What is a Boardroom?

Board of directors, business decision-making body. According to the relevant provisions of Chapter IV, Section III of the "Company Law of the People's Republic of China" ^[1] , the board of directors is a board of directors that manages company affairs internally and externally represents the company's operating decision-making and business execution agencies. Elected by the shareholders (big) meeting.

Basic Information

Chinese name

Board of Directors

Foreign name

Board of directors

Features

the company's

The emergence and development of the board of directors for the purpose of managing the company runs through the history of the law. Before the end of the 19th century, it was generally believed that the general meeting of shareholders was the highest authority of the company, and the board of directors was just an agency within the company set up for shareholders in the general meeting of employees.

By 1906, the British Appeals Division had made a clearer distinction between the powers of the board of directors and the general meeting of shareholders. The management of the company belonged to the board of directors, and the general meeting of shareholders could not interfere with their legal behavior. This ultimately led to a consensus among shareholders: "

The board of directors is composed of all shareholders or directors democratically elected by the employees, and is a permanent body responsible for implementing the resolutions of the shareholders' assembly.

Institutional arrangements for solving agency problems and trust in escrow agencies.

The board can consider

In many legal systems, the appointment and removal of directors is subject to shareholder voting at shareholders' (major) meetings.

Directors can leave due to resignation or death. In some legal systems, directors can be removed by negotiation with other directors (in some countries, this needs to meet certain conditions, but in other countries, there are no restrictions).

Some jurisdictions also allow the board to appoint directors directly to fill vacancies arising from retirement or death, or to supplement existing directors.

As a company's board of directors, it has specific requirements in terms of qualifications, numbers, and work arrangements, as well as its specific scope of duties:

1. In terms of qualifications, each member of the board of directors must be a director. Directors are elected by shareholders at shareholders' (major) meetings. Or it can be elected by the company's employees through the workers' congress, the workers' congress, or other forms of democratic election (if it is a wholly state-owned enterprise, the board of directors must have company employees' representatives). All directors form a collective leadership team to become the board of directors.

A limited liability company with a small number of shareholders or a small scale may have an executive director without a board of directors.

The statutory director qualifications are as follows: First, directors can be natural persons or legal persons. If a legal person acts as a director of a company, it must appoint a capable natural person as its agent. In the current practice of company law, directors can only be held by natural persons.

Secondly, a person without civil capacity or restricted capacity cannot be a director.

2. In terms of the number of personnel, the number of directors must not be less than the statutory minimum limit, because the number is too small, which is not conducive to brainstorming and full concentration of shareholder opinions. But the number of people should not be too large to avoid bloated organizations and reduce efficiency. Therefore, the company may be above the minimum amount, and the number of directors shall be determined according to business needs and the articles of association.

Since the board of directors is the meeting body, the final number of board members is generally odd. According to the relevant provisions of the "Company Law", a limited liability company has a board of directors with three to thirteen members; however, except as otherwise provided for in Article 50 of this law. A company limited by shares has a board of directors with five to nineteen members.

3. In terms of division of labor, the board of directors generally has a chairman, deputy chairman, and executive director. A larger number of companies may also have a standing board of directors. The selection of the chairman and deputy chairman is stipulated in the company's articles of association.

4. In the board of directors, the chairman has the most authority and is the chairman of the board of directors. In general, the following powers are mainly exercised:

First, convening and chairing board meetings;

Second, during the adjournment of the board of directors, exercise the powers of the board of directors to supervise and guide major issues in business execution;

Third, other functions and powers stipulated in the company's articles of association.

Relationship with shareholders (big) meeting

The relationship between the board of directors and the general meeting of shareholders is as follows: the general meeting of shareholders is the authority of the company. The board of directors executes the resolutions of the general meeting of shareholders and is responsible to the general meeting of shareholders. Both exercise all the powers of the company, but the shareholders 'meeting is separated or the decision-making and management rights granted by the shareholders' meeting.

Resolutions made by the board must be consistent

Board meeting agenda

I. The first item before the conference: conference preparation

1. Call for proposals

2. Determine the meeting agenda

(1) Title

(2) Meeting time

(3) Venue

(4) Moderator

(5) deliberations

3. Prepare meeting documents

(1) General manager's work report (this year's work report / next year's business plan)

(2) Financial statements for the current year

(3) Financial budget for next year

(4) Prepared topics or reports

Second item before the meeting: meeting notice

1.SMS notification

File notification

3. Prompt before the meeting

(In the case of non-written notification, such notification shall be clearly specified in the articles of association of the company and shall be reasonably receivable.)

