When a new general director of an LLC is appointed, the official receives the appropriate powers. These powers are confirmed by an official document. This could be a protocol drawn up during a meeting, an employment contract or an order. According to clause 1 of Article 53 of the Civil Code of the Russian Federation, an LLC receives rights and assumes a number of responsibilities through management bodies. “General Director”, “President”, “Director” - this is usually what the head of a legal entity is called.
The procedure for electing the general director and the scope of his powers are regulated by Law 14-FZ. The legislation also contains rules for determining the period of validity of a manager. The powers of the governing body and the period of validity of these powers are specified in the provisions of the charter of the enterprise.
According to the standards set out in paragraph 4 of Article 32 of Law No. 14-FZ, the manager determines the current activities of the organization and exercises control over it. The actions of the director are accountable to the meeting of participants, and if the LLC has a board of directors, then to this body.
Powers of the General Director:
- representing the interests of the organization before government agencies and third parties (without presenting a power of attorney);
- conclusion, modification, termination of transactions (without providing a power of attorney);
- the right to issue powers of attorney allowing to act on behalf of the organization, incl. with the right of subrogation;
- issuing orders on the appointment of officials, their transfer from one position to another, on the dismissal of employees and the application of incentive and disciplinary measures to them;
- the exercise of any powers that are related to the management of a legal entity and are not classified by the charter as the powers of other bodies.
The activities of the manager and the decision-making of this official are regulated by the charter, internal documentation of the organization, as well as an agreement concluded between the legal entity and the general director as an employee in accordance with paragraph 4 of Article 40 of Law No. 14-FZ. The activities of the head of a legal entity are regulated by the provisions of Article 273-281, Chapter 43 of the Labor Code of the Russian Federation.
Example
The charter of the company may contain a rule on the presence of mandatory consent of other bodies of the LLC to carry out specific types of transactions, incl. those that are not classified as large or with interest. Details are set out in the internal documentation of the enterprise.
According to the law, only an individual has the right to be the general director (clause 2 of article 40 of Law No. 14-FZ). The director is selected from among the LLC participants, and may also be elected from third parties. This is permitted by the provisions of paragraph 1 of Article 40 of Law No. 14-FZ. At the same time, the law prohibits combining the functions of the general director and chairman of the board of directors (paragraph 5, paragraph 2, article 32 of Law No. 14-FZ).
Confirmation of the powers of the General Director
The meeting resolves issues related to the election of the general director. This body is authorized to extend or terminate the powers of the manager, as well as establish the amount of his remuneration and compensation.
The legislation allows such decisions to be made by a simple majority of votes from their total number (paragraph 3, clause 8, article 37 of Law No. 14-FZ). This rule does not apply to cases where the provisions of the charter provide for a larger number of votes. For example, this may be a qualified majority of votes, and sometimes the votes of all members of the society may be required. The charter may also contain provisions according to which the board of directors can resolve these issues (clause 2, article 2.1, article 32 of Law No. 14-FZ).
Paragraph 2, paragraph 1, Article 40 of Law No. 14-FZ contains the rule according to which an agreement is concluded with the manager. Society itself acts as an employer. When signing an agreement on behalf of the organization, the following applies:
- the chairman of the meeting during which the manager was elected, or an authorized participant of the LLC (the rule applies if the election of the manager falls within the competence of this body);
- the chairman of the board of directors or a person vested with the corresponding powers by the board (this rule applies to cases when, according to the charter, the director is appointed by the board).
These persons also have the right to extend the period of validity of the manager’s powers or terminate them.
The new CEO independently issues an order to assume a leadership position. This document is similar to an order for hiring an employee.
The authority of the manager must be documented. An official document can be a protocol drawn up by an authorized body (instead of a protocol, an extract from it on the election of a manager can be used), an employment contract concluded between the organization and the general director, as well as an order to take office.
How to apply
The corporate body that appoints the sole executive body in the company has the right to reappoint the general director for a new term:
- In limited liability companies, the general director is appointed, as a rule, by the general meeting of participants or by a single participant. Less often, these powers are transferred to the board of directors or supervisory board.
- In joint stock companies, on the contrary, the default appointment is made by the board of directors. However, in its absence in small companies, this function is performed by the general meeting of shareholders.
- In institutions, the director is reappointed for a new term by the owner of the organization’s property.
In accordance with Art. 67.1 of the Civil Code of the Russian Federation, the decision of the LLC participants on the appointment and reappointment of the general director must be certified by a notary, unless otherwise established by the charter or a decision of the company participants. In its Review of Judicial Practice dated December 25, 2021, the Supreme Court of the Russian Federation indicated that this requirement also applies to cases where there is only one participant in the company.
Without a notarized protocol or decision, the bank will not accept the extension of the powers of the general director, unless the participants have determined in their charter a different procedure for certifying decisions.
