The date of the annual ordinary shareholders meeting is fast approaching for companies whose financial year overlaps with the calendar year; therefore, it should be determined whether the mandate of members of the management board will expire upon the meeting taking place. We frequently forget that management board membership of capital companies is, as a rule, term-based.
Pursuant to Article 202 § 1–2 of the Code of Commercial Companies, as a rule, the mandate of a member of the management board expires on the date of the shareholders meeting approving the financial statements for the first full financial year during which they performed the function of a member of the management board and, if the member of the management board is appointed for a term longer than one year, the mandate of that member of the management board expires on the date of the shareholders meeting approving the financial statements for the last full financial year during which they performed the function of a member of the management board.
Expiration of the mandate will give rise to serious legal consequences, including invalidity of agreements, management board resolutions or other managerial activities. For this reason, we recommend a review of your articles of association and resolutions of the Shareholders Meetings adopted so far in order to determine whether your company has a functioning Management Board and, possibly, what remedial actions can be taken.
At the same, please note that in joint-stock companies, members of the Management Board perform their functions for a term under the law and this matter should be pointed out at the next General Shareholders Meeting.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.