We have already examined the important role of the Board of Directors in our previous article. We were also concerned with its function and members; the rule and exceptions as to the manner of electing members and their alternates; the conditions of eligibility and the defects of their election or appointment. Finally, the scope of the powers of the Board of Directors and the possibility of appointing substitute bodies. In the present article, we will look into issues related to the convening of the Board of Directors: the place, the time and the conditions for a legitimate convening. Also, its head: the Chairman of the Board and their role.
The Chairman of the Board
Generally
The role of the chairman of the Board of Directors is critical for the operation of the Board of Directors.
Under the previous regime, matters relating to the chairman of the board (and their deputy) were tackled in practice on the basis of, usually, relevant statutory provisions. Under the current regime, it was considered appropriate to have such provisions in the relevant law, for the sake of completeness and to avoid disputes, taking into account: (a) the existence of scattered references in the law on SAs to the powers of the chairman (and his deputy) and (b) the lack of provision for the case of non-appointment of a president (see Explanatory Report n. 4548/2018 on article 89).
The relevant legislative provision (art. 89 n. 4548/2018) regulates issues related to the election (or appointment) of the president and their deputy, their replacement as well as the powers of the president.
Election/Appointment of Chairman (And Deputy) of the Board
As provided in the law (art. 89 §1), the president is (usually) elected by the Board of Directors, at its constituent sitting. Their election may be subject to certain conditions, provided for in the articles of association.
It is possible to appoint the first president from the statute-during the founding stage of the SA. Also by the General Assembly during the election of the members of the Board. It is therefore clearly concluded that the chairman of the board must also be a member of it. There is, however, an important exception: if there is no president (nor a deputy), the shareholder with the largest number of voting rights can temporarily act as president (art. 89 §1). The purpose of this regulation is to deal with emergency situations that arise in the absence of the president (and their deputy). The duties of the said (temporary) chairman may be to convene the Board of Directors for the election of a (new) chairman and to issue copies of the Board and General Assembly minutes.
The articles of association, the General Assembly and/or the Board of Directors may also elect a deputy president (usually: vice-president), in order to replace them in cases of unavailability or absence.
Replacement
The Board of Directors can (art. 89 §2) replace the president and their deputy – at any time.
In order to take the relevant decision of the Board of Directors, as long as there is no more specific regulation, a simple quorum and majority is required (according to art. 92 §§1 and 2). However, in case the president and the deputy have been designated by the statute or the General Assembly, then an increased quorum (2/3 of all members) and a majority (2/3 of those present) are required for the decision to replace them.
If the president (or their deputy) is replaced (or resigns), they still remain an ordinary member of the Board.
Responsibilities
The chairman of the Board of Directors exercises the powers provided by the law and the statutes (art. 89 §3). Their responsibilities are mainly of a coordinating nature regarding the functioning of the Board. The president convenes the Board of Directors and determines the agenda (art. 91 §2). They are charged with the authority to receive requests to convene the body. They decide on the entry of an opinion in the minutes of the Board of Directors and issues copies thereof (art. 93 §§1 and 2 respectively). They give the floor to the substitute members to speak to the Board (81 §3). The vote of the president prevails, in case of a tie, for the decision of the Board of Directors – as long as there is a relevant statutory provision. The chairman of the board, in one sense, can be granted a veto right when making decisions of the board.
In addition to the above, important powers for the operation of the Board, the chairman of the Board signs the amended statute (art. 4 §3). Receives requests to convene the General Assembly (art. 121 §2 and 141 §1). Is the temporary president of the General Assembly until the election of the final president (art. 129). Signs the balance sheet (art. 147 §1).
The chairman of the board may also be the managing director of the SA (or have such responsibilities, as executive chairman) – unless, however, it is provided otherwise, such as e.g. in financial institutions.
