On the Qualifications of the Corporate Directors
Abstract
The system of requirements to members of bodies of a legal entity includes elements, actively discussed in science recently. Social quotas in boards' research are relevant. In Russian legislation and judicial practice, the issue of possibility of qualifications for members of bodies of a legal entity is still not resolved. Subject of research is elements of the system of requirements to members of bodies of a legal entity, most controversial in science and legal practice — qualifications (experience, education, and business qualities) and quotas in boards, due to which requirements are established to some of the seats. Using general research (analysis, synthesis) and special legal means (historical legal, comparative legal, dogmatic, sociological) methods, the author puts forward the following hypothesis: Because by legal nature the relations between director and legal entity is civil, latter is free to determine, what business qualities should be possessed by members of bodies (as well as counterparties and representatives). At the same time, state intervention is possible — through quotas in boards in various ways (quotas for members of social groups; codetermination; including the government representatives by virtue of “golden share”, quotas for minority shareholders and insertion of independent directors. In the article the relationship between the need for qualified management and the corporate democracy is proposed. Various reasons for introducing quotas are being assessed (in world context and in context of Russian corporate governance). Application of corporate governance best practices is proposed (introduction of an “ideal election procedure”, “nudging” through description of best practices, inclusion of persons, who are not members of board, in the board committees, or creation of separate advisory bodies). Parameters are put forward with which possible to check reasonableness for introducing a quota and its impact on stakeholders.
References
Adams R., Akyol A. C., Verwijmeren P. (2018) Director Skill Sets. Journal of Finan-cial Economics, vol. 130, issue 3, pp. 641–662. DOI: https://doi.org/10.1016/j.jfineco.2018.04.010
Afanasjev M.P., Kuznetcov P.G., Fominyh A. (1997) The Corporate Gover-nance through Eyes of Directorate (based on 1994–1996 Survey). Voprosy Ekonomiki=Issues of Economy, no. 5, pp. 84–101 (in Russ.)
Bainbridge S. M. (2015) Corporate Law. St. Paul: Foundation Press, 551 p.
Bebchuk L., Hamdani A. (2017) Independent Directors and Controlling Sharehold-ers. University of Pennsylvania Law Review, vol. 165, no. 6, p. 1271–1315. DOI: https://doi.org/10.2139/ssrn.2741738
Belcredi M., Bozzi S., Di Noia C. (2013) Board Elections and Shareholder Activism: the Italian Experiment. In: Boards and Shareholders in European Listed Companies: Facts, Context and Post-Crisis Reforms. Cambridge: University Press. pp. 365–422. DOI: https://doi.org/10.1017/CBO9781139629126.008
Bogan V.L., Potemkina K., Yonker S.E. (2021) What Drives Racial Diversity on U.S. Corporate Boards? SSRN Electronic Journal. DOI: https://doi.org/10.2139/ssrn.3952897
Chugunova K. Yu. (2020) Features of the Formation of the Will of Joint-Stock Companies Subsidiaries with Predominant State Participation (Case of Russian Railways). Aktualnye problemy rossiyssogo prava=Urgent Issues of Russian Law, no. 10, pp. 116–124 (in Russ.) DOI: https://doi.org/10.17803/1994-1471.2020.119.10.116-124
Dass N., Kini O. et al. (2014) Board Expertise: Do Directors from Related Indus-tries Help Bridge the Information Gap? Review of Financial Studies, vol. 27, issue 5, pp. 1533–1592. DOI: https://doi.org/10.1093/rfs/hht071
Davies P. L., Hopt K. J., Nowak R. et al. (2013) Corporate Boards in Law and Practice. A Comparative Analysis in Europe. Oxford: University Press, 818 p. DOI: https://doi.org/10.1093/acprof:oso/9780198705154.001.0001
Davies P. L., Worthington S., Micheler E. (2016) Gower`s Principles of Modern Company Law. London: Thomson Reuters, 1225 p.
Du Plessis A., Pretorius J.L. (2017) Substantive Equality and the Beneficiaries of Broad-Based Black Economic Empowerment. Journal of Contemporary Roman-Dutch Law, vol. 80. pp. 390–411.
Gabov A.V. (2015) Legal Persons: Independent Directors and Career Executives in Boards of Directors. In: Law and Economic Activity. Modern Challenges. Мoscow: Statut, 400 p. (in Russ.)
Gabov A.V. (2005) The Related-Party Transactions in Joint-Stock Companies Practice: Aspects of Regulation. Moscow: Statute, 412 p. (in Russ.)
