Changing an LLC's Executive

Executive, CEO, president, director – there are many names to call the person, but the fundamental job is the same. All of these persons represent the company's sole executive authority. They act without a power of attorney on the company's behalf and represent its interests to other legal entities and state authorities.

Sometimes, the executive decides to step down or in fact may go missing altogether without saying a thing. In that case, there is an array of actions you will need to execute which at first appear easier to handle than initially meets the eye.

What difficulties may one encounter when initiating a change of executive?

1. The most common mistake at this point in time is incorrectly filling out the P13014 form. This results in the filer’s registration of the change of executive getting rejected, which leads to additional notary expenses;
2. The second mistake is failing to have the notarized signature of a shareholder certifying the decision to change the executive, in the event that such is envisaged in the company's articles of association;
3. The third most widespread mistake is that the person appointed to the position of executive cannot take such a position as a result of a ban imposed upon him by law.

We say this speaking from our own experience and these are encountered quite frequently in practice. There is only one result when such mistakes are allowed to happen – registration of the change of executive being rejected. Thus, in order for the change to process successfully on the first attempt, it’s best to entrust the handling of all procedures to professionals that you only have to pay once and will get the job done right.

Our company's lawyers have extensive experience and will be happy to provide comprehensive assistance on this issue.

Documents and information required in order to prepare the documents for a company’s change of executive include:

1. a copy of the current edition of the articles of association;
2. the company's main information;
3. a copy of the passport of the appointed company executive and his TIN number;
4. the company's contact number (to indicate in documents);

No change will need to be made to the articles of association when the executive is changed for a new executive, but there are changes that must be made to the company's internal documents: staff schedule, orders, etc.

Depending on the company's reason for making a change of CEO, the series of steps to be taken may vary.

Executive quitting of his own volition

Suppose that the reason for the change was simply that the executive decided to quit. In that case, he must warn the participants and shareholders in writing of his decision to quit at least one month before the presumed end date of his employment, not just two weeks, as is the case with ordinary employees.

This time period is necessary to give the company time to find a new executive, notify all the shareholders and participants of a new meeting regarding his replacement, catch the new executive up to speed, and orchestrate a transfer of affairs and documents from the old executive to the new one with minimal turbulence.

Series of steps:

1. Conduct a general meeting

A general shareholders meeting of the LLC (general shareholders meeting of the JSC) or  in certain cases a board of directors or an observation board (if the company has such an authority, and it is authorized by the articles of association to appoint the executive) shall conduct a meeting or conference at which the decision shall be made to terminate the executive's powers, terminate his labor agreement, elect a new executive to the position, and conclude a labor agreement with him.

In special cases, if such is required by the articles of association or LLC law, the meeting must be conducted in the presence of a notary or a specialized organization responsible for conducting  shareholders registers (in the case of a JSC).

2. Entering amendments to the company's internal documents

After the meeting is held with the old executive, the labor agreement is terminated and a record of his dismissal is entered into the labor book. The old executive transfers by way of an acceptance certificate his affairs to the new executive with whom the company has already concluded a labor agreement.

3. Notification of the authorities

The registration office must be notified of the adopted decision to bring about the change of executive and the registration documents must be submitted within 7 days.

In the event that the deadline is missed, a fine of about 5,000 RUB may be imposed on the company.

For notification purposes, the newly appointed executive must contact a notary which shall notarize the authenticity of his signature on a P13014 form. Then this form is to be submitted to a registration authority.

Remember! Within the next day, the Russian Social Fund must be notified of the change of executive that occurred and the corresponding report must be submitted to the fund as well.

NOTIFICATION METHODS

There are different ways the CEO may file the documents. He can choose the method that is most convenient to him. These methods of document submission to the registration office are the same in all situations in which a company has had a change of CEO.

One can submit documents to the registration office:

1. In person. In this case, the P13014 form must be notarized;
2. Via the MPSC;
3. Via a representative by power of attorney after certifying the P13014 form at a notary in advance;
4. Using the digital signature of a notary after notarizing it at a notary via a P13014 form in advance.

The change of director will be registered  six business days after the documents are submitted.

We examined the simplest way to effect a change an Executive with the least turbulence. But there are situations when for example, the reason for changing the executive is because he passed away, he's alive but has gone missing without a trace, or he is doing damage to the company through his actions or inaction. Sometimes the company's executive and the participant or the shareholder may be the same person.

What does one do in the aforementioned situations? What documents must one submit and to which office? How does one get in touch with a missing executive and is that even necessary? Our company's professional lawyers will help you get to the bottom of all of these issues. They will consult you, accommodate you, and help resolve even the messiest situations related to effecting a change of company executive.