An executive board represents the association externally, determines its direction, and acts for it. Under this responsibility, the election of the board of directors is regulated by law since the board of directors is ultimately liable for the association. So how does the election work?
The role of a chairman of the board of directors
The board of directors represents the association externally and is elected by the general assembly. There are no statutory provisions that determine the term of office of the board of directors, so the association is free to set any term of office in its statutes. The board of directors appoints its chairman if this task is not assigned to the general assembly by the articles of association. He has the casting vote on the board of directors and signs the minutes and the annual report. In addition, the chairman is mentioned in connection with the right of board members to inspect files and convene a board meeting. The Annual General Meeting elects the chairman of the board of directors and the other members for one year (until the end of the next ordinary general meeting). There is no statutory term limit. The chairman must be a member of the board of directors and must be entered in the Commercial Register.
The chairman also ensures:
- effective work of the members of the board and constructive relations between them and the management board;
- effective relations with shareholders and bringing the position of shareholders to the board of directors;
- timely receipt by members of the board of reliable and transparent information;
- providing newly elected members of the board with an induction program;
- providing answers to shareholders’ questions in the manner determined by the general meeting of shareholders or the charter;
- the discussion of the company’s development strategy with (primary) shareholders.
Besides, in the absence of the chairman of the board, his functions are delegated to one of the members of the board of directors by its decision.
The procedure for the election of a chairman
The сhairman of the board of directors is elected from among its members by a simple majority of votes from the total number of board members by open voting. It has the right to re-elect its chairman at any time by a majority vote of the total number of members of the board.
The procedure for a new election is divided into several steps:
- Determination of the election officer or election committee. In principle, the board is appointed to direct the elections. The election officer/election committee must prepare and conduct the election and determine the election result.
- Creation/update of the electoral roll. The election officer/election committee must check which persons are allowed to vote according to the statutes and which persons may be elected. Unless the statutes state otherwise, all members may propose candidates for election, including themselves.
- Dispatch of the election invitation. The election invitation is sent via the proper invitation to the general assembly. Properly means that the provisions of the articles of association regarding the form and deadline of the invitation are observed.
- Ballot creation. The order of candidates on the ballot can be either random or alphabetical. All candidates must be presented equally.
- Conduct of the election. Usually, the election takes place in a more open vote. A secret ballot is also possible. Invalid votes or abstentions will not be considered; they count as a non-appearance of the member.
- Counting the votes. After the election, the votes must be counted, and the election result is announced.
- Acceptance of the election by the newly elected chairman of the board.