In any case, the solution must contain the following data:
- name and details of the company where the general director is appointed;
- Full name of the appointed person and his passport details,
- the decision itself on appointment for a new term;
- term of office in accordance with the company's charter;
- signatures of the chairman and secretary or the only participant.
Sample decision of the sole founder of LLC
Limited Liability Company "Alpha Betta" ("Company")
Decision No. 10-2020
September 1, 2021
I, Maxim Maksimovich Ivanov, born May 15, 1970, registered at Moscow, Stroiteley Street, building 25, apt. 1050, being the only participant of the Company, I hereby make the decision:
Extend the powers of the current General Director of the Company, Igor Vitalievich Vasiliev, born on October 16, 1980, passport series 00 No. 000000, residing at the address: XX, for a new period of 1 year from September 1, 2021 to September 1, 2021.
Sole participant /signature/
Sample minutes of the general meeting of LLC participants
Limited Liability Company "Alpha Betta" ("Company")
Protocol No. 20/2020
September 1, 2021
Type of general meeting: extraordinary.
Form of holding: joint presence of participants.
Date of the general meeting: September 1, 2021.
Venue of the general meeting: Moscow, st. Stroiteley, 15, office 35.
The meeting opens at 15.00. The meeting adjourned at 15.30.
Present at the meeting were:
1. Ivanov Maxim Maksimovich, born on May 15, 1970, passport series 00 No. 000000, registered at the address XX, owning a share of 70% (seventy percent) of the authorized capital of the Company with a nominal value of 7,000 (seven thousand) rubles, and
2. Petrov Konstantin Vasilievich, born on October 16, 1980, passport series 00 No. 000000, registered at the address: XX, owning a share of 30% (thirty percent) of the authorized capital of the Company with a nominal value of 3,000 (three thousand) rubles.
The total number of votes of participants present at the meeting is 100%.
There is a quorum to make decisions on the agenda items.
Agenda:
1. On the extension of powers of the General Director of the Company.
1. On the first issue of the agenda, we heard M.M. Ivanov, who proposed extending the powers of the current General Director of the Company, Igor Vitalievich Vasiliev, for a new period of 1 year from September 1, 2021 to September 1, 2021.
Voted: "FOR" - 100%, "AGAINST" - 0%, "ABSTAINED" - 0%.
Decision:
1. Extend the powers of the current General Director of the Company, Igor Vitalievich Vasiliev, for a new period of 1 year from September 1, 2021 to September 1, 2021.
In accordance with clause 8.31 of the Company's Charter, a method has been approved for confirming decisions made by the general meeting of the company's participants by signing the minutes of the general meeting by all participants.
The protocol was drawn up on September 1, 2021.
/Signatures of participants/
Sample minutes of the board of directors
Limited Liability Company "Alpha Betta" ("Company")
Minutes of the Board of Directors No. 20/2020
September 1, 2021.
Meeting date: September 1, 2021.
Venue of the meeting: Moscow, st. Stroiteley, 15, office 35.
The meeting opens at 15.00 and closes at 15.30.
The meeting was attended by members of the board of directors:
1. Ivanov Ivan Petrovich, date of birth XX, registered at address: XX;
2. Mikhailov Mikhail Ivanovich, date of birth XX, registered at address: XX;
3. Sidorov Maxim Petrovich, date of birth XX, registered at address: XX.
Total 100% votes. The quorum established by clause 15.1 of the Company's Charter for making decisions on all issues on the agenda is present.
The chairman of the meeting is I.P. Ivanov, the secretary of the meeting is M.P. Sidorov. The counting of votes is carried out by the presiding officer.
Agenda:
1. On the extension of powers of the General Director of the Company.
1. On the first issue of the agenda, Ivanov I.P. was heard, who proposed extending the powers of the current General Director of the Company, Igor Vitalievich Vasiliev, for a new period of 1 year from September 1, 2021 to September 1, 2021.
Voted: "FOR" - 100%, "AGAINST" - 0%, "ABSTAINED" - 0%.
Decision:
1. Extend the powers of the current General Director of the Company, Igor Vitalievich Vasiliev, for a new period of 1 year from September 1, 2021 to September 1, 2021.
All issues on the agenda have been considered.
The protocol was drawn up on September 1, 2021
Chairman /signature/
Secretary /signature/
Signing a new contract with the manager is a necessary condition for extending his powers.
The organization's charter must contain provisions on the term of office of the general director. Business owners have the right to determine this period in the number of days, weeks, months or years.
There are no restrictions in law regarding the upper limits of the term of office. Therefore, there will be no contradiction to the law when defining the period of a manager’s powers as indefinite or indefinite. The authority in this case will remain in effect until the authorized persons make a formal decision to terminate it.
