The Legal Framework of a Governance Manual
Whether a governance manual remains a paper document or becomes a working system, its foundation lies in the law on entrepreneurs. Under Article 35, the organs of an enterprise are the general meeting, the managing organ and — where provided by law or charter — the supervisory board; organs and their members act only within the competence defined by law or charter. A manual describes precisely the allocation of these competences.
Every company must have a managing organ to ensure leadership. The charter determines its form: sole management by one person, joint or several management by several leading persons, or joint management by all; absent a charter provision, all leading persons exercise management jointly.
The law also refines the forms: in a solidarity company the right to manage belongs to every partner; in a kommandit company — to the personally liable partners (complementars), unless the partners appoint another person; in a limited-liability company, a joint-stock company and a cooperative — to the leading person or persons. A manual reflects this choice and aligns the internal rules with it.
The Supervisory Board
The supervisory board controls the activity of the managing organ, but the managing organ’s functions cannot be transferred to it, save as provided by law. Its meeting is quorate with a majority of members present, and decisions are taken by a majority of votes unless the charter requires a greater number.
State participation triggers special rules: where the state or an autonomous republic holds more than 50 percent of the votes, a supervisory board may be created by government decision, and the appointment and dismissal of the leading person must be agreed with the shareholder holding more than 50 percent of the votes. A public servant without a conflict of interest may represent the state on the board.
The Duty of Care and Its Boundary
The leading person must manage the company’s affairs lawfully and with the diligence of a conscientious manager: caring as an ordinary, prudent person would in similar conditions, in the belief that the action is economically most advantageous for the company. They are liable to the company for damage caused by culpable non-performance, and limiting liability for intentional non-performance by charter or decision is impermissible.
Where the value of a transaction exceeds 50 percent of the balance-sheet value of the company’s assets or a smaller charter-set amount, the general meeting must approve it. The duty of care is not breached and no damage is compensated where the decision was made on the basis of sufficient and reliable information, independently and free of conflicts, in the company’s interests — this is the business-judgment rule.
The right to claim compensation of the damage belongs to the managing organ, another leading person and the supervisory board, and in cases provided by law and in the established manner — to each partner. The leading person is released from liability where he executes a decision of the general meeting — except where he contributed to the adoption of that decision by supplying incorrect information, or knew that it would cause damage but did not inform the meeting.