GENERAL CHARACTERISTICS OF THE BOARD OF DIRECTORS’ COMPETENCE IN THE ONE-TIER CORPORATE BOARD STRUCTURE

Abstract

In the article there is an analysis of the the competence of the body of corporation that combines management and control functions, which, mostly in the one-tier corporate board structure known as the «board of directors». The determination of the economic competence of the board of directors is the article objective, which is achieved through the study and analysis of legislative acts and relevant scientific researches. The author notes that delineating the boundaries of the economic competence of the board of directors depends on the boundaries of the economic competence of the general meetings of shareholders as derived from the corporate charter document (charter, agreement) adopted in accordance with the law, both in terms of procedure and content. Therefore, the article provides an analysis of the content of the term «exclusive competence of general meetings». The author concludes that it is impossible to assert the existence of the exclusive competence of the board of directors because, firstly, issues within the competence of the board of directors may be resolved by the general meetings at the discretion of the board of directors (and the law does not provide for the possibility of limiting this right in the charter document), and secondly, the general meetings of private joint-stock companies, except for companies of which 50 percent or more of the shares directly or indirectly belong to the state, may thus exercise their will-forming function, granting the general meetings the right to decide on any issues, including those within the competence of the board of directors. Since the board of directors is an entity endowed with the authority to act on behalf of the corporation in relations with third parties (acquiring rights for the corporation, exercising them, creating obligations, fulfilling them, and being responsible for their non-performance), the author investigates whether the board of directors realizes its own legal personality in doing so. The author concludes that the board of directors acts on behalf of the corporation, exercising functions of management and control delegated to it by the general meetings of shareholders, and doing so as a part of the corporation, as well as the individuals performing the functions of the board of directors (executive and non-executive directors) act not as individuals but as part of the corporation, therefore, there are no representation relations between them and the corporation.