REALWorld Law

Corporate vehicles

Corporate governance

What corporate governance requirements apply to each type of corporate vehicle used to invest in real estate?

Angola

Angola

LDA

The company is governed and represented by one or more managers that can be chosen from persons outside of the company or natural persons with full legal capacity to manage. The managers are nominated through the contractual agreement or elected afterward through General Meeting. The manager must have the capability to exercise all the acts necessary and convenient for the accomplishment of the social objective, and it must relay its actions to the legally statutory dispositions of the shareholders’ resolutions.

Managers of the company must be either Angolan nationals or holders of a working permit issued by the company.

SA

The company is governed by a Board of Directors and an Audit Committee that must be constituted by an odd number of members, elected by the shareholders in General meeting.

The contractual agreement may outline that the company is governed merely by one administrator and a sole auditor, when:

  • The number of shareholders is reduced to two
  • The share capital is less than, the equivalent in national currency of, US$50,000, or
  • Determined by law

Managers of the company must be either Angolan nationals or holders of a working permit issued by the company.

Australia

Australia

Proprietary companies

Proprietary companies must have at least one director (who can also be the company secretary, if one is to be appointed and sole shareholder) who must ordinarily reside in Australia.

A secretary can be appointed (but this is not mandatory). If appointed, at least one secretary must ordinarily reside in Australia. The company’s affairs are run by its directors. In addition to supervising day to day management, the directors must ensure that statutory registers and records are maintained, financial statements are prepared and (if required) lodged with the Australian Securities and Investments Commission (ASIC). All company officers owe duties (under statute, as well as under general legal principles) to the company. Fundamental changes to the company (such as changes to its capital, shareholders and officers) must be promptly notified to ASIC.

Public companies

Public companies must have at least three directors, with at least two ordinarily residing in Australia, and must appoint at least one company secretary who ordinarily resides in Australia. The same person may act as a director and company secretary. In general, corporate governance requirements are largely similar to proprietary companies. However, all public companies are required to prepare and to lodge audited financial statements, and every public company that has more than one member must hold an annual general meeting, at least once in each calendar year and within five months after the end of its financial year. If the public company is listed on the Australian Securities Exchange, it will be required to comply with the Exchange’s listing rules (and report on its corporate governance practices). Offers of shares to the public are extensively regulated.

Branch of foreign corporation

A foreign corporation registered to carry on business in Australia requires at least one local agent, an Australian company or person ordinarily resident in Australia, to be appointed to act on behalf of the foreign corporation. They must be authorized to accept notices on the foreign corporation’s behalf and may be held personally liable for any penalties imposed should the foreign corporation contravene the Corporations Act. The local agent is responsible for acts that a foreign corporation is required to do under the Corporations Act. The foreign corporation must also maintain a registered office in Australia and lodge documents with ASIC, as specified by the Corporations Act. These will mainly be changes to constituent documents, shareholders and officers.

Partnership

Partnerships (except certain professional partnerships such as legal and accounting firms) may have no more than 20 members. In a general partnership, each partner can incur obligations on behalf of the partnership and each assumes unlimited liability for the partnership’s debts. The governance procedures for partnerships will be as agreed by the partners in their partnership agreement.

In a limited liability partnership, there is usually just one general partner (although there can be more). The other partners are called ‘limited partners’. The general partner has full management responsibility and runs the day-to-day operations of the business. A limited partner cannot incur obligations on behalf of the partnership and must not participate in the firm’s daily operations or management. A limited partner’s role usually involves nothing more than making an initial capital investment in exchange for a share of the partnership’s profits. A limited partner’s liability cannot exceed their financial contribution to the partnership.

Australian partnerships are governed on a state-by-state basis. Each state has its own partnership legislation.

Discretionary trust

A discretionary trust is not a separate legal entity in the same way as an individual or a company, rather it is a relationship which exists whereby a person (trustee) is authorized to hold property for the benefit of others (beneficiaries), acting in accordance with the powers conferred on the trustee under a deed of settlement. It is common for the trustee of the trust to be a company in which case the above requirements for a company will apply.

Unit trust

In a unit trust, entitlement to the benefits of the trust is divided into units similar to shares in a company. The investors hold a number of units according to their investment. Provided that the unit trust is not a ‘managed investment scheme’ (in which case a separate set of regulatory requirements may apply), the relationships between the parties (trustee and unitholder) are otherwise similar to those set out above for discretionary trusts except that the trustee has no discretion as to distributions or entitlements to assets as these are determined by the rights attaching to the units in the trust. If the trustee of the trust is a company, the above requirements for companies will apply.

If the trust is listed on the Australian Securities Exchange, it will be required to comply with the Exchange’s listing rules and the provisions of the Corporations Act dealing with registered managed investment schemes. Offers of units to the public are extensively regulated and will affect the contents of the trust deed.

Belgium

Belgium

Preliminary remark: The new contemplated company code is likely to imply changes in respect of the corporate governance structure. It may be expected that the law governing the Belgian REIT will be subject to changes as well. It is expected that the closed company would also be governed by 'directors' (opposed to 'business managers', which are currently the main actors in a closed limited liability company) and it would be possible 'fully authorize' one or more directors. A daily management body would also be introduced in the closed company. Note that this information with respect to the new company code is still subject to changes, as well as its date of entry into force.

Closed limited liability company (besloten vennootschap met beperkte aansprakelijkheid, BVBA/société privée à responsabilité limitee, SPRL)

There can be one or more business managers, who form the board. These may be appointed or dismissed by the shareholders. Unless the articles of incorporation provide otherwise, the company is represented officially by a single business manager acting individually.

By law, a statutory auditor need only be appointed if the company exceeds two of the following thresholds during two consecutive financial years:

  • It has more than €4.5 million on its balance sheet
  • Its annual turnover exceeds €9 million
  • It has more than 50 employees

An auditor must also be appointed if the company belongs to a group of companies that needs to publish consolidated accounts.

Limited liability company (naamloze vennootschap, NV/société anonyme, SA)

The board of directors of a limited liability company must have at least three directors, unless there are only two shareholders, in which case two directors will suffice. The board of directors normally represents the company but the articles of incorporation can provide for full representation by an individual director or by directors acting jointly. Day-to-day management can be delegated to one or more managing directors or general managers. The articles of incorporation can also set up a management committee.

The same provisions relating to statutory auditors apply as mentioned in relation to closed limited liability companies above.

B-REIT

Several requirements and restrictions apply, in addition to the requirements applicable to all listed companies. For instance, the board of directors of a public or social B-REIT (or where the B-REIT is incorporated as a Commanditaire Vennootschap op Aandelen/Société en Commandite par Actions, the board of directors of the managing partner of the B-REIT) must consist of at least three independent directors.