Third, the third item before the meeting: pre-meeting review

1. Amend the meeting topics

2.Packing and distribution of materials

3. Check the number of participants (sign-in form)

4.Implement the signature of entrusted authorization

5. Concerned about the signing of the meeting

During the meeting: deliberations and resolutions

1. Host

2. Matters for consideration and voting

3. Meeting minutes and signatures

4. Collection and signature of written opinions

5. Resolutions and signatures

(1) Enterprise name

(2) Meeting time

(3) Place of meeting

(4) Participants:

(5) Matters or contents of resolutions: With the unanimous consent of the board of directors, it is decided that ... shall take effect immediately. The above resolutions were signed by the following directors.

(6) Signature sequence: Chairman-Vice-Chairman-Director

6.Minutes and signatures

7.Issue of motions for solicitation

V. After the meeting: start a new cycle

1. Correct the information

2. Posting

3. Filing and disclosure

4.Archive

Traditionally, the relationship between the shareholders' meeting and the board of directors is handled according to the "appointment" theory. According to this theory, the board of directors is the agent of the shareholder (big) meeting, elected by the shareholder (big) meeting, and entrusted by the shareholder (big) meeting to manage the company's affairs. Therefore, the company laws of various countries stipulate that shareholders (big) will have the right to appoint reconciliation directors and have extensive decision-making powers on the company's operation and management. The board of directors will be under the shareholders (big) meeting and subject to the shareholders (big) meeting Responsible to shareholders (big) meeting.

But after entering the 20th century, especially in recent decades, the "organism" theory replaced the traditional "appointment" theory. According to this theory, the company is an organic whole, and the power of the company's organization is conferred by national law, not from the commission of the shareholders' meeting. According to this, the company law of modern western countries has weakened the power of the shareholders' meeting and strengthened the power of the board of directors. In different ways, the company's management rights have been assigned to the board of directors. For example, the German Stock Companies Act of 1937 stipulated that the board of directors is the leading agency. Except as otherwise provided by the law, neither the company's articles of association nor the resolutions of the shareholders' meeting can limit the board's exclusive leadership over the company's business.

The 1993 Company Law ignored the development trend of modern company law when allocating the power of the shareholders 'meeting and the board of directors. The authority allocated to the shareholders' meeting was very large, and even included some functions that should be exercised by the board of directors, such as company management. Decisions on policies and investment plans, decisions on corporate bond issuance, etc. China's "Company Law" strengthens the terms of reference of the board of directors, which is conducive to improving the operating efficiency of the company.

Board of Directors provisions of the current Company Law:

Article 44 A limited liability company has a board of directors, and its members are three to thirteen; except as otherwise provided in Article 50 of this Law;

In the case of a limited liability company invested by two or more state-owned enterprises or two or more other state-owned investment entities, members of the board of directors shall include representatives of the company's employees, and members of the board of directors of other limited liability companies may include representatives of the company's employees. The employee representatives on the board of directors are democratically elected by the company's employees through employee congresses, employee congresses, or other forms.

The board of directors has one chairman and may have a vice chairman. The method of selecting the chairman and vice-chairman shall be prescribed by the company's articles of association.

Article 45 The term of office of a director shall be prescribed by the articles of association, but each term shall not exceed three years. At the expiration of the director's term, they can be re-elected.

If the director's term of office is not re-elected in a timely manner, or the resignation of the director during the term of office causes the number of members of the board of directors to be less than the quorum, the original director should still perform the duties of director in accordance with the laws, administrative regulations and the articles of association before the elected director takes office.

Article 46 The shareholders meeting of the board of directors is responsible for exercising the following functions and powers:

(1) Convening meetings of shareholders 'meetings and reporting work to shareholders' meetings;

(2) implementing the resolutions of the shareholders meeting;

(3) Deciding on the company's business plan and investment plan;

(4) Formulating the company's annual financial budget plan and final accounts plan;

(5) Formulate the company's profit distribution plan and make up the loss plan;

(6) Formulating plans for the company to increase or decrease registered capital and issue corporate bonds;

(7) A plan for the merger, division, dissolution, or change of company form of the designated company;

(8) Deciding on the establishment of the company's internal management organization;

(9) Deciding to appoint or dismiss the company manager and its remuneration matters, and decide to appoint or dismiss the company's deputy manager, chief financial officer and remuneration matters according to the nomination of the manager;

(10) Formulating the company's basic management system;

(11) Other functions and powers stipulated in the articles of association of the company.

