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The instruments of governance

As a fully active participant in the governance of an organization, the role of an administrator can only be really perceived through a knowledge of all the governing bodies (AGM, board of directors, supervisory board, family council, special committees, steering committee etc).
Votre-Administrateur presents the different bodies :

The general meeting of shareholders (AGM)

This is the supreme body composed of company shareholders. The AGM takes decisions on precise points and cannot go beyond its prerogatives, which are of two types :

  •  The first consists of monitoring the executive bodies. Within this framework it appoints and discharges the board, approves the accounts and regulated agreements; It also pronounces on certain elements of management remuneration
  • The second is regulatory, as any change in the statutes is submitted for its approval.

The code of commercial law sets the number of administrators on the board, between 3 and 18.

The board of directors

 A single entity, which is the most frequently used in France (95%); its role is important.
In questions of strategy, “the board of directors decides on the orientations of company activity and monitors their implementation.  Taking into account the powers specifically attributed to the shareholders’ meetings, and within the limits of the social object of the company, it can deal with any question concerning the correct functioning of the company and deliberate to settle any such question.”The Board “will proceed to any controls and verifications it deems necessary” ( Article L225-35 modified by law n° 2003-706 of August 1st 2003 – article 129 JORF August 2nd 2003). It can co-opt members of the Board (Article L225-24) and divides among the board members the global directors’ fees determined by the AGM (Article 225-45).It approves the report of the Chairman of the board concerning internal control and company management (Article L225-37).It determines the code of reference of the company management (Article 225-37).
The board of directors appoints and discharges the General Manager, determines the remuneration of executives.  It closes the accounts to be approved by the AGM, writes a report of activity (Article 232-1) and authorizes endorsements, securities and guarantees (Article L225—42-1 & L225-22-1).
Finally, it calls and sets the agenda for the AGM (Article L225-103).

The supervisory board and the executive board

In the dual structure of supervisory board and executive board, the management functions – which belong to the executive board – are separate from the control function, which belongs to the supervisory board.
The supervisory board monitors the company management on a permanent basis.  As far as the executive board is concerned, it has wide-ranging powers : it manages and leads the company.
The members of the executive board can be employees, but cannot be members of the supervisory board.
The responsibility of members of the supervisory board is less heavy than that of the executive board, because they do not run the company.

The special committees

The committees are composed of administrators.

Article 225-29 of the code of commercial law stipulates that the board can decide to create special committees to study particular questions or subjects.  Nevertheless the responsibility and the decisions taken by the board are collective.
The decrees of 2008 and 2009 made it obligatory for listed companies to create audit committees and to have at least one independent director.
On its side, the AFEP-MEDEF code recommends the creation of financial committees, compensation and appointments committees, and a strong presence of independent directors.
In practice, the most popular and important committee is the audit or financial committee.  Its responsibilities include monitoring the process of preparing and checking accounting and financial information, as well as the efficiency of internal control systems – also possibly risk management if there is no specific committee – and the independence of the auditors; a subject which requires technical skills. An increase can be noted in the number of committees being created to deal with the compensation and appointment of executives; these are important subjects, as can be seen currently in the news.

The most common committees are :

  • Financial and audit committee
  • Risk committee
  • Appointments committee
  • Strategic or executive committee
  • Quality and sustainable development committee

The executive board and the steering committee

 The salaried members are responsible for the day to day running of the company, its monitoring, and more particularly the implementation of the strategy approved by the board of directors.

The family council

Mainly present in family-owned businesses, it differs from a board of directors or a supervisory board, for the interests and stakes can be different.  It must be possible to distinguish between business activities – taxation, liquidities, valorization etc – and family values; successive generations of shareholders, increase in the number of family members hoping for a management position – from the values and interest of the company.

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