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requirement of having a provision in the articles of association in order
to set up committees.
Delegation of Duties of the Board of Directors
Management
Management authority entails the management and operation of
the company in line with the policies determined by the board of direc-
tors. Management concerns the internal structure of the company.
Unless delegated, the management authority belongs to all members of
the board of directors, who shall exercise this authority acting as a
board (even if the board consists of one member only).
Pursuant to Art. 367 TCC, the board of directors may delegate the
management authority (other than its nontransferable duties examined
above) to one or more members of the board of directors or to third
persons. The transfer referred to under this provision is the transfer of
the corporate function of the board of directors.
The board of directors may, at its own discretion, decide to become
a non-executive board of surveillance with no executive powers,
through delegating all of its management power. Thus, it is possible for
joint stock companies to be managed by professional managers and to
freely choose and determine the most convenient management struc-
ture for themselves.
The first prerequisite in order for the management power to be del-
egated is to have a provision that enables such delegation of power in
the articles of association. A mere general assembly resolution gov-
erning the delegation of powers is not sufficient. Second, if authorized
by the articles of association, the board of directors may delegate the
management through adopting an internal regulation governing the
delegation of management. The internal regulation shall designate the
distribution and delegation of management authorities, positions,
definitions of positions and their rankings, the hierarchy and obligations
to inform among positions; in compliance with the accountability and
responsibility principles.
COMMERCIAL LAW
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