In addition, for any acquisition or and disposal of real estate, the fund must be represented by two directors. By law, a statutory auditor (accredited with the FSMA) must be appointed. In general, each public B-REIT needs to organise an adequate internal control, of which the functioning needs to be reviewed annually. This 'adequate internal control' can be further specified by Royal Decree.

Furthermore, the remuneration of the directors and effective managers of the B-REIT may not be directly linked to the operations of the public B-REIT or its subsidiaries. Nevertheless, variable remuneration related to the consolidated net result (excluding fluctuations in the fair value of the assets and the financial instruments) is permissible.

As to remuneration, provisions and costs incumbent on the B-REIT, specific reporting requirements are to be observed.

Additional requirements apply in order to safeguard the independence of the real estate expert, who must value the assets of the B-REIT on a periodic and occasional basis. The remuneration of the expert may not be linked to the value of the real estate assets which he is to appraise. Furthermore, he may only be appointed for a term of three years (renewable) and can only be responsible for the valuation of any one real estate asset for a maximum of three years. Only after a cooling off period of three years following that, may the expert appraise that real estate asset again.

Bosnia-Herzegovina

Bosnia-Herzegovina

Limited liability companies

The governing bodies of a limited liability company are:

In the Federation of Bosnia and Herzegovina:

  • A shareholders' assembly
  • A management board
  • A supervisory board (which is mandatory only in certain circumstances)

The shareholders' assembly is the main governing body and is entitled to make decisions regarding any issue relating to the company's activities. It must be convened at least once a year in order to approve the annual financial statement and make decisions about the company's profits/losses. The assembly is given the right to make decisions by the Law on Business Companies, the statutes of the company and the articles of association. All shareholders have a designated number of votes in proportion to the size of their shareholding.

The management board is authorized to represent the company. It can have one or more members who are appointed by the shareholders' assembly. If there is more than one member, the company may be represented either by an individual member or by the board collectively. A sole shareholder may also act as a manager. A foreign individual can be appointed as a member of the company's management board.

The supervisory board is the controlling body of the company. Establishing a supervisory board is mandatory for a limited liability company only if:

  • The company has more than 10 shareholders, or
  • The company's share capital exceeds KM 1,000,000 and it has been established by at least two founders/shareholders

Joint-stock companies

In the Federation of Bosnia and Herzegovina:

  • A shareholders' assembly
  • A management board
  • A supervisory board
  • An audit board

The shareholders' assembly must be convened at least once a year. Under law and statute this assembly has the right to make decisions on certain issues, but can only make decisions if shareholders with more than 30% of the shares and voting rights are present either in person or via a representative.

The management board is authorized to represent the company and consists of a director and one or more executive directors. It is appointed by the supervisory board.

The supervisory board is the main supervising body of the company.

The audit board is obliged to audit the half-yearly and yearly balance sheets and at the same time verify corporate compliance and the functioning of the relevant corporate bodies in accordance with the FBiH Business Act, other relevant legislation and the basic principles of corporate governance. It must submit a report to the Assembly and the Supervisory Board no later than eight days after the completion of the audit.

Shares can be freely transferred, except if otherwise decided by law or statute.

In the Republika Srpska:

The corporate bodies of a joint-stock company founded without a public share offering are:

  • A shareholders' assembly
  • A director or a management board
  • Internal auditor or an audit board (where provided by law)

The corporate bodies of a joint-stock company founded with a share offering are:

  • A shareholders' assembly
  • A management board
  • Internal auditor or an audit board (optional)
  • An independent auditor

The shareholders' assembly must be convened at least once a year. According to law and statute the assembly has the right to make decisions on certain issues. The shareholders' assembly can make decisions on the basis of a majority of paid voting shares.

The director represents the company, manages the business and performs other duties determined by law, the statutes and other by-laws.

The management board of a joint-stock company established by means of a share offering consists of at least three members and the 15 largest shareholders and can make decisions if the majority of the board members are present, unless a larger number is required by the relevant constitutional documents.

A board of executive directors may also be established by the constitutional documents. This will consist of one or more executive directors.

The audit board will consist of at least 3 members. The number of the audit board members must be odd.

An independent auditor must be elected at the Annual General Meeting of the Shareholders to carry out the audit of financial statements for the following business year.

Unlimited partnerships

The partnership is set up by a contract of establishment. All members have the right and responsibility to manage the partnership in accordance with this contract. Every partner has authority to represent the unlimited partnership and share profits and losses in equal amounts, unless the contract specifies otherwise. Voting rights and profit shares can be freely allocated.

Limited partnerships

For limited partnerships, in both the FBiH and the RS:

  • The general partner manages business operations.
  • Limited partners have a right of access to business registers and to the documents of the partnership, as well as to annual financial statements. 
  • Any general partner can represent the limited partnership, unless the contract specifies otherwise. 
  • The profits of the limited partnership are divided between the general partners and the limited partners in accordance with the contract. 
  • The profit that goes to general partners must be divided among them equally. 
  • The profit that goes to limited partners is divided among them in proportion to their contribution to the partnership’s capital, unless the contract specifies otherwise.
Canada

Canada

This varies based on jurisdiction of formation.

British Columbia (BC) limited companies (including unlimited liability companies) must have at least one director, and a public company must have at least three directors. British Columbia has no director residency requirements.

Any person, including a corporation, who meets certain criteria may incorporate a BC company.

A BC company must hold its first annual general meeting not more than 18 months after the date on which it was recognized. Subsequent annual general meetings must be held at least once in each calendar year and not more than 15 months after the annual reference date for the preceding calendar year.

Within two months after each anniversary of the date on which the company was recognized, every company must file with the registrar an annual report containing information that is current to the most recent anniversary.

British Columbia General Partnership

A British Columbia partnership is an unincorporated form of business association:

‘Partnership is a relation which subsists between persons carrying on business in common with a view of profit’.

Unlike corporations, with certain exceptions the general view is that a partnership is not a legal person or an entity with an existence that is separate and distinct from that of its partners.

No formal written agreements are necessary (although, depending on the purpose of the partners, one is advisable).

Partnerships are not required to file annual returns, hold annual meetings, elect directors or observe any mandated governance procedures.

British Columbia Limited Partnership

Limited partnerships are primarily employed for raising capital, particularly where significant potential liabilities surround a new business enterprise, and for their tax benefits. They are often used in real estate investment projects, in the film industry, in venture firms, in restaurants and in other businesses focusing on a single or limited term project.

