Publication date: 12.08.2024
I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.
The committees of the supervisory board of the joint-stock company are specialized groups formed to consider specific issues and prepare recommendations for the main management body. They can only be members of the supervisory board, and they perform important functions that help ensure the effective management of the company and compliance with corporate standards. Each of the committees provides an in-depth analysis of relevant issues and formulates recommendations for consideration by the supervisory board. Their activities contribute to the improvement of corporate governance, increasing transparency and ensuring compliance with legal requirements.
Question
What are the advantages of creating supervisory board committees?
Answer
Committees, in particular the audit committee, ensure effective control over financial statements and internal procedures, which reduces the risk of errors and fraud. Thanks to the committees, the workload is distributed among the members of the supervisory board, which allows them to focus on strategic issues. The transparency and efficiency of the committees have a positive effect on investor confidence and can attract new investors.
Question
What committees must be established?
Answer
In public joint-stock companies, as well as in companies that are of public interest or have more than 50% of shares directly or indirectly owned by the state, the formation of certain committees as part of the supervisory board is mandatory. These committees perform important functions to ensure effective corporate governance and compliance with regulatory requirements.
Appointments Committee. The main tasks of the committee include:
- The committee is responsible for creating and regularly reviewing internal regulations for appointment processes to ensure compliance with current standards and company needs.
- The committee reviews and recommends candidates to fill vacant positions in the executive body and other important positions, as provided by the charter or internal documents of the company.
- The Committee periodically assesses the structure, composition and work of the executive body and provides the Supervisory Board with recommendations on possible changes to improve efficiency.
- The committee verifies compliance with the qualification requirements for members of the executive body and reports to the supervisory board on the results of this assessment.
- The committee develops a succession plan for the positions of the chairman and members of the supervisory board and submits proposals for candidates for these positions to shareholders, if this is provided for in the company's internal documents.
- The committee ensures the development of a succession plan for positions in the executive body, as well as for other management functions in the company.
Remuneration Committee. The main tasks of the Remuneration Committee:
- The committee is responsible for creating and regularly reviewing the company's policies or internal regulations related to the remuneration system. This includes developing clear principles and standards governing how and why different forms of remuneration are established.
- If it is stipulated by the company's internal documents, the committee develops proposals for shareholders regarding the remuneration of members of the supervisory board. This includes recommendations for the level and form of compensation for those holding these positions.
- The Committee provides recommendations to the Supervisory Board regarding the remuneration of members of the executive body. This includes all forms of remuneration such as fixed remuneration, variable remuneration (based on performance), supplementary pensions, early retirement schemes and severance pay.
- The committee makes recommendations to the supervisory board regarding individual remuneration for members of the executive body, ensuring that these recommendations are in line with the remuneration policy and the evaluation of their performance.
- The committee provides suggestions to the supervisory board regarding the form and essential terms of the contracts or agreements to be concluded between the company and the members of the executive body. This includes terms of employment agreements, contracts for management positions and other relevant documents.
- The committee develops proposals on key indicators of the performance of members of the executive body, as well as criteria and procedures for periodic evaluation of their results.
- Provides general recommendations to the executive body regarding the level and structure of remuneration for persons performing managerial functions in the company. This includes recommendations for balancing remuneration within the context of overall company policy.
Audit Committee. The main tasks of the Audit Committee:
- Review of financial information: The Committee monitors and reviews the integrity and reliability of financial information provided by the company. This includes checking the appropriateness and consistency of the accounting methods used by the company and its controlled legal entities.
- Audit of accounting methods: Ensuring that accounting methods and policies meet generally accepted standards and requirements.
- Evaluation of internal audit: The Committee reviews the effectiveness of the internal audit system at least once a year, assessing its ability to identify and control financial and operational risks.
- Risk management assessment: Analysis and verification of risk management systems to ensure their effectiveness and adequacy.
- Appointment and dismissal: The Committee makes recommendations to the Supervisory Board regarding the selection, appointment, reassignment and dismissal of the internal auditor or head of the internal audit service.
- Selection of the head of the budget department: Recommendations for the appointment of the head of the budget department or other budgeting department.
- Budget of the Supervisory Board: The Committee prepares a draft budget for the Supervisory Board and submits it for approval. This includes planning costs and ensuring efficient use of resources.
Legal assistance in creating JSC supervisory board committees. The main types of legal services that can be useful:
Legal analysis of the situation, revision of the charter and internal provisions: Legal services in the examination and updating of the charter of JSC to ensure compliance with the legal requirements regarding the creation and functioning of committees. Lawyers online will prepare and draft by-laws for committees (audit committee, remuneration committee, nominating committee, etc.) containing their structure, powers and functions.
Lawyer help support and compliance: Lawyer advice on legal requirements related to the creation and functioning of committees, including compliance with corporate governance norms. The lawyer will prepare and issue the necessary documents for the creation of committees, such as decisions of the supervisory board, minutes of meetings, etc.
Legal services for the appointment of committee members: Lawyer consultation on the selection criteria of committee members according to their competencies, experience and company requirements. Legal registration of the appointment of committee members, including the preparation of decisions and contracts.
The creation of committees as part of the supervisory board allows for more effective management of the company, providing a deeper and comprehensive understanding of its activities, increasing the quality of decision-making and risk management. A lawyer services can provide important assistance in the creation of committees of the supervisory board of a joint-stock company (JSC), ensuring their proper organization and functioning in accordance with the legislation and internal documents of the company. The lawyer services online provides the legal basis for the creation and effective functioning of committees, helping the company to comply with legal requirements and internal standards of corporate governance.
