Duties of the Board of Directors
The board of directors has general competence in the company’s matters. All matters that have not in the Limited Liability Companies Act or in the articles of association been stipulated to be performed by other company organs belong to the board of directors. The same applies to matters that due to their nature do not belong to the scope of competence of other organs or to the managing director. However, the board of directors, as other company organs, has a right to decide upon company matters only within the limits of the company’s field of activity and its purpose.
The board of directors of a company attends to the administration of the company and the appropriate organization of its operations. If the company has a managing director he/she shall attend to the day-to-day administration of the company in accordance with the instructions and orders given by the board of directors.
The board of directors shall make sure that the supervision of the company’s bookkeeping and financial administration is appropriately arranged. If the company has a managing director he/she shall make sure that the company’s bookkeeping is arranged in accordance with law and that its financial administration is arranged in a reliable manner. The board of directors has in this case only a supervisory role.
The managing director may not undertake measures which are unusual or extensive in view of the scope and nature of the activities of the company unless the board of directors has authorized him/her thereto. A situation where it is not possible to wait for a decision of the board of directors without causing essential harm to the business operations of the company is to be considered as an exception. In such a case the board of directors has to be notified of the measures as soon as possible.
Such unusual or extensive measures normally within the powers of the Board may, for instance, include:
essential extension or reduction of the company’s activities;
significant organizational changes;
considerable purchases of real estate;
decisions concerning borrowing or lending that are considered large-scale compared to the size of the company;
concluding/termination/cancellation of agreements essentially affecting the company’s position; and
transfer of activity to another place.
Other tasks of the board of directors consist, among other things, of:
issuance of share certificates at the request of a shareholder;
maintenance of the share and shareholders’ registers;
representation of and signing for the company;
dating and signing the accounts;
issuance of various statements and guarantees (i.e. about increase of the capital stock and legality of the business transactions);
appointment and dismissal of the managing director as well as the confirmation of his/her compensation and of the contents of his/her service agreement;
convening the general meeting of shareholders to handle the company’s measures in order to restructure the company’s financial state if the company’s equity is less than half of its share capital;
attending to the Trade Register entries;
notifying a subsidiary’s board of directors or a corresponding organ if the company has become a parent company;
administration of the execution of the minutes of the board meetings and the reliable maintenance thereof;
administration of the availability and reliable maintenance of the minutes of the general meeting of shareholders;
making sure that the registered business name of the company, the registered place of business, the address and business identity code as well as the possible state of liquidation have been mentioned on the company’s letters and forms;
deciding on legal actions for damages based on a punishable act;
convening the general meeting of shareholders; and
execution of the decisions of the general meetings of shareholders.
The board of directors shall examine the legal validity of the general meeting’s decision, e.g., mainly that the Limited Liability Companies Act and the articles of association have been complied with. The board shall not follow the decision against law or articles of association. The board is also to make sure that other laws are complied with if the violation of some other law may cause a decision of the general meeting of shareholders to be null and void or the provision is otherwise such that the company has an obligation to comply with it in that particular situation.