Limited partnerships provide a number of benefits to their members, including:

  • Limited risk for the limited partners
  • A method for investors to pool their resources while enjoying the flow-through of net income and net losses for tax purposes (particularly beneficial where significant up-front losses are anticipated)
  • The ability to roll assets into the partnership at a partner’s cost amount in order to avoid triggering tax on capital gains
  • Significant flexibility to structure the organization to reflect the negotiated terms of the business relationship, and
  • A clear legal framework with roles firmly established by the courts

A typical modern limited partnership will have one general partner, which has been incorporated for the sole purpose of acting as general partner and which has no assets other than its interest in the limited partnership and assets which it holds as nominee for the limited partnership, and one or more limited partners.

British Columbia Limited Liability Partnership

A limited liability partnership or LLP is a modified form of partnership. The formation of a limited liability partnership begins with either an existing general or limited partnership or a new partnership that is created for the purpose of establishing the LLP. As with all partnerships, there must be (1) a business that is (2) carried on in common by two or more persons with (3) the object of profit. In addition, a written partnership agreement should be in effect. In BC, a partner of an LLP can be an individual, a company, another corporate entity or a limited partnership. Once a partnership is in place, the partners of the partnership would then apply for registration as a limited liability partnership.

Unless otherwise provided for in a partnership agreement, each partner has the full right and equal entitlement to participate in the management of the partnership.

The duties and obligations that partners owe to each other in a partnership are established under common law, the provisions of the legislation and the provisions of any partnership agreement.

There are three exceptions to the limited liability available to partners of a LLP. They are:

  1. There is no relief from personal liability available to a partner for either that partner’s negligent or wrongful acts or omissions or, if that partner knew of but did not take reasonable action to prevent, the negligent or wrongful acts or omissions of another partner or an employee of the partnership.
  2. In respect of the interest of the partners in the property of the LLP, there is no protection for that interest in the event of a claim against the LLP for an obligation of the LLP.
  3. For an existing general or limited partnership that ‘converted’ to a LLP, there is no limit to the liabilities of the partners for partnership obligations that arose prior to or that flow from a contract entered into before the general or limited partnership became a LLP.
China

China

Equity Joint Ventures

The management and operations of an EJV are governed by a board of directors (the highest authority of an EJV) and the managerial staff, who are responsible for the day-to-day operations of the EJV. The chairman of the board, who is the EJV’s legal representative, may be either a PRC or foreign national, and the vice chairman is traditionally appointed by the party that does not appoint the chairman. The managerial staff consists of a general manager in addition to other board-appointed officers, such as a chief financial officer or deputy general manager. It is common that if one party has the right to nominate the general manager, the other party will have the right to nominate the chief financial officer.

Cooperative Joint Ventures

A CJV’s management structure is generally unitary with either a board of directors or a joint management committee. It is likely that the limited liability-type CJV would have a board of directors and its management system would be similar to that of an EJV. A CJV without the status of a legal person is required to establish a joint management committee. There must be at least three members on the board of directors or joint management committee.

Wholly Foreign-Owned Enterprise

The day-to-day operations of a WFOE are controlled solely by its management, with the highest authority being the sole shareholder, and a WFOE need not have a board of directors. However, the production and operating plans must be filed with the relevant PRC entity responsible for monitoring the activities of the WFOE. Such filings are for recording purposes only, and legislation provides expressly that interference in the operation and management activities of a WFOE conducting its business in accordance with its articles of association is prohibited.

Croatia

Croatia

Limited liability company (društvo s ograničenom odgovornošću – doo)

The shareholders' meeting, which must be convened at least once a year, is entitled to make decisions on any issue concerning the company, including those which fall within the remit of other governing bodies.

The management board is authorized to represent the company and to manage its day-to-day affairs. The company may be managed by one or more directors with sole or collective authority. A sole shareholder may also act as a sole director.

The supervisory board is the controlling body of the company. Setting up a supervisory board is mandatory only if:

  • The average number of employees during a year exceeds 200
  • It is prescribed by law for a particular type of business
  • The share capital of the company exceeds HRK 600,000 and there are more than 50 shareholders
  • The company only manages joint stock companies or limited liability companies, which are obliged to have a supervisory board, or the company directly holds more than 50% of the share capital in such companies, and, in both cases, the number of employees in any of those companies, or the average for all of the companies together, exceeds 200.

If the company is a partner in a limited partnership and the average number of employees in the company and the limited partnership jointly exceeds 200.

Public limited liability company (dioničko društvodd)

The shareholders' meeting, which must meet within the first eight months of each business year, is the main governing body and is entitled to make decisions on any issue concerning the company, including those within the remit of other corporate bodies.

The amendments to the Companies Act which came into force on 1 April 2008 introduced an option for public limited liability companies to choose between single-tier and two-tier management structures:

Two-tier structure

With two-tier structures the principle is that one of the company’s management bodies cannot interfere in the work of the other, except in exceptional circumstances. Accordingly, the management board is the management body which is authorized to represent the company. There can be one or more directors who are appointed by the shareholders in a general meeting. All directors must sign documents unless this is otherwise agreed when the company is incorporated.

The supervisory board is the controlling body of the company. It must have an odd number of members (at least three).

Single-tier structure

With a single-tier structure the shareholders in general meeting choose only a single managing board of directors. The managing board of directors then consists of executive directors, who directly manage the corporate business to the extent decided on and permitted by the managing board of directors, and of non-executive directors who only participate in the board's decision-making and in supervision. In this way, the management and supervisory functions are integrated.

Public partnership (javno trgovačko društvo – jtd)

Each member of a public partnership has the right and responsibility to manage the business of the company. However, the articles of association may provide for only one or more of the members to manage the business. In such cases the other members cannot participate in management. Each member authorized in this way has the right to manage the business independently of the others, unless the articles of association provide for joint management.

Limited partnership (komanditno društvo – kd)

The general partners have responsibility for management of the partnership and are jointly and severally liable for any debts. Limited partners have limited liability and are only liable for debts to the extent of their individual contributions. They have no management authority.

Closed end real estate investment fund (zatvoreni investicijski fond s javnom ponudom za ulaganje u nekretnine)

A closed end real estate investment fund may only be set up and governed by a fund management company, which may be in the form of either a limited liability company or a public limited liability company. At least two members of the management of the fund management company must have the expertise and knowledge required to lead the business of the management company. Members of the management board must be approved by the supervisory body (HANFA – Croatian Agency for Supervision of Financial Services).

The fund must also have a supervisory board with at least five members, of which a maximum of 40% may be employees or other people connected with the fund management company, or people who have concluded an agreement with the fund for the provision of services within the last two years, such as auditors, lawyers and public notaries.

Czech Republic

Czech Republic

Limited liability company (společnost s ručením omezeným – s.r.o.)

