March 25, 2022
LLC decision-making procedure
Table of Content
3. The General Meeting of Participants
3.1.1. The preparatory procedures of GMP
3.1.2. Who has a right to participate and vote on the GMP?
3.1.3. How are decisions made on the GMP?
3.1.4. Where are the results of GMP recorded?
4. The Supervisory Board of the Company
The Law No. 310-II dated 06.12.2001 «On Limited and Additional Liability Companies».
Nowadays, the most common form of commercial activity organization is the creation of the Limited Liability Company (hereinafter referred as the “Company“). The Company carries the meaning as an organizational form of business, whose minimum and maximum composition consists from 1 to 50 participants and the main feature of which is the fact that the participant’s liability is limited within the limits of their contribution. One of the key moments in the Company is the decision-making procedure. The procedure for making decisions in the Company is established in the Company’s charter, and also regulated by the Law “On Limited and Additional Liability Companies” (hereinafter referred as the “Law“).
3. The General Meeting of Participants
The supreme governing body of the Company is the General Meeting of Participants (hereinafter referred to as the “GMP“). The Company’s charter sets the terms of the GMP, but in accordance with the Law, the meeting must be held at least once a year and convened by the executive body of the Company.
Meetings held in addition to the annual general meeting are called extraordinary, and held in the cases established in the Company’s charter, and convened by the executive body of the Company. An extraordinary GMP may also be held at the request of the Company’s participants who collectively hold at least one-tenth of the total number of votes of the Company’s participants, as well as the Company’s supervisory board and the Company’s audit commission (auditor).
Within three days from the date of receipt of the request to hold an extraordinary GMP, the executive body must consider and make a decision on its convocation or refusal to hold it. If the Company’s charter determines the creation of a supervisory board, the Company’s executive body is obliged to submit this request to the supervisory board for consideration within three days from the date of receipt of the request to hold an extraordinary GMP. In case of a positive decision on holding an extraordinary GMP, the meeting must be held no later than forty five days from the date of receipt of the request for its holding.
3.1.1. The preparatory procedures of GMP
The body or persons convening the GMP must, no later than thirty days before its holding, notify each participant of the Company about the actual holding, time, place of the GMP and the proposed agenda – by registered mail to the address indicated in the list of participants of the Company. The Company’s charter may provide other methods and shorter notice periods. Also, together with the notification, information and materials on the conduct of the GMP must be sent within thirty days before the meeting.
3.1.2. Who has a right to participate and vote on the GMP?
It is possible to participate, discuss issues and vote in the GMP personally by a participant or through their representatives on the basis of a power of attorney, and an unregistered participant of the Company (a representative of a participant) cannot participate in voting. Each participant of the Company has a number of votes proportional to his share in the authorized fund (authorized capital) of the Company, but the Company’s charter may provide different procedure.
3.1.3. How are decisions made on the GMP?
Decisions on the GMP, depending on the nature of the issues specified in Appendix No. 1, may be taken by a majority of at least two-thirds of the votes, by a majority of the total number of votes of the Company’s participants, if the need for a larger number of votes for making such a decision is not provided by the Company’s charter, as well as unanimously. Decisions of the GMP are made by open voting, unless otherwise specified in the Company’s charter.
It should be mentioned that the decision on the GMP can also be made without holding a meeting, that is, by holding an absentee vote (by poll). Such voting can be carried out by exchanging documents by means of postal, telegraph, teletype, telephone, electronic or other communication that ensures the validity of the transmitted and received messages and their documentary confirmation. Each participant must be informed about the absentee voting, about the proposed agenda, about the possibility of making changes to the agenda and about the deadline for the end of the voting procedure. The issues on which this method of voting can be applied are determined in the Company’s charter.
3.1.4. Where are the results of GMP recorded?
The main provisions of the speech, the issues rose at the voting, the results of the voting and the decisions adopted by the meeting are indicated in the minutes kept by the executive body of the Company. After closing GMP, the protocol is signed by the chairman and the secretary of the general meeting, for a period of no later than three days.
4. The Supervisory Board of the Company
The Company’s charter may also specify the creation of the supervisory board. The supervisory board can be understandable as parallel management body of the Company. The powers of the supervisory board of the Company are determined by the Company’s charter in accordance with the Law, but there are issues that relate exclusively to the powers of the GMP and cannot be transferred to the supervisory board, except for the issues specified in Appendix 1. As for the right to vote, members of the supervisory board who are not members of the Company may participate in the GMP with the right of an advisory vote and such votes may not be transferred to other members of the supervisory board or other persons.
Appendix 1
The Table of Issues on which decisions are made in the Company[1]
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[1] It should be mentioned that the Company’s charter may establish and grant the right to resolve other issues specified in the table.