Gaydarska N., Rammeloo S. (2009) The Legality of the “Golden Share” under EC Law. Maastricht University Working Papers, vol. 9, pp. 1–31. DOI: https://doi.org/10.2139/ssrn.1426077
Glodwell M. (2022) Outliers. The Story of Success. Moscow: Mif Press, 224 p. (in Russ.)
Glushetsky А.А. (2019) Inclusion of Issues to Agenda of General Shareholders Meeting and Nomination of Candidates to Company`s Bodies. Zakonodatelstvo i ekonomika=Legislation and Economics, no. 1, pp. 22–35 (in Russ.)
Hopt K. (1994) Labor representation on corporate boards: impacts and problems for corporate governance and economic integration in Europe. International Review of Law and Economics, no. 2, pp. 203–214. DOI: https://doi.org/10.1016/0144-8188(94)90019-1
Hopt К. (2008) Representation of Interests and Conflicts of Interest in Modern Corporate, Banking and Professional Law (on Dogma of Modern Legal Regulating Conduct of Other Persons Affairs). Civil Law Bulletin, no. 2, pp. 225–277 (in Russ.)
Iliev P., Roth L. (2023) Director Expertise and Corporate Sustainability. DOI: https://doi.org/10.1093/rof/rfad012
Irvine W. (1988) Corporate Democracy and the Rights of Shareholders. Journal of Business Ethics, vol. 7, no. 1/2, pp. 99–108. DOI: https://doi.org/10.1007/BF00382003
Koerner T., Mueller O. et al. (2013) Supervisory Board Qualification of German Banks: Legal Standards and Survey Evidence. SSRN Electronic Journal.
Kopylov D.G. (2012) Codetermination (German Evidence). Zakonodatelstvo i ekonomika=Legislation and Economics, no.10, pp. 90–95 (in Russ.)
Kulaev М. (2023) Trade Unions, Labor Movements and Hegemony in Modern Russia. Мoscow: Gaydar Institute, 504 p. (in Russ.)
Makarova О.А. (2016) Joint Stock Companies with State Participation. Aspects of Corporate Governance. Moscow: Jurayt, 211 p. (in Russ.)
Makushina E. Yu., Evsikov N.A. (2021) Impact of Gender Composition of Directorate upon Company`s Performance: Germany, Austria and Switzerland. Vestnik Moskovskogo universiteta=Moscow University Bulletin, no. 2, pp. 140–158 (in Russ.) DOI: https://doi.org/10.38050/01300105202126
Minzberg H. (1983) Why America Needs, But Cannot Have, Corporate Democracy. Organizational Dynamics, vol. 11, issue 4, pp. 5–20. DOI: https://doi.org/10.1016/0090-2616(83)90036-0
Mogilevskiy S.D. (2010) Limited Liability Company: Legislation and Application. Moscow: Statute, 421 p. (in Russ.)
Molotnikov А.Е. (2010) Codetermination: Russian and Foreign Evidence. Predprinomatalskoye pravo=Entrepreneurial Law, no. 2, pp. 3–8 (in Russ.)
Osipenko O.V. (2018) Issues of Russian Corporate Governance. Imushestvennye otnoshebia v Rossiysloy Federatcii=Property Relations in The Russian Federation, no. 5, pp. 83–94 (in Russ.)
Osipenko O.V. (2018) Systemic Application of Corporate Governance and Share-holder Law Instruments. Мoscow: Statut, 448 p. (in Russ.)
Shitkina I.S. (2022) The executive bodies of the corporation. Moscow: Statut, 316 p. (in Russ.)
Shitkina I.S. (ed.) (2021) Commentary on the Federal Law on Limited Liability Companies. Vol. 2. Мoscow: Statut, 486 p. (in Russ.)
Taj Y., Budylin S. (2023) Equal Inequality. Can Discrimination be Positive? Available at: https://zakon.ru/blog/2023/9/1/ravnoe_neravenstvo_byvaet_li_diskrinminaciya_pozitivnoj_chast_1/ (in Russ.)
Tarasov I.T. (1880) The Doctrine on Joint-Stock Companies: Regulations on Joint-Stock Companies. Vremennik Demidovskogo Juridicheskogo licteya= Proceedings of the Demidov Legal Lyceum, vol. 22, pp. 185–296 (in Russ.)
Tsepov G.V. (2006) The Joint-Stock Companies: Theory and Practice. Moscow: Prospekt, 200 p. (in Russ.)