The company is managed by one or more managing directors (jednatel), who can act for and sign on behalf of the company, either independently or jointly. Flexible management can be provided for in the articles of association. General shareholders' meetings are also required in relation to certain decisions, as laid down by law and in the articles of association. There are no restrictions on how voting and dividend rights may be allocated.

Financial statements need to be audited only if two out of three statutory thresholds, relating to the size of the company's assets, turnover and number of employees, are exceeded.

Joint stock company (akciová společnost – a.s.)

The founders of the company may provide for either a single tier or a two tier system. In both systems, the highest body is the shareholders' general meeting. In the two tier system, the company is managed by a board of directors (představenstvo) and controlled by a supervisory board. In the single-tier system, a supervisory board is established (správní rada) and a statutory director appointed. It is also possible to provide in the by-laws of the company that these bodies will consist of only one person.

There is flexibility on corporate governance as set out in the company by-laws. Day-to-day management in a two tier system is carried out by directors generally appointed by shareholders' general meeting or by the supervisory board if the company by-laws provide for this. In a single tier system, such management is usually carried out by the statutory director.

It is possible to create different categories of shares with different rights. Voting and dividend rights can be freely allocated.

Financial statements need be audited only if one out of three statutory thresholds, relating to the size of the company's assets, the turnover of the company and the number of employees, are exceeded.

Unlimited partnership (veřejná obchodní společnost – v.o.s.)

An unlimited partnership is managed by all the partners unless the articles of association state otherwise.

There are few restrictions on the way the articles may regulate corporate governance or the allocation of voting rights and dividends.

All partners are fully liable for the obligations of the partnership and this liability cannot be limited.

Financial statements need be audited only if two out of three statutory thresholds, relating to the size of the company's assets, turnover and number of employees, are exceeded.

Limited partnership (komanditní společnost – k.s.)

A limited partnership has two categories of partners: partners with unlimited liability (komplementáři) and partners with limited liability (komanditisté).

Day-to-day management may only be conducted by unlimited liability partners. Other matters must be decided by all partners jointly. There are no restrictions on voting rights and the allocation of dividends which will be governed by the articles of association.

Financial statements need to be audited only if two out of three statutory thresholds, relating to the size of the company's assets, turnover and number of employees, are exceeded.

Denmark

Denmark

Partnership (Interessentskab)

There are no corporate governance requirements in Denmark for a partnership.

Public limited company (Aktieselskab)

Management

A public limited company may have either (i) an executive board and a board of directors or (ii) an executive board and a supervisory board.

In public limited companies where management is divided between an executive board and a board of directors (classical Danish management system); the executive board is in charge of day-to-day management under the guidelines and directions issued by the board of directors.

In public limited companies with no board of directors, the executive board must be appointed by a supervisory board that oversees the executive board (classical two-tier system).

In a public limited company with at least 35 employees (on average over the past three years), the employees are entitled to elect a number of members of the board of directors among themselves.

General meetings

Unless agreed otherwise, the shareholders have a right to pass resolutions which is exercised at the general meeting.

A general meeting must be held no more than five months after the end of each financial year. The annual accounts accompanied by the auditor's adopted annual report, the resolutions passed concerning the adoption of the accounts, the allocation of profits or the covering of losses, as well as any other business which the articles of association prescribe, must be presented at the general meeting.

Extraordinary general meetings must be held upon request from the central governing body (the board of directors or the executive board depending on the management system), the supervisory board, the auditor elected by the general meeting or when otherwise required by the law. Shareholders that hold 5 percent of the share capital, or any smaller fraction of the capital as prescribed by the articles of association, and shareholders that are so authorized under the articles of association can also request an extraordinary general meeting in writing.

Extraordinary general meetings to consider specific issues must be convened within two weeks of receipt of a request to that effect. At the end of each financial year, the company must prepare financial statements to be audited and filed within five months. The financial statement is subject to publicity requirements.

Private limited company (Anpartsselskab)

Management

A private limited company may have either:

  • An executive board and a board of directors
  • An executive board and a supervisory board or 
  • An executive board only (one-tier management system)

In a private limited company where management is divided between an executive board and a board of directors (classical Danish management system); the executive board is in charge of the day-to-day management under the guidelines and directions issued by the board of directors.

In a private limited company with no board of directors, the executive board can be appointed by a supervisory board that oversees the executive board (classical two-tier system), but the private limited company is also allowed to operate solely with an executive board only (one-tier system).

In a private limited company with at least 35 employees (on average over the past three years) the employees are entitled to elect a number of members of the board of directors from among themselves.

If the employees are entitled to elect directors and choose to do so, the private limited company must have a board of directors or a supervisory board.

General meetings

Unless agreed otherwise, the shareholders have a right to pass resolutions, which is exercised at the general meeting.

A general meeting must be held no more than five months after the end of each financial year. The annual accounts, accompanied by the auditor's annual report, the resolutions passed concerning the adoption of the accounts, the allocation of profits or the covering of losses, as well as any other business which the articles of association prescribe, must be presented at the general meeting.

Extraordinary general meetings must be held upon request from the central governing body, the supervisory board, the auditor elected by the general meeting or when otherwise required by law. For private limited companies, any shareholder can request that an extraordinary general meeting is convened.

Extraordinary general meetings to consider specific issues must be convened within two weeks of receipt of a request to that effect. At the end of each financial year, the company must prepare financial statements to be audited and filed within five months. The financial statement is subject to publicity requirements.

 

Limited partnership (Kommanditselskab)

There are no corporate governance requirements in Denmark for a limited partnership.

Limited partnership company (Partnerselskab)

A limited partnership company follows the same rules as a public limited company.

France

France

SCI (société civile immobilière) – real estate civil company

The company is managed by at least one general manager who may be an individual or a legal entity appointed in the by-laws (a statutory manager) or by the shareholders.

The general manager can be a shareholder or a third party.

SNC (société en nom collectif) – commercial partnership

The partnership is managed by at least one general manager who may be an individual or a legal entity appointed in the by-laws (a statutory manager) or by the shareholders.

The general manager can be a shareholder or a third party.

One principal and, if required, one alternate statutory auditor must be appointed if two of the following three thresholds are exceeded:

  • The total value of the assets on the balance sheet is €1,550,000 or more
  • The turnover (exclusive of tax) is €3,100,000 or more
  • The average number of employees is 50 or more

SARL (société à responsabilité limitée) – limited liability company

The company is managed by at least one individual general manager who can be named in the by-laws (a statutory manager) or properly appointed subsequently. Additional general managers can also be named in the by-laws (statutory managers) or appointed by a decision of the shareholders. Only individuals are likely to be appointed as manager. The general manager can be a shareholder or a third party.

