Executive Director: functional responsibilities

Why does a company need several directors?

The possibility of dividing the powers of the head of a company between several persons appeared among Russian businessmen in 2014. This can be done by the changes made to paragraph 1 of Art. 53 Civil Code of the Russian Federation.

It is important to note that we are not talking about a collegial body (for example, a board) or the presence of deputies for the general director. In this case, we mean that the company is managed by two independent managers, and sometimes more. All these directors have equal rights and report only to the owners of the business.

The need to separate the management function may be due to several reasons:

• the company is engaged in different types of activities and each of the managers is competent in their field;
• the organization has two or more co-owners, each of whom wants to have a representative in the management;
• the company has acquired another legal entity and its representative is “introduced” into management to simplify integration.

How are powers divided between directors?

The specific regulations for the interaction of directors in the Civil Code of the Russian Federation are not spelled out in detail. It is only mentioned that they can act together or separately.

The following options are possible here:

1. Collaborative management. In this case, any decision must be approved by both managers. But this option is more similar to the work of a collegial executive body. The absence of one director (for example, due to illness) can paralyze the work of the entire business.
2. Independent management. In this case, each of the managers can make any decision regarding the management of the company. But there is a high risk that conflicts will arise due to inconsistency of positions. For example, one of the directors entered into a deal that provides for certain restrictions, and the agreement concluded by the second director violates the terms of the first deal.
3. Independent management with division of powers. With this option, each of the managers makes management decisions in their areas of the company. In this case, the general director usually deals with “strategic” issues, and the executive manages the current activities of the company.

But with any of the above options, each of the managers individually bears responsibility for their violations, as an official who has the authority to act on behalf of the company. What exactly does the executive director do and what is he responsible for? Let’s look at it further.

Responsibility of the General Director of the LLC

More details

Job Description of the Executive Director

I. General provisions

1. The executive director belongs to the “managers” category.
2. Appointment to the position of executive director and dismissal from it is carried out by order of the general director.

3. The executive director reports directly to the general director.

4. A person with a higher education and at least three years of experience in management positions is appointed to the position of executive director.

5. During the absence of the executive director, his functional duties, rights, and responsibilities are transferred to another official, as reported in the organization’s order.

6. The executive director must know:

• civil, economic, labor, tax legislation;
• organizational structure of the company;
• norms of business etiquette and communication;
• organization of document flow;
• methods of company and personnel management;
• organization of labor and production.

7. In his activities, the executive director is guided by:

• legislation of the Russian Federation;
• The company's charter;
• Internal labor regulations, other regulatory acts of the organization;
• orders and instructions from management;
• this job description.

II. Job Responsibilities of the Executive Director

The Executive Director performs the following functional responsibilities:

1. Establishes work and effective interaction between employees of structural divisions.

2. Controls the activities of departments in accordance with their work plans.

3. Participates in the formation of the company's strategy.

4. Responsible for fulfilling all orders of the organization’s management and maintaining labor discipline.

5. Informs the General Director and his deputy about the progress of work in the company and the implementation of plans.

6. Conducts operational assessments, analyzes the organization’s performance indicators, and develops plans for their adjustment.

7. Develops standards for performing labor operations, proportional, reasonable workload of personnel.

8. Develops and improves the employee compensation system and is responsible for its implementation.

9. Contributes to the creation of normal living conditions for the work of the organization’s employees.

10. Regularly draws up documents containing analysis of finances and resources, operational plans.

11. Develops draft contracts, agreements.

12. Establishes office work in the company in accordance with established standards.

13. Monitors the legal and economic compliance of agreements, contracts, and agreements with the interests of the organization.

14. Identifies and eliminates shortcomings in the company's work.

15. Organizes or carries out individual tasks and instructions of the General Director.

III. Rights

The executive director has the right:

1. Make decisions independently and ensure their implementation by subordinates within the limits of their competence.

2. Do not begin to implement the decisions of the company’s management if they contradict the current legislation of the Russian Federation and the regulatory documents of the organization.

3. Make proposals to management to improve the activities of the company's divisions and receive a response on the result of their consideration.

4. Submit for management consideration proposals to reward employees for the successful completion of work tasks; recovery of persons who have not fulfilled their duties.

5. Sign documents within your competence.

6. Act by proxy on behalf of the organization.

7. Represent the interests of the company in relations with contractors, government bodies, and other structures.

8. Require employees of the organization to provide materials necessary to perform their functional duties.

IV. Responsibility

The Executive Director is responsible for:

1. Logistical support for the organization’s activities.

2. Implementation of company policy.

3. Compliance with labor discipline, compliance by employees with orders and instructions from management.

4. Providing false information to employees of the organization or other persons.

5. Causing damage to the company, its counterparties, the state, or employees.

6. Disclosure of trade secrets, personal data, confidential information.

7. Improper performance of one’s official duties.

8. Offenses committed in the course of their activities.

7. Violation of safety regulations and fire protection.

8. Conducting meetings, negotiations, or representation of the interests of the organization that are not authorized by management.

What are the responsibilities of an executive director?

The procedure for dividing powers between managers must be prescribed in the company's charter and the job responsibilities of directors. It is important to reflect in detail all the nuances in the company’s internal documents in order to minimize possible disagreements.

Each organization distributes responsibilities individually, but usually the powers of the executive director include:

• operational planning of the company;
• current management of activities;
• organization of document flow;
• control over financial flows (together with the financial director or chief accountant);
• operational analysis of the company’s activities and monitoring the implementation of current plans;
• monitoring compliance with labor laws;
• personnel selection. If we are talking about leading positions, then together with the general director.

Who is an executive director and his area of ​​activity?

