Appointing Company Director. Template Contract.
The appointment of a director in a limited liability company (SRL) is a fundamental requirement for the organization and functioning of the business. The director’s role is to manage the company’s daily activities, represent the company in commercial relationships with partners, suppliers, or other third parties, and ensure compliance with legal obligations in the course of the company’s operations. Within the limits established by the company’s articles of incorporation, the director is authorized to conclude commercial contracts with third parties and assume obligations on behalf of the company.
For this reason, the director plays a critical role in the efficient functioning of an SRL. The proper selection of the individual for this position can significantly influence both the financial performance of the SRL and the company’s ability to meet its legal obligations and honor its contracts with business partners.
How do you ensure that the director of an SRL company has the appropriate responsibilities and duties? By using a template contract that includes all the necessary legal provisions. Depending on your company’s interests, you can use either a mandate contract for director appointment or an individual employment contract. Both contract templates are effective in regulating the role of the company’s director, though there are differences in their legal regime. For more details, read this article or contact us.
General rules about company director appointment. Ask A Lawyer.
What is the role of the director in an SRL? Commercial contract templates.
The director is the person responsible for managing the company’s daily operations and implementing the decisions of the shareholders. They may be a shareholder or an external person and can be appointed for either a fixed or indefinite term, based on the shareholders' resolution. The director has broad powers of representation and management, but these must be clearly defined in the articles of incorporation and in the contract under which they operate.
Procedure for appointing company director. Template mandate contract.
Art. 197 of the Companies Law: The company is managed by one or more directors, shareholders or non-shareholders, appointed through the articles of incorporation or by the general meeting.
A limited liability company may be managed by one or more directors, appointed through the articles of incorporation or by the general meeting of shareholders.
Typically, the appointment of a director is made during the company's registration with the National Trade Registry Office (ONRC) through the articles of incorporation signed by the shareholders (details about electronic signatures).
The identity of the director will be registered with the ONRC and can be verified by any interested party.
The appointment of a director after the registration of the SRL or the replacement of the director requires the adoption of a resolution by the general meeting (extraordinary) of shareholders (GMS templates). The resolution can be adopted either during the general meeting, by written agreement of all shareholders, or by another majority provided in the company's articles of incorporation.
In this case, the newly appointed director must be registered with the ONRC along with the updated version of the company’s articles of incorporation.
Who can be the director of an SRL? Commercial law attorney.
The director of a limited liability company (SRL) is the person designated to manage the company’s day-to-day activities and represent the company in its relations with third parties. As such, the law imposes certain conditions and restrictions related to this role.
Who can be appointed director of an SRL?
Any individual, regardless of nationality, can be appointed director of an SRL, provided they meet the legal requirements and are not in a situation of incompatibility or conflict of interest with the company (e.g., acting as a director or shareholder in a competing firm if the SRL's articles of incorporation prohibit it). It is not mandatory for the director to be a shareholder of the company – they may also be an external person appointed by agreement of the shareholders.
Another company (legal entity), whether Romanian or foreign, can also be appointed as director. In this case, the legal entity appoints a representative who will carry out the duties of the director.
Legal conditions to become a director of an SRL. Commercial law attorney
A natural person director must be of legal age (at least 18 years old) to serve as the legal representative of the company.
The director must also have full legal capacity to perform legal actions, meaning they must be legally capable of entering into binding contracts on behalf of the company.
In certain cases, especially in regulated industries, the appointed director must provide a clean criminal record (e.g., free of offenses such as fraud, corruption, or mismanagement).
The director must not be subject to legal restrictions from holding the position, such as those imposed as a sanction (details on criminal complaints). A person who is legally prohibited from managing companies, either through a court decision or by other sanctions imposed by state authorities, cannot serve as a director.
Additional criteria set by the shareholders or in the company’s articles of incorporation.
Shareholders may establish additional criteria for the appointment of the director, such as minimum experience in a specific field or relevant educational qualifications. The SRL’s articles of incorporation may also set forth other criteria, such as the term of the mandate, compensation, or the director's responsibilities.
Can there be multiple directors?
Yes. An SRL may have one or more directors. If multiple directors are appointed, the articles of incorporation must specify whether they act jointly or independently (with individual powers of representation) in carrying out their duties.
Can a director be dismissed?
Yes. The director can be dismissed at any time by the shareholders, through a resolution or by mutual agreement of the shareholders. The conditions for dismissal may be outlined in the articles of incorporation or in the mandate contract or employment contract between the director and the company.
What is the relationship between the director and the SRL? Contract templates.
The most common methods of appointing a director involve signing either a mandate contract or an individual employment contract between the company and the director. These contracts determine the method of compensation, the director's rights and responsibilities, and their liability toward the company's operations.
