Introduction
Defining the organization of a joint stock company is one of the inalienable core tasks of the Board of Directors. Even in SMEs and startups, it is essential to clearly organize responsibilities, competencies, decision-making processes and controls. The Code of Obligations and most articles of association provide for the Board of Directors to delegate management to individual members or third parties. The “can provision” commonly used in law and statutes is not an invitation to informal pragmatism, but the starting point for legally secure delegation: As soon as operational tasks are transferred in whole or in part, organizational regulations are needed that precisely determine the content and limits of this delegation.
Table of contents
- Responsibility of the Board of Directors for the organization
- Legal obligation to issue organizational regulations
- Liability risks due to missing or inadequate organizational regulations
- Governance benefits of living organizational regulations
- Importance for investors and due diligence
- Conclusion and how Konsento supports
1. Responsibility of the Board of Directors for the organization
The Board of Directors is the overall management of the company and is required by law to structure the organization in an appropriate manner (Art. 716a CO). It defines roles, competencies, reporting and controls in such a way that the company is managed in an appropriate, legally compliant and risk-conscious manner. This responsibility remains with the Board of Directors, even if it delegates individual tasks to committees, individual members or third parties. It must ensure that delegated bodies receive the necessary resources, report regularly and that the Board of Directors actually exercises its oversight.
2. Legal obligation to issue organizational regulations
Statutory authorization (“can delegate”) opens up the possibility of delegation, but does not replace its formal structure. If the Board of Directors delegates operational management tasks — whether comprehensively or only individual subtasks such as finances, personnel or compliance — a written organizational regulations required (Art. 716b CO). These regulations describe at least the organizational structure of management, the delimitation of tasks and competencies, the signing and representation rules, and the nature, frequency and content of reporting to the Board of Directors. Without such regulations, the delegation is considered to be unauthorized, and the management remains legally with the full Board of Directors. The regulations are not a unique model form; they must suit the company, adopted by the Board of Directors and reviewed regularly and amended as necessary.
3. Liability risks due to missing or insufficient organizational regulations
Responsibility under stock corporation law makes a sharp distinction between effective and ineffective delegation. If delegation is effective, the liability of non-operational board members is reduced to careful selection, instruction and monitoring of delegates (Art. 754 CO in conjunction with Art. 717 CO). If, on the other hand, the delegation is ineffective due to lack of organizational regulations or because of inadequate, unimplemented regulations, full management responsibility remains with the full Board of Directors. In the event of a claim, no member of the Board of Directors can then rely on a delegation limiting liability. The missing or incorrect regulation constitutes a breach of due diligence (Art. 717 CO) because the Board of Directors fulfills its duty to ensure appropriate organization (Art. 716a OR) did not comply. Although there is generally no lack of organization in the sense of a missing body, the risks of responsibility are significant; decisions made by de facto management can be attributed to the entire Board of Directors, and insurers and courts critically examine whether there were formal delegation requirements and active supervision.
4. Governance benefits of living organizational regulations
Good organizational regulations provide clarity about responsibilities, decision makers and approval requirements. It regulates information flows and reporting cycles so that the Board of Directors can exercise its supervisory authority in a substantive manner. It ensures that conflicts of interest are handled properly, that representation and signing rules are practicable and controllable, and that meetings and decisions are consistently recorded. In practice, implemented regulations act like an operating system for management: They prevent conflicts of competence, reduce frictional losses and increase the ability to react in crises, for example through predefined escalation and crisis mechanisms or the admissibility of virtual meetings. Especially in growing startups, where responsibility and processes are changing dynamically, regularly updated regulations offer stability without stifling the necessary agility.
5. Importance for investors and due diligence
Professional investors review as part of due diligence not only products, markets and finances, but also corporate governance. Comprehensible, up-to-date and lived organizational regulations signal maturity, transparency and ability to control. It shows that the Board of Directors takes its non-transferable duties seriously (Art. 716a CO) that delegation is set up in a legally secure manner (Art. 716b CO) and that information and decision-making channels work. If there are no such regulations, questions, delays and often an obligation to issue or update the regulations before financing is completed. Resilient organizational regulations therefore make it easier to raise capital and reduce perceived risks.
6. Conclusion and how Konsento supports
The Board of Directors must determine the organization of the company and ensure that it keeps pace with the company's business model, risks and structure (Art. 716a CO). As soon as tasks — even partially — are delegated, organizational regulations are needed that make the delegation legally effective (Art. 716b CO) and ensures supervision by the Board of Directors. Only then does liability relief apply to the selection, instruction and monitoring of delegates (Art. 754 CO and Article 717 CO). Responsibilities that are unclear or only lived out but not defined in writing increase liability risks for all members of the Board of Directors and weaken governance. For investors, the organizational regulations are visible proof of professionalism and a sense of responsibility.
Konsento supports boards of directors in practical implementation: With Konsento, organizational regulations can be drawn up and continuously maintained so that delegation, supervision and reporting are reliably interlinked.
that Board meeting module also provides pre-formulated agenda items and records meetings automatically. This expressly includes an agenda item to adopt or update the organizational regulations as well as other points that support the Board of Directors in fulfilling its duties in a legally secure manner. Resolutions can be made online as a circular resolution, so that necessary decisions are documented promptly and cleanly.
Contact us now, to draw up your organizational regulations and to anchor their maintenance at the pace of meetings of your Board of Directors in order to ensure effective delegation, clear oversight and convincing governance.