Are the powers of the board of directors absolute

Joint stock companies, whether private, public or business, must have a board of directors that manages their affairs of not less than three members

Alaa Eldebeki - • Information about Legal advice and incorporation work

Are the powers of the board of directors absolute?

In joint stock companies, whether the private sector, the public sector or the business sector, it must have a board of directors that manages its affairs of not less than three members, and it is noted to us in family companies that the board of directors as well as the chairman of the board has absolute powers, and the board may appoint an executive head of the company that has all the powers, and the role of the chairman of the board becomes secondary and honorary in appreciation of his age, status and the effort he made throughout the years of the company's existence.

The General Assembly appoints the Board of Directors, so the final responsibility for the company remains with the Board, even if it forms committees or authorizes other entities or individuals to carry out some of its work.

The Board of Directors represents different groups of shareholders, but once a member of the Board of Directors is appointed, he must consider himself a representative of all shareholders and committed to doing what is in the interest of the company in general, and not what is in the interest of the group he represents or that voted on his appointment to the Board only.

The Board of Directors must include a majority of non-executive (experienced) members to bring benefit to the Board and the Company. In all cases, when selecting the non-executive members of any company, the member must be able to devote sufficient time and attention to his membership and that this membership does not represent a conflict with other interests of him.

The Board shall appoint the Chairman and Managing Director, preferably not to combine the same two qualities. If the combination of the two positions is necessary, the reasons for this must be explained in the company's annual report and a non-executive vice chairman shall be appointed.

The term of the Board at the time of incorporation is five years, after which the term of the Board must be renewed every three years, and the duration of one contract for a member of the Executive Board of Directors shall not exceed more than three years, unless for clear and specific reasons to be disclosed in the General Assembly of the company, and the Board must convene at least once or twice annually.

The responsibility of the Board of Directors in setting the administrative structure of the company

Develop mechanisms and systems that include the company's respect for the laws and regulations in force, and its obligation to disclose material information to shareholders, creditors and other stakeholders based on objective criteria, not only formalities, and to develop policies and outlines for the company's management.

Non-executive members of the Board of Directors have the right to meet with the company's managers to consult on any of its affairs, whether in the presence of the executive board members or without them, provided that coordination is made with them in setting appointments and informing them of what will be consulted.

The Board shall review the Company's internal systems and procedures on an ongoing basis to verify their suitability and efficiency. The Board may obtain all financial and non-financial information and reports on the Company's performance.

The Council shall form committees from its members and others to carry out specific tasks and for certain periods. These committees should be considered as means of assisting the Council in the performance of its work and not as a means for the Council to evade its responsibility or transfer it to another party.

Appropriately form committees of the Board of Directors in accordance with general procedures set by the Board, including determining the mission of the committee, the duration of its work, the powers granted to it during this period, and how the Board oversees it. The Committee shall inform the Council of its actions, findings or decisions with absolute transparency. The Council shall follow up the work of the committees periodically to verify that they carry out the work entrusted to them.

Forming an internal audit committee from a number of non-executive board members whose task will be to review the work of the internal control department and the company's internal work systems.

(Functions and role of the Board of Directors before shareholders)

The Board of Directors shall prepare an annual report for presentation to shareholders that shall include, in addition to the requirements of the laws, the following:

1. An overview of the company's business and financial position.

2. The future outlook of the company's activity during the next year.

3. Activities and results of the business of subsidiaries, if any.

4. About changes in the main capital structure of the company.

5. The extent of commitment to follow up and apply corporate governance rules.

6. Prepare the financial statements and present them to the auditor for review and preparation of his report.

7. The Board is generally responsible for managing its risks in a manner consistent with the nature of its activity, size and the market in which it operates, and it is responsible for developing a strategy to determine the risks facing the company, how to deal with them, and the level of risk that the company deals with and presenting all of this to shareholders clearly.

The question arises: Are the powers of the board of directors or its chairman absolute?

