In accordance with paragraph 3 of Article 51 of the Law of the Republic of Kazakhstan “On Limited and Additional Liability Partnerships”, members of the executive body of the company are elected by the general meeting for a term not exceeding five years. Upon expiration of this term, the director’s powers must be extended.
The issue of extending the director’s powers is an important point for the legal correctness of the LLP’s work, since ignoring this procedure can lead to legal consequences. Let’s consider how to properly extend the director’s powers and what steps need to be taken for this.
How to extend the powers of an LLP director?
1. Making a decision
The first step to extend the powers of the director is the adoption of a decision by the founders of the company. This may be a decision of the sole participant or the minutes of the general meeting. Without this step, the extension of the director’s powers will be impossible.
2. Issuing an order to extend the powers and concluding an additional agreement to the employment contract
Based on the decision of the founders, the director issues an order to extend his powers. It is also important to conclude an additional agreement to the employment contract, which will specify the extension of the term of office. The wording of the order may be as follows: “Extend the powers of the director of LLP ________ (company name), full name, based on the decision of the founder dated ..____ year.”
3. Familiarization with the decision and order
After the order is issued and the additional agreement is concluded, the director must familiarize himself with the decision of the founders and the order on the extension of powers. This is a mandatory process confirming that all parties are aware of the decision made.
4. Registration of the agreement in the enbek.kz system
After signing the additional agreement, information about it must be entered into the unified system of accounting of employment contracts of the Republic of Kazakhstan – enbek.kz. This procedure is mandatory and helps to track all changes related to labor relations.
Important points:
Extension of the director’s powers does not require amendments to the constituent documents of the company, and does not require registration with the authorities exercising state control. Thus, there is no need to notify the registration authorities.
Why is it important to renew the director’s powers in a timely manner?
The need to renew the director’s powers in a timely manner arises not only due to legal requirements, but also to ensure stability in the management of the company. Neglecting this process can lead to a number of inconveniences:
- Bank refusal to carry out banking operations (depending on the bank): Banks may refuse to carry out operations if the current authority of the director is not confirmed
- Inability to confirm the powers of the executive body to counterparties: Without official confirmation of the director’s powers, counterparties may refuse to conclude transactions, which will lead to difficulties in business relations
- Failure of transactions: The absence of confirmed powers may lead to blocking of transactions, which in turn may cause the failure of transactions and other serious consequences
Remember: timely contact with professionals helps to avoid serious problems in the future. KORGAN Law Firm is ready to provide qualified assistance in solving all issues related to corporate law and labor relations.
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Author of the article: Kenzhemergenova M.N.