Board Meeting Place
Physical session
According to the general rule, the Board of Directors must meet in the municipality where the seat of the SA is located (art. 90 §1). In the articles of association, it is possible to provide for another place of meeting of the Board of Directors – even abroad (art. 90 §2). In case of more alternates, the choice of the place of the meeting of the Board of Directors rests with the president who convenes it. The Board of Directors, however, validly meets in any (other) place, as long as all its members are present or represented and no one objects (art. 90 §3). Similarly, in this case, the choice of the place of meeting belongs to the chairman of the Board of Directors. The latter must, however, ensure, in advance, the consent of the members of the Board of Directors for the off-site meeting.
Video conference
If there is a relevant statutory provision, the invitation to a meeting of the Board of Directors may stipulate that it will be held by teleconference (art. 90 §4) with respect to some and/or all of its members. In this case, the invitation must include the necessary information and technical instructions for the members’ participation in the meeting. The Board of Directors can also meet this way (as a whole), as long as all its members agree – regardless of a lack of a relevant statutory provision.
Each member of the Board of Directors is entitled, subject to conditions (art. 90 §5), to demand the holding of the meeting by teleconference only for them. Specifically, if: (a) they reside in a different country from the one where the meeting takes place or (b) there is another important reason, in particular illness, disability or epidemic.
Frequency of Board Meetings
In terms of the frequency of the meetings, there is no provision for a minimum number or for meetings at specific, regular intervals. The Board of Directors meets whenever the law, the statutes or the needs of the company require it (art. 91 §1).
Convocation of the Board of Directors
Power of Convening & Invitation
The Board of Directors, as we have already established, is convened by the chairman or their deputy (art. 91 §2, section a’) or, in their absence, by the majority shareholder (art. 89 §1).
For the legal convening of the Board of Directors and, by extension, its valid decision-making, a timely invitation of its members is required: (a) two working days before the meeting or (b) five working days, if the meeting is to be held outside of the company’s headquarters (art. 91 §2, section a’). For these deadlines, the day of the invitation and the day of the meeting of the Board of Directors are not taken into account. It is not necessary to publish the invitation to the General Assembly, nor to officially serve the invitation to the members of the Board of Directors with a bailiff (according to art. 122 et seq. of the Civil Code). It is sufficient to notify it in any convenient way (4377/2004 Multimember Court of First Instance of Athens) – e.g. to the e- mail that has been provided to the SA.
Furthermore, the items on the agenda must be clearly stated in the invitation. Issues that are not listed on the agenda can be the subject of a decision if all the members of the Board of Directors are present or represented and no one objects to the decision-making on them (art. 91 §2, section b).
Convening at the Request of Two Board Members
The initiative, competence and authority to convene the Board of Directors and determine the agenda items does not belong, exclusively, to its president. The convening of the Board of Directors may be requested by at least two of its members with a (preferably written) request to the president or their deputy. The latter two are required to convene the Board of Directors in a timely manner, so that it meets within seven (calendar) days from the submission of the application.
If the Board is not convened (by the president or their deputy) within the specified seven-day period, the requesting members are allowed to convene the Board themselves. The relevant invitation can be addressed to the other members within five days after the previous seven-day period has passed. If the five-day deadline elapses, it is considered that they (the requesting members) have waived their right to convene it.
Differentiation of Conditions and Deadlines for Convening the Board of Directors
In derogation of the publicity formalities and the deadlines set by the law (no. 91), it is possible, with a statutory provision, to shorten the deadlines for convening the Board of Directors as well as to define other formalities. The specific possibility concerns, exclusively, non-listed SAs. In any case, however, any statutory regulations should not make it more difficult, in the end, to convene the Board of Directors.
The role of the President of the SA Board is pivotal for the functioning of the body and, ultimately, of the SA. They ensure, among other things, the convening, meetings and smooth operation of the Board. In the case, however, that they are unavailable, unable or refuse to fulfill their duties, the law provides important freedoms and adequate safeguards. Their utilization is imposed not only through the activation of the other members of the Board of Directors and, possibly, the shareholders, but also through the appropriate statutory regulations. It is a given that all this will work in favor of the SA. They will also contribute to the smooth and optimal taking of the appropriate decisions of the Board of Directors, which, however, will be further explored in our next article.=-
Stavros Koumentakis
Managing Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (January 29th, 2022).
Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.