When creating a new LLC, the period of authority of the general director is calculated from the date of state registration of the organization. The legislation does not contain any provisions on the legal consequences for enterprises if the articles of association do not contain provisions on the term of office of a director. In such situations, the deadline is indicated in the decision to elect the general director. However, a legal entity may have problems with banking institutions, counterparties when making transactions, as well as with the Federal Tax Service.
Difficulties may arise if all these individuals interpret legal norms literally in their relations with the organization. For example, if the company’s charter does not indicate the period of validity of the general director’s powers, this may be considered a violation.
In the event of a change of director, his powers are considered terminated from the date specified in the decision. This document also indicates the period for which the new general director is vested with powers. The emergence or termination of the powers of an official has no relation to the fact of entering information about him into the state register. If the organization fails to fulfill this obligation, the general director is not deprived of his functions in accordance with Resolution of the Supreme Court of the Russian Federation of July 25, 2021 No. 34-AD16-5.
Term of office of the permanent executive body
No company can imagine its existence without a leader. As for the Limited Liability Company (hereinafter referred to as the Company), the director here is an individual who manages the organization, including performing the functions of its sole executive body, that is, at the same time he is both the management body of the Company and its employee. Thus, the directors of the Company are subject to both the norms of the Federal Law of 02/08/1998 N 14-FZ “On Limited Liability Companies”, and the norms of the Labor Code of the Russian Federation (hereinafter referred to as the Labor Code of the Russian Federation), constituent documents, internal documents of the Company, as well as the employment contract , concluded between society and the leader.
In accordance with Art. 16 of the Labor Code of the Russian Federation, labor relations arise on the basis of an employment contract as a result of appointment to a position.
Provisions of Art. 32, art. 33 and paragraph 1 of Art. 40 of the Federal Law “On Limited Liability Companies” indicate that the formation of the executive bodies of the Company and their early termination are carried out by the general meeting of the Company’s participants or the board of directors.
The activities of the Company are also subject to the Federal Law of 08.08.2001 N 129-FZ “On State Registration of Legal Entities and Individual Entrepreneurs”, on the basis of which the Company is obliged to inform the registration authority at its location about a number of legally significant actions, including The appointment of a new head of the Company also applies.
But the legislation does not connect the emergence or termination of the powers of a manager with the fact of entering data about him into the Unified State Register of Legal Entities (decision of the Supreme Arbitration Court of the Russian Federation dated May 29, 2006 N 2817/06, Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 14, 2006 N 12049/05).
Thus, the powers of the director arise from the moment of adoption of the corresponding decision of the general meeting of participants (board of directors) on appointment to the position or from the date specified in the decision. If the date of appointment to a position and, accordingly, the emergence of powers is not indicated in the decision, then the rules of Chapter 11 of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation) on the calculation of deadlines are applied.
Art. 191 of the Civil Code of the Russian Federation states that the course of a period determined by a period of time begins the next day after the calendar date or the occurrence of an event that determines its beginning.
The Labor Code of the Russian Federation contains a similar provision: in accordance with Art. 14 of the Labor Code of the Russian Federation, the period of time associated with the emergence of labor rights and obligations begins with the calendar date that determines the beginning of the occurrence of these rights and obligations. According to Art. 61 of the Labor Code of the Russian Federation, an employment contract comes into force from the day it is signed by the employee and the employer, unless otherwise established by the employment contract, or from the day the employee is actually admitted to work with the knowledge or on behalf of the employer or his representative. The employee is obliged to begin performing his job duties on the date specified in the employment contract. If the employment contract does not specify the start date of work, the employee must begin work on the next working day after the contract enters into force.
Based on the above, we can say that the director is obliged to begin fulfilling his labor duties from the date specified in the employment contract or on the next working day after the day of its signing, if there is no specified date. Despite this, perform the functions of the sole executive body, i.e. Such an employee will be able to manage the Company with all rights and obligations only from the date specified in the decision of the authorized body of the Company. Moreover, the basis for concluding the specified employment contract must be the decision of the general meeting of participants (board of directors) on appointment to the position.
At the same time, it is necessary to keep in mind that banks and government bodies, in order to carry out legally significant actions, may require an extract from the Unified State Register of Legal Entities, which will contain current information, including information about a person acting on behalf of the Company without a power of attorney, despite the fact that no Federal Law “On State Registration of Legal Entities and Individual Entrepreneurs” nor the Federal Law “On Limited Liability Companies” do not contain provisions that such changes become effective for third parties from the moment of their state registration. Thus, in practice we simultaneously obtain:
— information contained in the Unified State Register of Legal Entities about the director whose powers were terminated by decision of the general meeting of participants (board of directors);
— information not yet contained in the Unified State Register of Legal Entities about the director, whose powers arose on the basis of a decision of the general meeting of participants (board of directors);
In response to a similar situation, an employee of one of the bank’s offices explained that when witnessing a signature on a card with the director’s signature and the Company’s seal, they do not require an extract from the Unified State Register of Legal Entities. In another bank, the account may be blocked until an extract from the Unified State Register of Legal Entities and a sheet of entry in the Unified State Register of Legal Entities about the change of director are provided. In order for participants to be sure that a director whose powers have ceased will not be able to carry out transactions on accounts under payment orders signed by him, they can provide the bank with a letter demanding not to carry out transactions on accounts signed by the former director.