The presence of the position of executive director at the enterprise is not mandatory. According to the law, each business entity must have its own manager, empowered to act in the interests and on behalf of the enterprise. This person can be either an executive or a general director. As a rule, information about the existence of a position of this kind is prescribed in the charter of the LLC.

The position of executive director is quite multifunctional. His duties and powers are fixed in the relevant job descriptions, the content of which is established by the founders of the company and depends on production needs.

Responsibility to the organization

The executive director, like any other manager, is an employee of the company. Therefore, he is responsible to the organization according to the Labor Code of the Russian Federation.

This responsibility falls into two categories:

1. Disciplinary action can be in the form of a reprimand, reprimand and dismissal. It is important to note here that the owners can dismiss the director not only for any violations, but also “just like that” (Article 278 of the Labor Code of the Russian Federation).
2. The manager, like any employee, is obliged to compensate the organization for damage incurred through his fault. The financial liability of the director is by default full, even if this is not specified in the agreement with him (Article 277 of the Labor Code of the Russian Federation).

Important!

Material claims may be brought against the director even after dismissal. In this case, labor legislation no longer applies to him, so the organization here is guided by the requirements of Art. 53.1 Civil Code of the Russian Federation.

Within the framework of civil law relations, in contrast to labor relations, not only direct damage, but also lost profits can be recovered from the manager (Article 15 of the Civil Code of the Russian Federation)

Responsibilities of the Executive Director

The executive director is responsible for failure to perform or improper performance of his official duties within the framework of labor legislation.

Note! The executive director is responsible for damage caused to society. Most often in the amount of average monthly earnings (Article 241 of the Labor Code of the Russian Federation).

He can be brought to full financial liability:

• if his position is on the list, approved. Resolution of the Ministry of Labor dated December 31, 2002 No. 85, for example, when the LLC operates in the field of catering, trade or consumer services;
• if the damage was caused intentionally, as well as as a result of a crime or administrative offense (Article 243 of the Labor Code of the Russian Federation).

Important! When the data of the executive director is included in the Unified State Register of Legal Entities and he can represent the interests of the company without a power of attorney, Art. 53.1 of the Civil Code of the Russian Federation. Under it, damages caused to society can be recovered from the guilty person.

If the accounting department is subordinate to the executive director, he may be held liable, for example, for non-payment of taxes (Article 199 of the Criminal Code of the Russian Federation).

Conclusion! Thus, the responsibility of the executive director depends on the activities that the LLC is engaged in, on the terms of reference of the director and on whether information about him is included in the Unified State Register of Legal Entities.

Responsibility to creditors

In some cases, the executive director is liable to the company's creditors.

Important!

If it is proven that his dishonest actions have caused damage to the interests of creditors, then the director will have to pay off the organization’s debts from his personal funds.

Property liability of the founder and director of an LLC

The manager’s property may be at risk in the following cases:

1. In case of bankruptcy, if the directors are recognized as the controlling person of the debtor (Articles 61.10–61.12 of the Law of October 26, 2002 No. 127-FZ “On Insolvency (Bankruptcy)”).
2. If the company was liquidated by decision of the registration authority as having ceased operations, but all debts were not repaid (clause 3.1 of Article 3 of the Law of 02/08/1998 No. 14-FZ “On LLC”).
3. If the tax authorities have proven that the organization’s work is only a cover for evading the collection of mandatory payments (Resolution of the Constitutional Court of the Russian Federation of December 8, 2017 No. 39-P).

Responsibility to the state

If the duties of the executive director include signing primary documents, contracts and reports, then he is responsible under the Code of Administrative Offenses of the Russian Federation and the Criminal Code of the Russian Federation, as the executive body of the company.

The manager can be punished under dozens of articles of administrative and criminal legislation. Let's list the most “common” areas:

• taxation;
• bankruptcy;
• trading rules;
• antimonopoly legislation;
• labor law;
• anti-corruption.

The sanctions themselves can vary from a minor fine of several hundred rubles under the Code of Administrative Offenses of the Russian Federation to multimillion-dollar penalties and imprisonment for up to 10 years in case of criminal prosecution.

Rights of the executive director

To carry out functions and perform duties, the executive director is usually vested with the following rights:

• make decisions independently within your competence;
• distribute work among your subordinates and ask them for results;
• give your proposals to the general director to improve the work of the company’s divisions;
• petition the manager to bring employees to disciplinary liability or reward them;
• manage funds and property of the company in compliance with the requirements of laws and the charter of the LLC.

Note! As an employee, the executive director has the right to vacation, timely payment of wages and other social guarantees.

How to avoid violations in document management

One of the important components of the management system is document flow. It usually falls under the purview of the executive director.

The results of the entire business largely depend on working with documents. Due to the loss of important information, errors or delays, you can not only lose the opportunity to conclude a large contract, but also be subject to penalties.

Outsource problem areas to professionals

Often errors in document flow are associated with the influence of the human factor. In many companies, work with documents is carried out without a specific plan. New forms and the order of their application are created in working order, i.e. as necessary, often without taking into account existing regulations.

When we are asked to systematize document flow, in other words, to put things in order, we first analyze the current situation. Next, we identify problem areas and areas that are optimally organized. At the end, taking into account the scale of the “disaster”, our experts give recommendations that allow us to optimize the document management system, bringing it to a unified format based on the most successful samples.

Conclusion

Current legislation divides management of an organization between several equal persons.

In this case, it is most advisable to allocate each manager his own area of ​​responsibility, reflecting this in the company’s constituent documents.

The executive director is usually responsible, among other things, for document flow. But managers often don’t get around to this important area.

To set up work with documents, taking into account the current situation and the characteristics of a particular business, it makes sense to contact an outsourcing company.