One principal and, if required, one alternate statutory auditor must be appointed if two of the following three thresholds are exceeded:

  • The total value of the assets on the balance sheet is €1,550,000 or more
  • The turnover (exclusive of tax) is €3,100,000 or more
  • The average number of employees is 50 or more

SA (société anonyme) – stock corporation

There are two possible structures:

Société anonyme with a board of directors

The board of directors must be composed of between three and eighteen members appointed through the by-laws when the company is set up, and subsequently by the shareholders. The chairman of the board of directors is appointed by the board, amongst its members. The board must also appoint a chief executive to lead the management of the company.

A single individual can be both chairman (président du conseil d'administration) and chief executive (directeur general).

At the request of the chief executive, the board of directors can appoint up to five deputy executives to assist the chief executive in the management of the company.

The chairman of the board, as well as the chief executive and deputy executives must be individuals.

Société anonyme with an executive board and a supervisory board

The executive board typically has between two and five members, all individuals. But should the company be listed on a French stock market this number may be increased to seven.

If the share capital of the company is less than €150,000, the executive board can be replaced by a single chief executive. Members of the executive board are not required to be shareholders of the company. The members and the president of the executive board are appointed by the supervisory board. The executive board manages the company.

The supervisory board must contain at least three but no more than eighteen members. These members are not required to be shareholders of the company and they can be employed by the company. Members of the supervisory board cannot be members of the executive board. Members of the supervisory board are appointed through the by-laws when the company is set up, and thereafter by the shareholders. The supervisory board appoints amongst its members, a chairman and a deputy chairman which must be individuals.

The supervisory board supervises the executive board.

Principal and alternate statutory auditors are mandatory.

SAS (société par action simplifiée) – simplified stock corporation

Considerable flexibility on corporate governance can be granted in the by-laws. The company is typically managed by a president, who can be either an individual or a legal entity. The by-laws can provide for the president to be assisted by one or more executives, or by one or more deputy executives, and can also provide for the appointment of a joint management body.

Principal and, if required, alternate statutory auditors have to be appointed if two out of three thresholds are exceeded:

  • The total value of the assets on the balance sheet is €1 million or more
  • The turnover (exclusive of tax) is €2 million or more
  • The average number of employees is 20 or more

Auditors must be appointed when the SAS ‘controls or significantly influences’ or is ‘controlled or significantly influenced’ by one or more entities as those terms are defined in the French Commercial Code even if the thresholds are not exceeded.

SCPI (société civile de placement immobilier) – real estate civil investment company

An SCPI is managed by a management company, which must be either a stock corporation (société anonyme) with a minimum share capital of at least €225,000, or a partnership (société en nom collectif) of which at least one partner is a stock corporation with at least this amount of share capital.

The management company must:

  • Be approved by the French Securities and Exchange Commission (Autorité des Marchés Financiers)
  • Present sufficient guarantees regarding its organization, its technical and financial strength, and the suitability and experience of its managers
  • Take steps to secure the transactions it enters into
  • Have sufficient financial means to conduct its business and meet its liabilities

The management company is assisted by a supervisory board comprised of at least 7 shareholders who are appointed at a shareholders' meeting.

The shareholders of the SCPI must appoint one or more statutory auditors.

SIIC (société d’investissement immobilier cotée) – listed real estate investment company

An SIIC is managed by a management company which must be either a stock corporation (société anonyme) with a minimum share capital of at least €225,000, or a partnership (société en nom collectif) of which at least one member is a stock corporation with at least this amount of share capital.

The management company must:

  • Be approved by the French Securities and Exchange Commission (Autorité des Marchés Financiers)
  • Present sufficient guarantees regarding its organization, its technical and financial strength, and the suitability and experience of its managers
  • Take steps to secure the transactions it enters into
  • Have sufficient financial means to conduct its business and meet its liabilities

The management company is assisted by a supervisory board comprising at least seven shareholders who are appointed at a shareholders' meeting.

The shareholders of the SIIC must appoint one or more statutory auditors.

Germany

Germany

Gesellschaft mit beschränkter Haftung (GmbH) – limited liability company

The articles of association of a GmbH can allow for considerable flexibility. Voting and profit rights can be allocated without restriction. Shareholders can appoint and remove directors and provide instructions at any time, which the directors must follow. Furthermore, shareholders may have approval rights concerning management decisions, but the management will oversee the day-to-day business. The company can be managed by a sole director or a board of directors.

A GmbH is characterized by a one-tier corporate governance system and, therefore, compared to an Aktiengesellschaft is less complex in its day-to-day management.

An external auditor is required only if certain thresholds, relating to the balance sheet total, turnover and the number of employees, are exceeded. Currently, the thresholds are:

  • a balance sheet total of more than €6 million
  • turnover of more than €12 million
  • more than 50 employees

If at least two thresholds are exceeded, an audit is required.

Aktiengesellschaft (AG) – stock corporation

AGs must comply with a number of acts, most importantly the Stock Corporation Act (Aktiengesetz - AktG). The acts that need to be observed depend on whether the company is listed or not. It is possible to create different classes of shares with different rights. Voting rights and profit participation rights may be allocated differently for each class of share.

An AG is characterized by a two-tier corporate governance system (a board of directors and a supervisory board). Features of this system are:

  • Day-to-day management is carried out by a sole director or board of directors which is appointed by the supervisory board. No restrictions may be placed upon the directors regarding the way they manage the company.
  • Management is overseen by a supervisory board, which is appointed by the shareholders' meeting.
  • Certain important decisions (eg the disposal of all or of a vast majority of the company's assets) go beyond the directors' authority and must be approved at the shareholders' meeting. 

An external auditor is required only if certain thresholds, relating to the balance sheet total, turnover and the number of employees, are exceeded. Currently, the thresholds are:

  • a balance sheet total of more than €6 million
  • turnover of more than €12 million
  • more than 50 employees

If at least two thresholds are exceeded an audit is required. However, every listed AG is subject to a statutory audit. In addition, listed stock corporations are subject to the German Corporate Governance Code which is a set of non-binding but recommended rules drafted by a committee of experts. 

The corporate governance rules in the code are quite elaborate and deal with issues such as:

  • the adequacy of the focus on shareholders' interests
  • the two-tier system of executive and advisory boards
  • transparency of corporate governance
  • the independence of the supervisory board and of the auditors

The executive board and the supervisory board of listed stock corporations must issue a declaration of conformity under the Stock Corporation Act stating that the company has complied with the corporate governance code.

