Managing Director in General

The articles of association may provide for an obligation of the company to appoint a managing director. Without such a provision in the articles of association the board of directors will decide upon whether or not to appoint a managing director. In the company that has a managing director a deputy managing director may be appointed. See further [Deputy Managing Director (Alternate Managing Director)]⁠. The managing director and the deputy managing director shall be notified to the Trade Register.

The managing director is always appointed by the board of directors. The appointment may not be delegated in the articles of association to the general meeting of shareholders or to any other party. Prior to the appointment consent must be given by the managing director to come. The disqualification rules that apply to board members [Disqualification of a Member of the Board]⁠ are equally applied to the managing director.

The managing director may be a shareholder or a member of the board of directors of the company. If the sole shareholder of the company is at the same time the sole member of the board of directors as well as the managing director, there is in practice no division in the company management while all the power and responsibility is vested with the same person. In case the company has a board of directors consisting of several members, the appointment of a managing director and his/her duties may affect the liability of the other members of the board of directors.

The liability of the managing director is often stricter than that of the other members of the board of directors. The exact determination of the duties and liability between the managing director and the board of directors depends on many factors. Such factors may consist, e.g. of the company’s size and its field of activity as well as its practice and the eventual managing director agreement.

The managing director is an official, whose position differs from the position of the company’s personnel due to the special liability of the managing director. The managing director does not have an employment relationship with the company and unless otherwise explicitly agreed the labor legislation does not apply to the managing director. Therefore it is recommendable to conclude a separate managing director agreement in which the relationship between the managing director and the company is agreed upon [Managing Director Agreement]⁠.