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How can the management of a public limited company or private limited company be structured?
The current Companies Act provides for several possible management structures for a public limited company (plc) or a private limited company (Ltd).
Management structures for a public limited company or private limited company
The following management structures are provided for by law:
- Sole director.
- Several joint and several directors. This means that each director may, individually and independently, carry out any acts, legal transactions and commercial operations falling within the powers of the management body, without requiring the signature or authorisation of the other joint and several directors.
- Several joint directors. This management structure requires the directors to act jointly. Accordingly, in order to execute acts, legal transactions and commercial operations falling within their powers, the directors must necessarily act together and obtain the participation of the other joint directors.
- Board of directors.
That said, certain particular rules apply depending on whether the company is a public limited company (plc) or a private limited company (Ltd).
Particular rules governing the management of a public limited company
Where joint management is entrusted to two directors, they must, as required by law, act jointly.
Furthermore, where joint management is entrusted to more than two directors, the management body must necessarily take the form of a board of directors.
These statutory safeguards, which result in a greater distribution of management powers, apply to public limited companies but not to private limited companies. This is because the legislature regards public limited companies, in principle, as a more open corporate vehicle designed to accommodate a larger number of shareholders than their private limited company counterparts.
Particular rules governing the management of a private limited company
In a private limited company, the articles of association may provide for different legally permitted management structures, allowing the general meeting of shareholders to decide subsequently which structure to adopt without the need to amend the articles of association.
This flexibility does not exist in a public limited company, where any change to the management body requires an amendment to the articles of association, in strict compliance with all applicable legal requirements and procedures, including the quorum required for the relevant resolution to be validly passed.
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