Choosing the type of contract influences how the director is compensated, as well as the risks and benefits associated with the role. A mandate contract offers more flexibility but entails greater risks for the director, as they do not benefit from the protections offered by labor legislation. On the other hand, an individual employment contract provides the director with stability but imposes stricter reporting and compliance obligations with the company’s internal regulations.
Mandate contract vs. individual employment contract for an SRL director.
The director of an SRL may operate under a mandate contract or an individual employment contract. The main differences between the two contracts lie in the director's liability toward the company and vice versa.
Director appointed under a mandate contract.
A mandate contract is a civil contract through which one party (the mandate holder) is authorized to act on behalf of another party (the principal).
Typically, a director appointed through a mandate contract enjoys more freedom in carrying out their duties, as they are not subject to the hierarchical relationship specific to labor law.
The mandate contract may or may not include compensation payable by the company. In any case, the director must act with prudence, diligence, and loyalty toward the company, and failure to meet these obligations may result in legal liability (about contractual liability).
Art. 2010 of the Civil Code: "The mandate is either gratuitous or remunerated. A mandate between two natural persons is presumed to be gratuitous. However, a mandate granted for the performance of professional activities is presumed to be remunerated."
In the case of an unpaid mandate contract, the director's liability for actions carried out on behalf of the SRL may be lower than in the case of a paid mandate contract.
Art. 2018 of the Civil Code: "If the mandate is remunerated, the mandate holder is required to perform it with the diligence of a prudent owner. If the mandate is gratuitous, the mandate holder must perform it with the diligence they exhibit in their own affairs."
However, a director appointed under a mandate contract does not benefit from the full social rights offered by an employment contract. For example, they do not have the right to paid leave regulated by labor law and do not enjoy the same level of protection against dismissal. A director appointed under a mandate contract is liable for any damage caused to the SRL due to failure to fulfill their obligations, just like any other mandate holder.
Director Appointed through an Employment Contract
A director appointed under an individual employment contract is considered an employee of the SRL. Therefore, the director benefits from all the rights and obligations of an employee, such as paid leave, wages, and social security contributions.
The director is subject to the company's internal regulations (internal regulation template) and may face disciplinary action (read about disciplinary dismissal). The director's obligations and responsibilities are clearly outlined in the job description associated with the employment contract.
What are the responsibilities of an SRL director?
The director must manage the company’s assets, represent the company in relations with third parties, sign legal documents, ensure compliance with applicable legislation, and report the company’s status to shareholders. Depending on the provisions of the articles of incorporation and the type of contract in place, the director's responsibilities may also include specific tasks, such as preparing financial reports or coordinating the company’s team.
FAQs about Appointing an SRL Director
Who can be appointed as a director of an SRL?
Any individual or legal entity can be appointed as a director, provided they are not in a conflict of interest or under any legal restrictions.
Can a shareholder also be the director of an SRL?
Yes. A shareholder of the SRL can also serve as its director, holding both ownership and management roles. However, it is not mandatory for the director to be a shareholder; the shareholders may appoint an external individual to manage the company’s operations.
Can an SRL company appoint a foreign citizen as director?
Yes. An SRL may appoint a foreign individual or legal entity as its director. There are no nationality restrictions for the director, but the person must comply with Romanian law and assume the corresponding legal obligations.
Can an SRL have multiple directors?
Yes. An SRL may appoint one or more directors, who can either act jointly or independently, as specified in the articles of incorporation.
Can the director be removed before the end of their mandate?
Yes. The director can be dismissed at any time by the shareholders, based on the provisions in the articles of incorporation or the contract signed with the company. In most cases, the removal of the director requires fulfilling specific quorum conditions.
What documents are needed to change the director of an SRL?
Resolution of the General Meeting of Shareholders (GMS template) regarding the removal of the current director and the appointment of the new one
Addendum to the articles of incorporation or the updated version of the SRL’s articles of incorporation
Mandate contract or employment contract signed with the new director
Declaration on own responsibility by the new director stating they meet the legal conditions for holding the position
Registration request to record the changes with the ONRC
What happens if the director fails to fulfill their obligations?
The director may be held civilly or criminally liable for damages caused to the SRL by failing to meet their obligations.
What are the director’s fiscal obligations?
The director is responsible for ensuring the company meets its fiscal obligations and submits tax declarations on time.
Conclusion
The appointment of a director in an SRL is essential for the smooth operation of the company. Choosing between a mandate contract and an employment contract depends on the company’s needs and the relationship the shareholders wish to establish with the director. Regardless of the type of contract, the director plays an essential role in ensuring legal compliance and the efficient management of the company’s day-to-day activities
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