Article 47 The board meeting is convened and presided over by the chairman; if the chairman fails to perform his or her duties, the vice chairman shall convene and preside over it; if the vice chairman is unable to perform his or her duties, more than half of the directors jointly recommend Directors to convene and chair.

Article 48 In addition to the provisions of this Law, the board of directors' deliberations and voting procedures shall be provided for in the articles of association of the company.

The board of directors shall make minutes of the decisions on the matters discussed, and the directors present shall sign the minutes of the meeting.

The vote of the Board resolution, the implementation of one vote.

Article 108 A company limited by shares has a board of directors, and its members are five to nineteen.

The members of the board of directors may include company employee representatives. The employee representatives on the board of directors are democratically elected by the company's employees through employee congresses, employee congresses, or other forms.

The provisions of Article 45 of this Law on the term of office of directors of limited liability companies apply to directors of joint stock limited companies.

The provisions of Article 46 of this Law on the functions and powers of the board of directors of a limited liability company shall apply to the board of directors of a company limited by shares.

Article 109 The board of directors has one chairman and may have a vice chairman. The chairman and deputy chairman are elected by the board of directors by a majority of all directors.

The chairman convenes and presides over board meetings to check the implementation of board resolutions. The vice chairman assists the chairman in the work. If the chairman fails to perform his duties or fails to perform his duties, the vice chairman shall perform his duties; if the vice chairman fails to perform his duties or fails to perform his duties, more than half of the directors shall jointly recommend one director to perform his duties.

Article 110 The board of directors meets at least twice a year. Each meeting shall notify all directors and supervisors ten days before the meeting is convened.

Shareholders representing more than one-tenth of voting rights, more than one-third of directors, or the board of supervisors may propose to convene an extraordinary meeting of the board of directors. The chairman of the board shall convene and chair the board meeting within ten days after receiving the proposal.

When the board of directors convenes an ad hoc meeting, it may determine the notice method and time limit for convening the board of directors.

Article 111 A meeting of the board of directors shall be held only when more than half of the directors are present. The resolution of the board of directors must be approved by more than half of all directors.

The vote of the Board resolution, the implementation of one vote.

Article 112 The board meeting shall be attended by the directors themselves; if the directors are unable to attend for any reason, they may entrust other directors in writing to attend on their behalf. The power of attorney shall specify the scope of authorization.

The board of directors shall make minutes of the decisions on the matters discussed at the meeting, and the directors present at the meeting shall sign the minutes of the meeting.

The directors shall be responsible for the resolutions of the board of directors. If a resolution of the board of directors violates laws, administrative regulations or the company's articles of association or a resolution of a shareholders' general meeting, causing serious losses to the company, the directors participating in the resolution shall be liable for compensation to the company. However, the director may be exempted from liability if he proves that he has stated an objection during the voting and recorded it in the minutes of the meeting. ^[2]

Directors are generally divided into

The board of directors of a listed company may, in accordance with the relevant resolutions of the shareholders' general meeting, set up special committees on strategy, auditing, nomination, remuneration and evaluation.

The members of the special committee are all composed of directors. Among them, the independent directors in the audit committee, nomination committee, and remuneration and evaluation committee should take the majority and act as convenors. At least one independent director in the audit committee should be an accounting professional. The classification and duties of the specialized committees are as follows:

Board Strategy Committee

The main responsibility is to research and make recommendations on the company's long-term development strategy and major investment decisions.

Audit Committee of the Board

The main responsibilities are:

(1) Propose to hire or replace external audit institutions;

(2) Supervising the company's internal audit system and its implementation;

(3) Responsible for communication between internal audit and external audit;

(4) Review the company's financial information and its disclosure;

(5) Review the company's internal control system.

Board Nomination Committee

The main responsibilities are:

(1) Study the selection criteria and procedures of directors and managers and make recommendations;

(2) Extensive search for qualified directors and managers;

(3) Review and make recommendations for candidates for directors and managers.

Board Remuneration and Evaluation Committee

The main responsibilities are:

(1) Study the assessment standards of directors and managers, conduct assessments and make recommendations;

(2) Research and review the remuneration policies and plans of directors and senior management personnel.

Note: The special committees can hire intermediary agencies to provide professional advice, and the related costs shall be borne by the company. Each special committee is responsible to the board of directors, and the proposals of each special committee should be submitted to the board for review and decision. ^[4]