According to the Corporate Enterprises Act, the contract of the managing director is obligatory when the board of directors delegate power and executive functions to one member of the board.
The appointment of the managing director shall require the favourable vote of two-thirds of the board members. Furthermore, the result of the voting shall be annexed to the minutes of the general meeting.
Characteristics of the contract of managing director
The contract that the managing director has with the company as a board member also applies and has the following characteristics:
- The contract of managing director requires the manifestation of intention of the company and the explicit manifestation of intention of the managing director
- The contract of managing director should specify all the methods of obtaining remuneration
- The contract must determine any compensation paid to the director in case of early termination. The compensation should be paid from the insurance premiums or from the savings of the company
- The managing director cannot receive any remuneration for the performance of executive duties that are not included in the contract
- The contract of managing director may contain clauses with the limits of the contract
- The contract of managing director should be in written form
The contract of the managing director should contain relevant information for the members, so that the board cannot refuse its distribution to the partners to exercise their right to information.
The contract of managing director shall not take effect until it is registered in the Mercantile Registry.
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