The Board and other organs of limited liability company
The Board of Directors is a key organ in your company, and it has the power to both lead and represent your company. However, the General Meeting is the highest decision-making body consisting of your company’s shareholders. Your company may also select a Managing Director to lead the practical operations.
Generally, the General Meeting elects members for the Board of Directors of a limited liability company. The Board of Directors ensures that the company's administration and operations are properly organised.
Your company's Board of Directors should have between one and five ordinary members. If there are fewer than three members, the Board must have at least one deputy member. If the Board of Directors has only one member, an entry about the chairperson should not be included in the notification to the Trade Register, even if the General Meeting has determined that one person is the chair. If there is more than one member, the Board must select a chairperson. The number of members can be waived by the rules.
Members of the Board of Directors are usually selected by your company's General Meeting or Supervisory Board. A person to whom a trustee has been designated or who is in a business ban or declared bankrupt cannot be a member. Inform the Trade Register about the members and deputy members of your company's Board of Directors as well as any related changes without delay.
The Board discusses issues and makes decisions in Board meetings. The Board of Directors has a quorum, meaning it can make decisions, when more than half of its Members are present. If members of the Board of Directors do not agree about a decision, the majority opinion wins. In the event of a tie, the decision is made by the chairperson’s vote. In the event of a tie in the election of a chair, the election is decided by drawing lots.
You can also agree on alternative arrangements with regard to the Board of Directors and its operations in the Articles of Association.
Your company can also have a Managing Director, who shall carry out your company's running administration in accordance with the instructions and regulations of the Board of Directors. The Managing Director’s tasks can include
- management and supervision of the practical operations of your company
- responsibility to take care of personnel matters
- planning and monitoring of finances
- ensuring that your company fulfils its agreements and other obligations
- ensuring that your company’s accounting is lawful and financial management has been arranged in a reliable manner
- ensuring that your company's Board of Directors receives sufficient information in order to carry out their duties
- representing your company in matters which belong to the Managing Director by law.
Your company's Board of Directors will select the Managing Director. Particularly in small companies, the Managing Director is often one of the members of the Board of Directors. Inform the Trade Register about the selection of the Managing Director and their deputy, as well as any related changes without delay. If your company selects the Managing Director already at the start-up phase, record it in the Memorandum of Association.
The annual General Meeting consists of your company’s shareholders, who meet to decide about issues concerning your company. You can even be the sole shareholder and decide about company matters alone by yourself. The General Meeting is the highest decision-making body of your company. It may decide on all matters that fall within the Limited Liability Companies Act.
An Ordinary General Meeting is always mandatory. Your company's Board of Directors should convene it once a year, within six months after the end of the financial year. The General Meeting decides, amongst other things, about the approval of the financial statement, distribution of profit, and the selection of the Board and the Board of Directors, Supervisory Board and auditor. It also gives discharge to the Board of Directors, Supervisory Board and the Managing Director, which means that the actions they have taken are approved by the General Meeting
Your company may also hold extra General Meetings if indicated in the Articles of Association, or required by the Board of Directors, a shareholder, an auditor or the Supervisory Board.
Your company's shareholders may also decide about a matter belonging to the annual General Meeting even without organising a General Meeting, if everyone agrees on the matter.