Real estate investment trust (REIT) 

A REIT is a listed stock corporation and therefore subject to the German Stock Corporation Act unless the German law governing REITs (REITG) provides otherwise. Other statutes specifically apply to listed stock corporations.

REITs as AGs are managed as follows: 

  • a sole director or board of directors is appointed by the supervisory board
     
  • management is supervised by a supervisory board, which is appointed by the shareholders' meeting

Since a REIT is a listed stock corporation, an audit is mandatory.

It is not possible for a REIT to create different classes of shares with different rights ie all shares must be issued as the same class of shares including voting rights.

Immobilien Sondervermögen – real estate fund 

All decisions relating to the investment policy of the fund must be taken by the Alternative Investment Fund asset management company (AIF-Kapitalverwaltungsgesellschaft). Some day-to-day business decisions can be delegated to a third-party asset manager. Investment decisions cannot be subject to approval by unit holders. Unit holders can revoke the appointment of the asset management company and replace it only in certain restricted circumstances.

German funds (Sondervermögen) are generally open-ended.

Special rules apply to funds that are restricted to institutional investors (Spezial-Sondervermögen or Spezialfonds). In these cases no prospectus is required.

Kommanditgesellschaft (KG) – limited partnership

Considerable flexibility on corporate governance can be agreed in the partnership agreement. Voting and profit-participation rights can be allocated freely. The general partner (Komplementär) is, by law, the managing partner and represents the KG vis-à-vis third parties. Limited partners (Kommanditist) may have certain limited approval rights over management decisions but can be appointed as managing limited partners. A statutory audit is required in certain circumstances, such as if the general partner is not an individual and if certain thresholds, relating to the balance sheet total, turnover and the number of employees, are exceeded.

Currently, the thresholds are:

  • a balance sheet total of more than €6 million
  • turnover of more than €12 million
  • more than 50 employees

If at least two thresholds are exceeded, an audit is required.

Hong Kong

Hong Kong

Companies

The corporate governance requirements for a company are primarily set out in its constitution, which is the company's articles of association (the requirement for a memorandum of association was abolished with effect from 3 March 2014). The articles of association set out the internal regulations for the management of a company, and may provide information about the appointment and powers of directors, as well as matters relating to shareholders' rights and procedures in general meetings.

Corporate governance requirements are also set out in the Companies Ordinance. In particular, every private company must have at least one director who is a natural person. A body corporate, in general, cannot be a director unless the company involved is a private company which is not a member of a group of companies of which a listed company is a member. Directors are responsible for the management of the company and owe fiduciary duties to it.

Every company must also have a company secretary (who is an officer of the company). A director can also be a company secretary (except in the case of a private company having only one director). The company secretary must either be an individual who is ordinarily resident in Hong Kong or a body corporate with its registered office or place of business in Hong Kong.

In addition, a company must have a registered office in Hong Kong where court documents and other official notices may be served. Companies must hold their annual general meeting (AGM) within nine months (for companies limited by guarantee or private companies which are not subsidiaries of public companies) or six months (for all other companies) after the end of their accounting reference period (ie the period by reference to which the company's annual financial statements are to be prepared).

However, if the company's first accounting reference period is longer than 12 months, the company must hold its first AGM as follows:

  • Nine months from the date of incorporation or three months after the end of the accounting reference period, whichever is later (for companies limited by guarantee or private companies which are not subsidiaries of public companies)
  • Six months from the date of incorporation or three months after the end of the accounting reference period, whichever is later (for all other companies).

If the company is listed on the Hong Kong Stock Exchange, the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (Listing Rules) and the requirements in the Corporate Governance Code and Corporate Governance Report (which is an Appendix to the Listing Rules) will also apply.

Branches of a foreign corporation

A non-Hong Kong company that is establishing a place of business in Hong Kong will need to appoint an authorized representative who is authorized to accept service of proceedings and notices in Hong Kong and have a registered place of business in Hong Kong. The authorized representative is usually a person residing in Hong Kong or a firm of solicitors or certified public accountants. If the non-Hong Kong company ceases to have a place of business in Hong Kong, the company must deliver to the Registrar for registration a return in respect of another person as an authorized representative of the company for at least 11 months from the date of cessation of maintenance of a place of business in order to accept service on the company's behalf.

Partnerships

The corporate governance procedures for partnerships will largely be dictated by the provisions in the partnership agreement.

Reference should also be made to the Partnership Ordinance (Cap. 38 of the Laws of Hong Kong) which contains legislative provisions regarding the liability of partners, partnership property, expulsion/retirement of partners and dissolution of the partnership etc. For limited partnerships, provisions of the Limited Partnerships Ordinance (Cap. 37 of the Laws of Hong Kong) must be considered.

Trusts

A discretionary trust is not a separate legal entity in the same way as an individual or a company, rather it is a relationship which exists whereby the trustee is compelled to hold property for the benefit of others (the beneficiaries). The trustee, who owes fiduciary duties to the beneficiaries, oversees the fund, and any corporate governance requirements will generally be set out in the trust deed. These features apply to unit trusts as well, although for unit trusts which are subject to authorization from the SFC, additional regulations (for example, the Code on Unit Trusts and Mutual Funds) apply. In particular, such a trust must appoint a trustee/custodian as well as a management company who are:

  • independent of each other; and
  • acceptable to SFC.

If the trustee is a company (which is the common case), the above requirements for companies will also apply. Furthermore, if the trust is listed on the Hong Kong Stock Exchange, the Listing Rules and the Corporate Governance Code and Corporate Governance Report requirements will also apply.

Hungary

Hungary

Limited liability company (korlátolt felelősségű társaság)(kft)

The main governing body of the company is the shareholders’ meeting. One or more managing directors represent the company with sole or joint authority to sign on its behalf. The managing directors are appointed by the shareholders’ general meeting. A sole shareholder may also act as a sole director. With some exceptions, a supervisory board is not mandatory but may be elected.

Company limited by shares (részvénytársaság)(zrt or nyrt)

Private company limited by shares

The main governing body of the company is the shareholders’ general meeting. The company is managed by a board of directors comprising a minimum of three directors. Board members are appointed by the shareholders’ general meeting and may have either sole or joint authority to sign on the company’s behalf. The articles of association may allow for the appointment of a sole general manager instead of a board of directors. It is possible to create different categories of shares with different rights, and voting and profit rights can be freely allocated. Private companies limited by shares do not need to have a supervisory board unless shareholders holding 5 percent of the voting rights request it.

Public company limited by shares

The main governing body of the company is the shareholders’ general meeting. The company can operate either a one- or two-tier system. An audit committee is also mandatory and is appointed by the shareholders’ general meeting from members of the board of directors or the supervisory board. Its duties include assisting the board of directors and the supervisory board in relation to financial reporting.

