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Executive director in the Joint Stock Companies

العضو المنتدب في الشركات المساهمة - Executive director in the Joint Stock Companies

In the business colliding world, Joint-Stock Companies (J.S.C) are considered huge ships sailing in an ocean of challenges and opportunities. On these ships, there is a skilled captain who steer the wheel of success, holds the reins and directs it to safety, namely the Executive Director (E.D).

The E.D of the J.S.C has a variety of rights and obligations, the law has states them and set clear boundaries to enable the E.D to carry out his duties within the Board of Directors (BOD), as outlined in the laws and executive regulations of companies’ law No. 159 of 1981.

Who is the Executive Director?

The E.D serves as the company’s Chief Executive Officer (CEO) appointed by the BOD to serve as the company’s executive pillar and handles the execution of the policies set by the BOD and manages the company’s day-to-day operations efficiently and effectively.

The Executive Director’s role

The E.D is considered as the beating heart of the company, as he undertakes significant tasks to ensure smooth and efficient business operations, including but not limited to the following:

  • Representing the company before third parties, such as investors, customers and the government.
  • Executing the decisions of the BOD accurately and effectively, turning them into applicable plans.
  • Leading and supervising all aspects of the company’s day-to-day operations, including production, marketing, finance, and human resources.
  • Developing strategic plans where he participates with the BOD in developing strategic plans that determine the company’s long-term path and contribute in achieving its future goals.
  • Safeguarding and representing the shareholders’ interests and aiming to increase their profits and achieve the best return of their investments.
  • Providing the necessary guidance to the senior management of the company, supervises the company’s performance and evaluates its periodically.

The method of appointing the company’s Executive Director and the BOD

  • The E.D shall be appointed by the BOD, after carefully considering the company’s needs and circumstances and evaluate the qualifications’ assessment, experience and competencies necessary for this position.
  • The company’s bylaws specify the members’ number of the BOD, provided that it shall not be less than three members and may increase according to the company’s bylaws.
  • The first appointment of the BOD term shall be 5 years from the date of annotation in the commercial register and the BOD term shall be renewed every three years.
  • The BOD shall be composed of a chairman and members, including one or more Executive Directors, and the tasks and competencies of each of them shall be determined in accordance with the resolution of the shareholders’ General Assembly.
  • The BOD takes into consideration when selecting the E.D specific criteria that ensure his success in his task, the most important of which are experience and competence, the E.D shall have extensive experience in the company’s field of work, strong administrative, financial and legal skills. The E.D shall have a strong leadership personality and the ability to make the right decisions.

The procedures for selecting the BOD’s members

  1. Nomination: the members of the BOD are nominated according to the policies and criteria approved by law and by the company’s Articles of Incorporation.
  2. Election: the General Assembly selects members from among the nominees, and justice shall be considered in the minority of shareholders’ representation in the BOD through the voting system, and the nominees’ sufficient information shall be provided in advance of the General Assembly meeting.
  3. Reporting: after the approval of the election results, the elected members are informed and officially provided with their competencies, duties, remuneration, regulations and rules to avoid conflict of interests and consider confidentiality in the performance of their work.

The expiration of the membership of the BOD or the dismissal of one of the members

  • The article of Incorporation details how the BOD’s membership expires, and the Ordinary General Assembly (OGA) may at all times dismiss all members of the board or some of them, without prejudice to the right of the dismissed member to compensation if the dismissal occurred for an unacceptable reason.
  • On the recommendation of the board, the assembly may terminate the membership of the member who is absent from attending three consecutive meetings of the board without a legitimate excuse.
  • The membership of the Board expires at the end of its term or at the expiration of the validity of the appointment of the member in accordance with any applicable law or legal instructions in force, and if the position of one of the board members is vacant, the board may temporarily appoint a member to the vacant position provided that this appointment is presented to the first OGA’s meeting, and the new member completes his replacement’s term.
  • If the required legal quorum for the validity of the BOD’s meeting was not fulfilled, the OGA must convene as soon as possible to appoint the necessary number of members. The law has regulated the procedures for convening the General Assembly.
  • In the event of the termination of the membership of a member of the BOD by any of the methods of termination of membership, the company shall notify the General Authority for Investment and free zones (GAFI) with an indication of the reasons of termination.
  • If a BOD’s member resigned and has comments on the company’s performance, a written statement shall be submitted to the chairman of the BOD and this statement shall be presented to the BOD’s members.

finally, the E.D in his capacity as a BOD’s member who is delegated by the Board to carry out the actual management of the company. The regulations for the appointment of one or more Executive Directors to the company, must be dedicated to the actual management of the company, and the BOD shall determine the authorities and competencies that the E.D undertakes.

As for the Chairman of the Board is a BOD’s member who is elected from among the board members to be the Chairman of the Board of the company, his authorities include representing the company before the courts as the Chairman of the Board or the CEO according to the company’s Articles of Incorporation, and convening the BOD and the General Assembly for meetings.

The chairman of the board and the Executive Director work and form together a leadership duo to achieve the company’s goals, promote its development and ensure its success.