We mentioned earlier that the powers of the Board of Directors in family companies are absolute, and they are also absolute in companies in which the Board acquires the governing percentage of the shares and which controls the decisions of the General Assembly, provided that the decisions of the Assembly and the actions of the Board harm the interest of the rest and small shareholders, which exposes the Board to legal accountability by filing a civil liability lawsuit or a criminal lawsuit.

(The extent to which the Board of Directors may be dismissed or dismissed)

1. The General Assembly has the right to dismiss the Chairman of the Council because he is appointed among its members or one of its members at any time, even if this is not included in the agenda.

2. Dismissed members may not be re-elected before the expiry of five years from the date of the issuance of the dismissal decision.

(Is it permissible to invalidate the decisions of the Board of Directors?)

Yes, the decisions of the Council may be annulled when they are marred by defects in the following procedures:

1. In the event that the quorum of the meeting is incorrect.

2. In the event that decisions are not issued by the prescribed majority.

3. Any decision contrary to the Companies Law No. 159 of 81.

(Resignation of Council Members)

The members of the Board of Directors have the right to resign, provided that the resignation is at a time that does not harm the interest of the company.

(Inspection of Board of Directors violations by the Investment Authority)

First: In the event of inspection of the company and it is proven that the Board violated the General Assembly of the right to dismiss the members of the Board of Directors and file a lawsuit of responsibility against them, and its decision shall be valid when approved by the partners holding half of the capital after enslaving the share of those who consider the matter of dismissal from the members of the Board.

Second: Without prejudice to the right to claim compensation, any act, transaction or decision issued contrary to the rules prescribed in this law or issued by the board of directors of joint stock companies shall be null and void, without prejudice to the right of bona fide third parties, and the competent court may determine a period not exceeding six months to correct the invalidity if possible.

. The concerned parties may not file a nullity lawsuit after the lapse of three years from the date of their knowledge of the violating decision, unless this decision is issued by fraud or fraud, so the right to file a lawsuit in this case shall not be forfeited except after the lapse of fifteen years from the date of issuance of the decision.

Criminal liability of the Board of Directors

1) The following shall be punished by imprisonment for a period of not less than two years and a fine of not less than two thousand pounds and not more than ten thousand pounds:

- Any member of the Board of Directors who distributes profits or benefits contrary to the provisions of this Law or the Company's Articles of Incorporation.

- Anyone who falsifies the company's records or deliberately proves incorrect facts therein, or prepares or presents reports to the General Assembly that contain false or incorrect statements that would have affected the decisions of the Assembly.

2) A fine of not less than two thousand pounds and not more than ten thousand shall be borne by the violator personally:

- Anyone who appoints a member of the board of directors of a joint stock company or a managing director to manage it or remains a member thereof contrary to the provisions of the prohibition prescribed in this law, and every managing director of a company in which one of these violations occurs.

- Every member of the Board of Directors who fails to submit the shares allocated to ensure his management in the manner prescribed in this Law within a period of sixty days from the date of notification of the appointment decision, as well as whoever fails to submit the declarations committed to submitting or makes false statements or deliberately omits data from the data that the Board of Directors is obligated to prepare the report on, as well as every member of the Board of Directors who proved in the company's reports incorrect data or deliberately omitted its data.

- Anyone who violates one of the provisions of the law.

- Any member of the Board of Directors who deliberately disrupts the invitation of the General Assembly.

(I wonder if the civil and criminal case against the members of the Council may be dropped)

Any resolution issued by the General Assembly shall not result in the fall of the civil liability lawsuit against the members of the Board of Directors due to errors made by them in the implementation of their mission and if the act giving rise to responsibility has been presented to

The General Assembly by a report from the Board of Directors or the auditor, this lawsuit shall lapse after the lapse of one year from the date of the issuance of the decision of the General Assembly to approve the report of the Board of Directors, however, if the act attributed to the members of the Board of Directors is a felony or misdemeanor, the lawsuit shall not be dropped except by the lapse of the public lawsuit.

The competent department and each shareholder may initiate this lawsuit, and any condition in the company's articles of association that stipulates the waiver of the lawsuit or the suspension of its commencement based on a previous permission from the general assembly or on taking any other action shall be null and void.

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