Furthermore, the management board of a public limited company must have a governance and management report prepared yearly according to the rules applicable to the actors of the given stock exchange and present such report to the annual shareholders' general meeting for approval. The general meeting’s resolution and the approved report shall be posted on the website of the limited company.

One-tier system

The company is managed by a single body acting as a board of directors and a supervisory board. It comprises a minimum of five directors. Board members are appointed by the shareholders’ general meeting and may have either sole or joint authority to sign on the company’s behalf. A sole general manager cannot be appointed for a public company.

Two-tier system

The company is managed by a board of directors comprising a minimum of three directors. A supervisory board comprising a minimum of three people is mandatory and is appointed by the shareholders’ general meeting.

In the case of a REIT (a real estate investment company) members of the board of directors and the supervisory board must have special qualifications.

Limited partnership (betéti társaság)(bt) and unlimited partnership (közkereseti társaság)(kkt)

The partners are given considerable scope to agree on corporate governance in the articles of association. Unless the articles state otherwise, a limited liability partner is not entitled to be involved in the management of the partnership, or to represent the company. There are no restrictions on how voting and profit rights are allocated with the exception that the partners may not be validly deprived of their voting rights. The unlimited liability partner is entitled to represent the company. Limited partners can take part in and vote at the members’ meeting.

Real estate investment fund

The investment fund itself is not a legally recognized organization but consists only of assets and liabilities. It is managed and represented by the investment fund manager.

Ireland

Ireland

Company

Rules will differ depending on the corporate form taken by the vehicle, on certain balance sheet/turnover thresholds and on whether the vehicle intends to offer securities to the public. Larger companies are required to have annual compliance statements, audit committees, etc. A company must have a board of directors (with at least one director who is resident in a member state of the EEA or have a bond in place), a company secretary and a statutory auditor. However, private companies limited by shares may avail of streamlined governance procedures (eg such companies require only a single director and may dispense with the requirement to hold an annual general meeting). Considerable flexibility may be agreed in by-laws on corporate governance. Voting and profit rights are freely allocable although there are strict capital maintenance rules and rules on related party transactions. Shareholders can appoint and revoke appointment of directors subject to the procedures set out in the company’s constitution and the Companies Act. Directors should hold regular board meetings, at least one per quarter, to discuss the performance of the business. Where documents are executed by a company under the company seal, the use of the seal and execution of said document must be authorized by the board of directors at a board meeting. This can be common where property documents are executed as deeds.

The financial statements must be approved by the directors at a board meeting. A public limited company, and certain types of private limited companies and unlimited companies, must hold an annual general meeting each year at which the financial statements are presented to the shareholders.

The business of a company is managed by its directors, who may exercise all powers of the company which are not required to be exercised by the company in a general meeting. The members may, by special resolution at a general meeting, give directions to the directors. However, no direction given at a general meeting will invalidate any prior act of the directors which would have been valid if that direction had not been given.

The directors typically delegate the powers exercisable by them to a managing director or CEO, who will take responsibility for the day to day business of the company.

Collective investment vehicle

A CIS which is established as an ICAV or a VCC must have a board of directors (with a minimum of two Irish residents). Delegation of asset management, administration and distribution normally occurs. A third-party depositary is required for the safekeeping of assets. Investors' rights are allocated in the by-laws of the CIS (trust deed, deed of constitution, memorandum and articles of association or instrument of incorporation).

A management company must also have a board of directors (with a minimum of two Irish residents), a company secretary and an auditor. There is considerable flexibility to agree corporate governance in the articles of association. There are strict rules on capital maintenance and related party transactions. Certain supervisory conditions are also imposed by the Central Bank. In addition to its memorandum and articles of association, the activities of a management company are governed by the management agreement, the trust deed or the deed of constitution entered into in respect of the CIS it manages.

A CIS is subject to prior authorization and ongoing regulation and supervision by the Central Bank. Discretionary asset managers must be regulated and are subject to a prior approval process. There is a detailed authorization process for a CIS, focusing on the offering document, custody arrangements and participants (directors, asset manager, etc).

Prior approval of the management company and the CIS directors by the Central Bank is required and they must also comply with its ongoing “fitness and probity” requirements. A voluntary “Corporate Governance Code for Collective Investment Schemes and Management Companies” also applies, on a comply or explain basis.

Limited partnership

The partners will enter into a limited partnership agreement and file the appropriate formation documents with the CRO in accordance with the Limited Partnerships Act 1907.

If the partnership trades under a name other than the names of all of the partners then the partnership must register this business name with the CRO.

Limited partnerships are not normally required to file accounts since there will be at least one general partner who has unlimited liability for the partnership's debts. However, the EC (Accounts) Regulations 1993 require any limited partnership to file accounts where all the general partners are limited liability companies (or their equivalent).

Real Estate Investment Trust

REITs are expected to comply in full with the listing rules of the exchange on which its securities are listed and on a voluntary basis with the exacting standards of the European Public Real Estate Association.

The governance rules applicable to a public limited company will apply to a REIT. It is a continuing obligation of a company that has shares admitted to listing to the Official List of the Irish Stock Exchange that it complies with the requirements of the UK Corporate Governance Code and the Irish Corporate Governance Annex on a "comply or explain" basis.

Italy

Italy

Società a responsabilità limitata (Srl)

Considerable flexibility can be agreed in the by-laws of an Srl and voting and profit rights can be freely allocated. The holders of the quotas into which the corporate capital is divided can appoint and remove directors and may also have approval rights over management decisions. The directors are responsible for day-to-day business decisions. The company can be managed by either a sole director or a board of directors.

The appointment of an Auditing Body is required if the Srl:

  • must prepare consolidated financial statements
  • controls a company which must appoint an auditing body, or
  • exceeds for two consecutive financial years the maximum thresholds for the drafting of ‘condensed’ (abbreviato) financial statements.

Unless the contrary is stated in the articles of incorporation, the Srl will be audited by an Auditing Body composed of only one effective member. The by-laws can provide that the quotaholders may choose among different auditing systems:

  1. a Sole Statutory Auditor (‘organo monocratico di controllo’)
  2. a Board of Statutory Auditors or
  3. an Auditing Company (which may be in addition to the Sole Auditor/Board of Statutory Auditors, and entrusted with the legal auditing of the accounts).

Società a responsabilità limitata semplificata (Srls)

The management of this type of company may be entrusted to directors who are external (ie not necessarily shareholders). The deed of establishment follows a standard form, issued by the Ministry of Justice, whose contents are mandatory and may not be modified by the members. If the quotaholders intend to set up an Italian limited liability company with a corporate capital of less than €10,000 but with specific and tailor-made provisions in the by-laws, the most appropriate solution will be to set up an Srl.

