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Helped to find and arrange an interim director of the company in April 2020

In April 2020, a Client, the owner of the business, contacted our law firm and explained the following situation:

  • Due to quarantine, the company has completely stopped its business activity;
  • As the company complied with all accounting and payroll regulations, all salaries were fully paid to its employees during the forced downtime.
  • The then acting director of the company, despite the suspended business activity, refused to take unpaid leave and just ceased to perform his duties.

Thus, the Client had a need to appoint a new director, but not to pay him the salary for a certain period of time on a legal basis, until the restoration of business.

This is not a rare situation - the need to change or even replace a director may arise at different stages of business development. We will tell you what our lawyers advice in such a situation.

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Who to appoint as director?

Our specialists offered the Client the following options to overcome the situation:

- to hire an interim director on minimum wage. This person will be registered as a director in the Unified State Register and, in fact, will not perform any duties;

- to appoint himself as director, if there is only one shareholder at the company, or to appoint one of the shareholders, if there are more than one of them. This will completely reduce the salary costs for the director. In this case, the minutes and articles of association of the company shall stipulate that the shareholder acting as a director shall not be entitled to any wage.

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What to do when all shareholders are foreigners?

That was the case of our Client. In this case, the best option is to appoint an interim director with the minimum wage.

Another option to save money would be to add a person to the company’s shareholders at a certain minimum percentage. But in this case it should be remembered that after the crisis, such a shareholder may not want to voluntarily sell his/her share. And as you know, even the owner of some 0.5% of the authorized share capital can have a significant impact on the activities of LLC, because:

  • a new shareholder is entitled to receive the dividends;
  • there is a list of issues, which shall be approved exclusively unanimously at the general meeting of LLC and ALC, etc.

This saving option should therefore only be considered if you have full confidence in the current director.

Our Client has agreed to our offer to use the services of an interim director with a minimum salary. We have selected the appropriate person and fully undertook legal support for the appointment of the new director.

If your business needs a change of the director - we can advise the best option, based on your specific situation, and conduct all actions within the shortest possible time.

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