter of a commercial organization may stipulate that labor contracts (contracts), civil contracts with members of the collegial executive body on behalf of the commercial organization are signed by the person exercising the powers of the sole executive body, as agreed with the board of directors.
The combination by the person exercising the powers of the sole executive body and members of the collegial executive body of positions in the management bodies of other organizations is allowed in the manner established by the charter or with the consent of the general meeting of participants in a business company, unless otherwise provided by legislative acts.
Requirements for the qualification, professional and other qualities of candidates for members of the executive body of an economic company, as well as the decision-making procedure by this body in part not regulated by the charter, may be determined by the relevant local regulatory legal act of a commercial organization approved by the general meeting of its participants or by the board of directors ( Supervisory Board).
The managing organization can be any commercial organization, and the managing director is an individual entrepreneur.
The main difference in the design of relations with a person who is an executive body. In the case of the appointment of a director, an employment relationship arises between the individual and the employer. When transferring cases to an individual entrepreneur, a civil-law contract for the fee-based provision of services is concluded and the subject of such a contract is the implementation of activities for the current management of a commercial organization. The manager also has the right to engage in other legal activities. All disputes between the managing director and the managed organization are considered in economic court.
