Changes to employees‘ representation in Supervisory Boards

03. February 2017

On January 14, 2017, the very first amendment in history to the Business Corporations Act comes into effect. The amendment brings a change in one part only – in the representation of employees in Supervisory Boards of joint-stock companies. In its wording in force before January 13, 2017, the Business Corporations Act simply set down that, unless bylaws stipulate otherwise, the Supervisory Board has 3 members elected and removed by General Meeting. As of January 14, 2017, the rule of 3 members of Supervisory Board continues to be in effect; however, the number of the Supervisory Board members must now be divisible by three in companies with more than 500 employees. At the same time, two thirds of Supervisory Board members are elected by General Meeting and one third by employees in the companies with more than 500 employees. Bylaws may define a higher number of Supervisory Board members elected by employees; however, the number must not be higher than the number of members elected by General Meeting. Bylaws may also stipulate that employees elect a part of the Supervisory Board members in the case where the company employs less than 500 employees. Supervisory Board members elected by employees may also be removed from office by employees.

The companies with more than 500 employees have 2 years to adjust their bylaws following the effect of the amendment (i.e. by January 14, 2019). Should they fail to do so, the Commercial Court would call on them to meet the obligation within an appropriate period. If the company in default still would not do it, the Court may dissolve it without petition and order its liquidation.