Adoption of resolutions by the management board of a limited liability company

The management board of a limited liability company is, in principle, a collegiate body. Unless the articles of association provide otherwise, each member of the management board has the right and duty to manage the business of the company. “Managing the company’s business” is different from the issue of representing the company, as the activities may concern property matters as well as purely technical matters related to the day-to-day operation of the company.

The ordinary course of business may be dealt with by any member without the need for a resolution to this effect. The obligation to adopt a resolution arises with matters falling outside this scope, as well as in the event that one of the members objects to action falling within the ordinary course of business.

This means it is important to assess which business activities fall into the category of “ordinary” and which exceed this scope. This should be assessed taking into account the characteristics of the company concerned, its size, established practice and the consequences of the actions taken.

As a general guideline, acts outside the ordinary course of business are usually considered to be those that would not be considered normal for a business. A good solution is to set out these issues in the management board’s rules of procedure. By clarifying these issues, doubts or disputes in this area can be avoided. Members of the management board will then have clear instructions indicating what falls within the ordinary course of business and what exceeds it.

This is important because, unless the articles of association provide otherwise, resolutions can be adopted in three ways:

1. during a management board meeting;
2. by means of direct communication at a distance (e.g. by teleconference or videoconference);
3. in writing (e.g. on the basis of resolutions circulated by letter to the management board members).

The law says that all management board resolutions should be minuted, including resolutions adopted by direct remote communication and in writing. The minutes should contain the agenda, the names of the management board members present and the number of votes cast on each resolution. The minutes must also indicate any dissenting opinions of members of the management board and the reasons therefor. The minutes must be signed by at least the member of the management board chairing the meeting or managing the vote, unless the articles of association or the rules of procedure of the management board provide otherwise.

Resolutions of the management board may be adopted as long as all the members have been properly notified of the management board meeting. An absolute majority, i.e. more than half of the votes cast, is required for a resolution to be adopted.

These rules do not, of course, apply to a one-person management board, where the sole member takes decisions individually.