In accordance with the Federal Law “On Limited Liability Companies,” termination of the powers of the director is also carried out by making a decision of the general meeting of participants (board of directors).
As stated above, labor relations with the manager, in accordance with Art. 16 of the Labor Code of the Russian Federation, arise on the basis of an employment contract as a result of appointment to a position.
Both a fixed-term employment contract (Article 59 of the Labor Code of the Russian Federation) and a contract for an indefinite period can be concluded with the director.
In the event that none of the parties (the general meeting of the company's participants or the director himself) demanded termination of the fixed-term employment contract due to its expiration and the employee continues to work after the expiration of the employment contract, the condition on the fixed-term nature of the employment contract loses force and the employment contract is considered to be concluded for an indefinite period. In the event of the expiration of the term of office provided for by the Company's Charter, the general meeting of participants (board of directors) may decide to extend the powers of the manager or to terminate them and terminate the employment contract on the basis of Art. 278 Labor Code of the Russian Federation.
If the Company's participants wish to maintain the term of the manager's employment contract, then they have no choice but to terminate the previous contract and enter into a new one - the Labor Code of the Russian Federation does not provide for the possibility of extending such an agreement or re-registering it.
In accordance with Art. 58 of the Labor Code of the Russian Federation, a fixed-term employment contract can be concluded for a period of no more than five years. Art. 275 of the Labor Code of the Russian Federation states that in the case when a fixed-term employment contract is concluded with the head of an organization, the validity period of this employment contract is determined by the constituent documents of the organization or by agreement of the parties. Based on this, we can conclude that the term of office of a manager provided for by the constituent documents, with whom a fixed-term employment contract has been concluded, should not exceed five years.
The charters of some organizations contain a provision on the perpetuity of the director's powers. Practicing lawyers, as well as banks and notaries, in their work are of the opinion that the term of office of a manager must be determined in a decision, Charter or employment contract and cannot be unlimited. This conclusion can be made on the basis of Art. 190 of the Civil Code of the Russian Federation on the determination of deadlines: “The period established by law, other legal acts, a transaction or appointed by the court is determined by a calendar date or the expiration of a period of time, which is calculated in years, months, weeks, days or hours. The term can also be determined by indicating an event that must inevitably occur.” In the wording “indefinitely” there is no indication of any period of time or event.
According to Art. 84.1 of the Labor Code of the Russian Federation, the day of termination of the employment contract in all cases is the employee’s last day of work. By analogy with this norm, the day of termination of the powers of the manager by decision of the general meeting of participants (board of directors) is also his last working day.
At the same time, the law does not contain norms according to which the expiration of the term of office for which the director was elected automatically entails their termination. We can see this point of view in the Determination of the Supreme Arbitration Court dated 07.07.2010 N VAS-8874/10: “if, after the expiration of the term of office, the general director of the company is listed as the general director in the Unified State Register of Legal Entities and there is no decision of the general meeting of participants on the election of a new general director directors, the former general director has the right to exercise his powers.” But there is an opposite point of view, also confirmed by judicial practice, according to which, if on the basis of paragraph 1 of Art. 40 of the Federal Law “On Limited Liability Companies”, the term of office of the general director has expired and at general meetings of the company’s participants no decisions were made to extend the powers; the powers of the general director should be considered terminated.
Based on the foregoing, we can conclude that when determining the term of office of the head of the Company, it is necessary to separate the concepts of “term of employment contract” and “term of office of the sole executive body” and carefully control the time of its beginning and end.
When extending the powers of the general director, you need to rely on the terms specified in the charter.
The organization may be satisfied with the work of the general director. However, before extending the authority, the company must sign a new agreement with the manager indicating the period of validity of his authority. Otherwise, the relationship between the organization and the manager may become permanent. This may occur when the CEO's term of office expires, there is no decision to extend the CEO's tenure or to elect another person to a leadership position, or if the previous CEO continues to serve.
According to the courts, in such situations the manager is obliged to continue working until a new general director is elected. This condition is necessary to ensure the functioning of the company as usual (Resolution 19 of the AAS dated December 27, 2021 in case No. A57-4582/2016).
Change of director
