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Appointment and replacement of а manager in a Limited Company

dev
June 29, 2023
Blog

Тhe appointment and replacement of a manager in an LTD(Limited Company) are important processes that can significantly affect the work and development of the company. The manager is a member carrying out the operational functioning of the company and representing it in its relations with other legal entities.

In the next few paragraphs, we will look at the procedures and conditions related to the appointment and replacement of a manager in an LTD.

How is the appointment of a manager in a limited company?

The manager is a sole member and according to the requirements of the Law - an adult, able to act individual person, with appropriate qualifications and experience in the relevant field of activity of the company. It is possible to appoint several managers and each of them to represent the company independently if the company agreement allows it.

To appoint a manager in an LTD, a certain procedure must be followed, the requirements for which are specified in the Commercial Law and the company agreement. The partners in the company should convene a general meeting, at which they will decide on the appointment of a specific person as a manager. There is no requirement that the manager be a partner.

Rights and obligations of the manager

The rights and obligations of the manager of the OOD can be specified by signing a management assignment contract. The contract must be concluded by a person authorized for this purpose by the general meeting of the partners of the company.

Part of the manager's powers in internal management include - convening the General Assembly at regular and extraordinary meetings, preparing the projects for decisions that he proposes for adoption by the General Assembly, concluding and terminating contracts with employees, keeping company books, etc.

His powers in external relations are reduced to representation of the company, as well as to enter into unlimited transactions on his behalf.

Without the consent of the general meeting, the manager cannot carry out transactions on behalf of others or on his own behalf, lead or participate in other commercial companies and establish new ones on behalf of the company he manages.

Protection against illegal actions of the manager

The protection against illegal actions of the manager (without engaging his responsibility) can be carried out by filing a claim by a partner in an LTD to establish the invalidity of transactions concluded by the manager. In such a hypothesis, it should be established that the claimant has a legal interest in the brought claim.

Implementation of responsibility of the manager

The manager is financially responsible for the damages caused to the company. The manager's liability is a special, property liability. It is based on two legal relationships - organizational and contractual.

The responsibility of the manager is expressed in compensation for the damages caused and lost benefits, which are a direct and immediate consequence of his illegal actions or omissions and were foreseeable when they were committed. For the property liability of the manager to be realized, it is necessary to establish by court order an action or inaction of the manager, which is a violation of the obligations assumed by him to the company. The factual composition also includes : damage to the company, a causal relationship between the damage and the behaviour of the manager, as well as his fault.

Termination of representative authority of the manager

The manager can be replaced in the event of death, being placed under prohibition or release, which is done by a decision of the General Assembly, taken by e simple majority. It can be changed without reason, by decision of the general meeting of partners.

Termination of the representative authority can also be done at the manager's request to be deleted from the commercial register with a written notification to the company, within one month of receiving the notification, the company should enter this circumstance in the commercial register. If he does not take action on its deletion, the previous manager has the right to request his deletion himself.

In conclusion, the appointment and replacement of a manager in an LLC are important steps to ensure the effective functioning and development of the company. They should be carried out in accordance with the legal requirements and procedures established in the company agreement and the Commercial Law, to guarantee the competence and reliability of the manager and the effective functioning of the company.

The KGK team has extensive experience in processes related to commercial companies.

You can contact us for assistance and consultation.


Lawyer

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