In the modern world, the main form of organization of large enterprises is the joint-stock Companies, as one of the most advanced legal mechanisms for improving the economy. The joint-stock company (hereinafter referred as Company) is the commercial organization, where legal entities and individuals, including foreign ones, voluntarily consolidate their funds by issuing shares, in order to meet public needs and make a profit in the form of dividends. The management structure and decision-making process in a Company differs from the other types of organizations in certain cases. Therefore, this article examines how and who makes decisions in company.

In accordance with the Law No.LRU-370 dated 6 May 2014 “On joint-stock Companies and protection of shareholder’s rights”, there are three management bodies in the Company, such as: the General Meeting of Shareholders (hereinafter referred as GMS), which is the highest management body of the company, the Supervisory Board and the executive body. In the Company, decisions are made only by the GMS and the Supervisory Board, as well as in the case of ownership of all shares of the Company by sole participant

3. The General Meeting of Shareholders

The GMS is an annual meeting of shareholders, which is the management body of the Company. Such meeting is conducted by the chairman of the Supervisory Board of the Company or one of its members in cases of his absence for valid reasons. The terms of conducting a meeting are determined in the Company’s charter, but not later than six month after the end of the financial year. At the annual GMS, diversity of issues can be resolved, such as:

Election of the Supervisory Board and the Audit Commission of the Company;
On the possibility of extending the term, renegotiating or terminating the contract with the director, the management board of the Company and the trusty;
The Company’s annual report, as well as the reports of the executive body and the Supervisory Board;
The issues specified in Appendix No. 1.

3.1. The Extraordinary GMS

The meetings conducted more than once in a year are the extraordinary meetings. The extraordinary GMS, can be conducted at the discretion of supervisory board, a written request of the audit commission and the shareholder/s holding at least five percent of the voting shares of the Company as of the date of submission of the written request. The convocation, date, procedure for conducting the GMS and informing shareholders is determined by the supervisory board, with a period of no later than thirty days from the date of submission of a written request. In the request to conduct the extraordinary GMS, the issues to be included in the agenda of the meeting should be formulated, by indicating the reason for their inclusion. The decision to convene or refuse an extraordinary GMS is established by the supervisory board within ten days from the date of submitting the request.

3.1.1. The preparatory procedures of the GMS

The information about the conduct of the GMS must be published on the Unified Corporate Information Portal, on the official website of the Company and in the mass media, as well as sent to shareholders by e-mail no later than twenty one day, but not earlier than thirty days before the date of the GMS. Regardless to the state representative, he must be notified by the company in written form no later than seven days before the date of the GMS.

3.1.2. Who has a right to participate and vote?

To participate in GMS, the shareholders must be registered in the Company’s register of shareholders, formed three working days before the date of holding GMS, while for the voting, shareholders must own voting shares, that is ordinary shares, as well as preferred shares, in case when these shares become voting in accordance with the Company’s charter. It must be noted that, if the shareholder cannot personally attend the meeting, the right can be transferred to his representative on the basis of power of attorney, but the state representative must be present in person.

If the Company’s share is jointly owned by several persons, the right to vote on the GMS is exercised at their discretion by one of the participants in the common share ownership or their common representative.

3.1.3. The voting and decision-making process

First of all, the supervisory board creates a counting commission that counts votes, registers shareholders to participate in the meeting and issues voting ballots with which voting is carried out. Voting at the general meeting of shareholders is carried out on the principle of one voting share of the Company — one vote. In the voting process, votes are counted on those issues on which only one of the possible voting options is left to the voters and is carried out jointly on all voting shares.

As for the decision-making process, decisions can be made only on those issues that were included in the agenda. A shareholder holding at least one percent of the voting shares may include issues in the agenda no later than thirty days after the end of the company’s financial year, unless another term is specified in the Company’s charter. Decisions at the GMS are made in two ways, such as by a simple majority of the votes of the shares (50% + 1 vote from the number of those present) and by a qualified majority (three-quarters of the votes of the shareholders).

3.1.4. Where are the results of the GMS recorded?

The adopted decisions, as well as the voting results, are announced at the GMS during which the voting was held, and are also brought to the attention of shareholders after the closing of the meeting by publishing a report on the voting results on the Company’s website, no later than thirty days from the date of making these decisions. Decisions taken without the participation of a representative of the State, as well as those that are prohibited cannot be valid.

