How to limit the CEO

How to limit the CEO

Legal regulation of activity of the CEO is carried out by the civil and labor legislation. But these legal acts do not contain unambiguous definition of the status of the head that provokes emergence of the legal conflicts. To limit the CEO in his powers, it is necessary to develop one local statutory act regulating its activity or to consider it in several legal acts of the company. Use one of the ways given below.

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Create collegiate executive body of management. Efficiency of decision-making will suffer in this case and the legislation does not allow to use power of joint governing body for considerable restriction of actions of the head. The board has no right of control over individual executive body. The director who will be chairman of the board, can have opportunity for abuses.

Develop the Provision on the CEO, the employment contract, duty regulations of the head. Define in these local regulations, and also in the Charter of your enterprise of power of the CEO. They can be defined in the form of a ban on commission of these or those actions. In this case efficiency of a similar measure will depend on a skill level of the lawyer which will undertake drawing up the similar list of restrictions.

Accurately state those directions and the purposes by which the director has to be guided in the Charter and functions. Do not use indistinct formulations like "activity directed on increase or receiving arrived". Such formulation gives a free hand to the head and gives him the chance of broad interpretation and abuses. Tie result of its activity to commission of concrete business actions and receiving a certain result.

In the corporate legislation possibilities of the organization of management which can also use for restriction of powers of the director are put. Redistribute them between several governing bodies and set restrictions in size of the sum of the concluded bargains. Develop an order of approval and the statement of large deals, a special order of transactions with interest, introduce restrictions on subject structure and the purposes of the transaction.