Shaking creature or CEO?

The general director is an important element in the work of the company, no matter how it is called - the president, manager, general or simply director, the essence of this does not change.
But, as practice shows, not all companies - from startups to corporations - know how to "prepare them correctly." And the leader himself must understand that his responsibility is quite extensive and he receives not only a beautiful chair, but also many responsibilities in the appendage to him.



Step 1. Purpose


The sole executive body (director) is appointed by decision of the general meeting of participants or by the board of directors (if such a body is created and the Charter of the company refers this issue to its competence).

If the company has only one member, he makes a decision individually and appoints a director. Note that the sole participant of an LLC and an individual entrepreneur are completely different things. Although an individual entrepreneur may have employees, he does not have a charter and cannot have a general director.

The text of the decision / protocol could be something like this:
  1. To appoint Ivanov Ivan Ivanovich to the post of General Director of LLC Romashka (passport of the citizen of the Russian Federation No. 7777 series 8888, issued ...).
  2. In accordance with the current legislation of the Russian Federation, register the changes made to the Unified State Register of Legal Entities at the MIFNS No. 46 in Moscow.
  3. To appoint Ivanov Ivan Ivanovich as the person responsible for the state registration of changes made to the Unified State Register of Legal Entities.

The term of office of the director is indicated in the Charter and the decision on appointment.

For example, if you have a term of office of 5 years under the Charter, then you cannot appoint a director for 10 years without changing the provisions of the Charter.

After the appointment of the director, amendments should be made to the Unified State Register of Legal Entities so that counterparties and government bodies see who your sole executive body is.

Step 2. Powers


The General Director carries out the current management of the company. But this does not mean that he owns it. The owners are the founders, and the director can be an ordinary employee who is chosen by the founders, and he is obliged to report to them on the work done. Yes, without a director, a company cannot conduct business, but it can be replaced in the manner prescribed in the Charter.

The director has the right to sign documents without a power of attorney and enter into transactions in the course of current work or, in other words, in the course of the business of the company. In order to protect the organization from the director’s dishonest behavior, it is possible to stipulate in the Charter that certain types of transactions are subject to mandatory preliminary approval by the general meeting of participants (board of directors).

For example, the charter may indicate that transactions for the alienation of intangible assets, transactions worth more than 1,000,000 rubles must be approved in advance. etc.

If, in violation of such rules, the director concludes transactions without approval, then the transaction itself can be declared invalid and the director can recover damages through the court. In such a case, the LLC will be the Claimant, and the unfortunate director as an individual - the Defendant.

Today, judicial practice in relation to the director is becoming tougher and tougher and more and more often losses are collected from him in favor of the company.

Losses will be recovered from the director in the same way as from individuals, that is, the losing side risks their property and funds in their personal accounts.

Step 3. Design


If you are NOT the only founder of the company, then the next step after choosing a director and determining his authority will be to conclude an employment contract with him. After all, the director is not only the executive body of the company, but also the employee, so his labor rights must be respected. Accordingly, the amount of compensation, the term for fulfilling obligations and his responsibility should be included in the employment contract with the director. Note that the general director, like any employee, may have a probationary period. Usually it is a maximum of 3 months, but the director can last up to six months.

It makes sense to prescribe in detail the working procedure of the director, the procedure for his dismissal, as well as develop the Regulation on the General Director and indicate in it the following:
  • reporting procedure to the founders;
  • the procedure for the appointment of an acting officer in the absence of the Director General.

The Labor Code establishes a number of features for the head of the organization as an employee:
  • the head of the organization may work concurrently with another employer only with the permission of the authorized body of the legal entity, or the owner of the property of the organization, or the person (body) authorized by the owner;
  • the head of the organization bears full financial responsibility for direct actual damage caused to the organization;
  • special grounds may be provided for the dismissal of the head;

And remember: the employment contract and the regulation on the general director must comply with the charter of your company.

Step 4. Dismissal


The general meeting of participants or the board of directors is removed from the post. In this case, the authorized body is absolutely not obliged to indicate the reasons.

The director may quit of his own free will. But it happens that the desire of the director does not coincide with the desire of the board of directors. They may even accept the application, but until they appoint a new candidate, the old director will appear on the register. The head becomes a hostage to such a controversial situation, and lawyers shrug their hands, because there is no specific practice on this issue.

The Federal Tax Service of Russia spoke in this regard in a letter dated July 1, 2015 No. SA-4-14 / 11453, indicating that the person holding the position of Director General does not have the opportunity to ensure that only the termination of his authority is entered into the Unified State Register of Legal Entities. Information about the specified person as the sole executive body of the company will be contained in the state register until the company enters the USRLE with information about the new general director.

What threatens the director:
  • In the case of fines imposed on the director of the company, the one who is listed as such in the Register will be responsible. Moreover, if two fines are imposed from any supervisory authority during the year, he is not only obligated to pay fines, but will also be disqualified and for some time will not be able to occupy the position of general director anywhere else.
  • Formal complaints from counterparties will also be forwarded to those listed on the register.


What threatens the company:
  • In fact - nothing. The director will have to prove that he was fired.



So, if you are the founder of an LLC, remember that you can hire and fire the CEO. But this is not as simple as it seems, and a negligent employee can paralyze the work of the company for a long time, and in the worst case, even ruin it. Be careful when choosing.

If you have been appointed CEO , remember that “great power entails great responsibility.” You get an office, a chair, and maybe even a personal secretary and a driver, but at the same time responsibility for the whole company rests on your shoulders. Remember that in some cases the CEO will answer with his personal property, and not with the property of the Company.

If you are the sole founder and you are the CEO , do not worry about it and work calmly.

Only registered users can participate in the survey. Please come in.

Does your company have a hired CEO?

  • 25% No, I work as an individual entrepreneur. 25
  • 14% No, I don’t need a stranger at the helm of my company! 14
  • 51% The director is one of the founders. 51
  • 18% Yes, hired. Hired to perform certain tasks 18

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