Further, based on the voting results, the counting commission draws up a protocol on the results of voting, within ten days after the closure of the GMS. After drawing up the protocol and signing the protocol, the voting ballots are sealed by the counting commission and deposited in the departmental archive of the Company for storage.

4. The Supervisory Board

The GMS also provides for the election of the Supervisory Board (hereinafter referred as the SB) for a period of one year, which performs the function of general management of the Company’s activities, in other words, has the right to resolve certain issues specified in Appendix No. 1. The election of the members of the SB of the Company is carried out by cumulative voting. In case of cumulative voting, the number of votes belonging to each shareholder is multiplied by the number of persons who should be elected to the SB of the Company, and the shareholder has the right to cast the votes received in this way in full for one candidate or distribute them among two or more candidates. The candidates who have received the largest number of votes are considered to be elected to the SB of the Company.

4.1. The preparatory procedures of the SB

To begin with, the SB elects its chairman, who convenes and conducts meetings of the SB, as well as the GMS, unless otherwise specified in the Company’s charter. The SB may be convened not only by the chairman, but also at the request of a member of the SB, the audit commission, the executive body of the Company and other persons specified in the Company’s charter. The procedure for convening and holding a meeting of the SB is determined by the Company’s charter.

4.2. The voting and decision-making process

Each member of the SB has one vote and the transfer of the vote by one member of the SB to another member is not allowed. Decisions at the meeting of the SB are made by a majority of votes of those present or unanimously. Decisions taken by the SB of the Company without the participation of a representative of the state, as well as those that are prohibited, are not subject to execution. In case of equality of votes, the charter of the Company provides for the right of the decisive vote of the chairman of the SB. It should be noted that the decisions of the SB can also be adopted by absentee voting (by poll) by all members of the SB unanimously.

4.3. Where are the results of the GMS recorded?

All information related to the meeting of the SB is established in the protocol, which is drawn up no later than ten days after its holding. Finally, the protocol is submitted for execution to the executive body (director/s) of the Company on the day of its signing.

5. The Company with one shareholder

The shareholder who owns all the ordinary shares of the Company, alone makes decisions on all issues related to the Company’s charter and the issues specified in Appendix No. 1. Such decisions must be made in a written form, except in cases when the Company’s preferred shares acquire the right to vote.

Appendix No. 1

The Table of Issues on which decisions are made in the Company[1]

THE GENERAL MEETING OF SHAREHOLDERS	THE SUPERVISORY BOARD
DECISION-MAKING BY THE SIMPLE MAJORITY	DECISION-MAKING BY THE SIMPLE MAJORITY (with the right under the Company’s charter)
Formation or increase of the state share in the authorized fund (authorized capital) of the Company (only with the consent of the shareholders holding at least two-thirds of the outstanding voting shares of the Company)	Increase of the authorized capital of the Company and amendments to the charter of the Company
Price of placement of shares and other securities	Price of placement of shares and other securities
Reduction of the authorized fund (authorized capital) of the Company and amendments to the charter of the Company	Acquisition of outstanding shares by the Company
Payment of dividends, the amount of the dividend, the form and procedure for its payment on shares of each type	Setting the amount of remuneration and compensation to be paid to the Company’s executive body
Election of the Supervisory Board and the Audit Commission (Auditor)	Inclusion of issues in the agenda
DECISION MAKING BY QUALIFIED MAJORITY	Holding an extraordinary general meeting of shareholders
Making amendments and additions to the Company’s charter or approving it in a new version	Making a decision to conduct an audit and all related issues (except for the mandatory audit)
Reorganization of the Company in the form of division, separation and transformation of the Company	Issue of derivative securities
Liquidation of the Company and appointment of a liquidator	Election of the chairman of the SB
Determination of the quantitative composition of the supervisory Board and the committee of minority shareholders of the Company	UNANIMOUS DECISION-MAKING
Increase in the authorized capital (authorized fund) of the Company	Issuance of corporate bonds by the Company, including those convertible into shares
Issuance of corporate bonds by the Company, including those convertible into shares	Making major transactions
Making major transactions	Approval of a transaction with an affiliate of a Company
Approval of a transaction with an affiliate of a Company	Increase in the authorized fund (authorized capital); number of outstanding shares, terms and conditions

[1] It should be mentioned that the Company’s charter may establish and grant the right to resolve other issues specified in the table.

JSC decision-making procedure

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