Società per azioni (SpA)

Considerable flexibility can be agreed in the by-laws of an SpA and it is possible to create different categories of shares with different rights. There are no restrictions on how voting and profit rights are allocated. In addition, shares where multiple voting rights are allocated to each individual share may now be created.

An SpA can be managed in any of the following ways:

  • By a sole director or a board of directors appointed by the shareholders meeting (the traditional system – ‘modello tradizionale’). This applies unless the company's articles of association state otherwise.
  • If the company's articles of association provide for this, the company can be managed by a supervisory board and a management board. The shareholders appoint the supervisory board and this then appoints the management board. The supervisory board can be composed of shareholders and non-shareholders and undertakes part of the functions of the board of statutory auditors as well as some functions usually entrusted to the shareholders meeting (in the traditional system), while the shareholders retain a degree of control over the management board (the two-tier system – ‘modello dualistico’)
  • If the company's articles of association provide for this, the company can be managed by a board of directors appointed by a shareholders' meeting and an executive committee of the board (the one-tier system – ‘modello monistico’).

The appointment of statutory auditors is mandatory in the case of an SpA. The shareholders may choose to appoint a board of statutory auditors comprising either three or five permanent members, in which case two alternate members must also be appointed. The legal audit of the accounts is carried out either by a statutory auditor or by an auditing company, if the SpA does not prepare a consolidated balance sheet, the legal audit may be carried out by the board of statutory auditors (who shall be all enrolled with the Register of statutory auditors).

Japan

Japan

TMK

A TMK may have two types of shareholders which are specified equity members and preferred equity members.  Specified equity members have voting rights for all matters, whereas preferred equity members have voting rights only for matters set forth in the Act on Liquidation of Assets or in the articles of incorporation.  In order to make a TMK bankruptcy remote, an ippan shadan hojin (ISH) whose director and member are certified public accountants or other independent persons is often used for a TMK's specified equity member. 

Certain important matters, eg certain important amendments to the ALP may not be resolved by a members' meeting but need to be agreed by all the interested parties, including without limitation, a specified bond holder (if any).  Relationship between multiple preferred equity members are governed by a joint venture agreement in addition to the provisions of the Act on Liquidation of Assets.    

GK (for TK-GK)

Different from a joint stock company, equity members of a GK, in principle, manage the business of the GK, ie there is no separation of ownership and management.  In order to make a GK bankruptcy remote, an ISH whose director and member are certified public accountants or other independent persons is often used for a GK's member.  A GK as the TK operator and TK investor(s) execute silent partnership agreement(s) for investment in TBI representing real property.  The TBI belongs to the GK as the TK operator and the GK distributes profits to TK investor(s) pursuant to the silent partnership agreement(s) between the GK and the TK investor(s).  

GK (for Real Estate Specified Joint Enterprise using TK-GK)

Different from a joint stock company, equity members of a GK, in principle, manage the business of the GK, ie there is no separation of ownership and management.  In order to make a GK bankruptcy remote, an ISH whose director and member are certified public accountants or other independent persons is often used for a GK's member.  A GK as the TK operator and TK investor(s) execute silent partnership agreement(s) for investment in real property itself.  The real property belongs to the GK as the TK operator and the GK distributes profits to TK investor(s) pursuant to the silent partnership agreement(s) between the GK and the TK investor(s).  The GK needs to entrust business relating to real estate transactions and solicitation of TK investment to licensed real estate specified joint enterprise operators (Item 3 operator for business relating to real estate transactions and Item 4 operator for solicitation of TK investment).  TK investor(s) need to be Special Investor(s).

Investment Corporation (for J-REIT)

A J-REIT has investors' (investment equity holders) meetings, corporate officers, supervisory officers, board of officers and accounting auditors.

A J-REIT needs to entrust asset management, asset custody and other administrative matters to an asset manager, and the like.  A J-REIT may procure equity as investment equity (toshi-guchi) and debts as investment corporation bonds (toshi-hojin-sai) and/or borrowings.  A J-REIT may be invested in securities, rights pertaining to derivative transactions, real estate, leasehold of real estate, superficies, promissory notes, monetary claims, TK investment, and the like.

Netherlands

Netherlands

Limited liability company (Besloten Vennootschap)

Considerable flexibility on corporate governance can be agreed on in the articles of association. It is possible to create different categories of shares with different rights. Non-voting shares and non-profit shares can be created. There are few restrictions on the allocation of voting and profit rights. Shareholders appoint and dismiss directors and may also have rights to approve management decisions, but the directors are responsible for day-to-day business decisions. The company can be managed either by a sole director or by a board of directors, and there can be a separate board of supervisory directors or a one tier board with executive and non-executive directors. A supervisory board or one tier board may be mandatory in certain specific circumstances. Legally, the board of directors can consist entirely of non-Dutch residents or – when it concerns executive directors – even legal entities.

Public limited company (Naamloze Vennootschap)

Considerable flexibility on corporate governance can be agreed on in the articles of association. It is possible to create different categories of shares with different rights. There are few restrictions on the allocation of voting and profit rights. In principle, the shareholders appoint and remove the company directors. A sole director or board of directors manages the company. There may be a separate board of supervisory directors or a one tier board with executive and non-executive directors. A supervisory board or one tier board is often installed and may be mandatory in certain specific circumstances. Legally, the board of directors can consist entirely of non-Dutch residents or – when it concerns executive directors – even legal entities.

Fiscal investment vehicle (Fiscale Beleggings Instelling)

The corporate governance requirements depend on whether the entity is a B.V. or N.V.

Limited partnership (Commanditaire Vennootschap)

Considerable flexibility can be given in the partnership agreement. There are few restrictions on the allocation of voting and profit rights. The unlimited partner is, by law, the general partner. Limited partners may have certain limited approval rights regarding management decisions. Too much influence by a limited partner on the partnership's management creates a risk that the limited partner might lose limited liability status.

Nigeria

Nigeria

Private Limited Liability Company

Nigeria’s company law provides corporate governance structure for all corporate entities in Nigeria and sets out policies regulating the rights and duties of the shareholders, directors and the company. Nigerian companies have a two-tier structure with at least two shareholders and two Directors. Directors owe a fiduciary duty to the company and are accountable for the performance and management of the company.

Public Limited Liability Company

In addition to the company law, the Code of Corporate Governance for Public Companies promotes higher standards of accountability, transparency and good governance, and is applicable to all public companies. It requires public companies to comply or demonstrate sufficient compliance to rules relating to the composition and structure of the boards, decision-making processes and controls, risk management, reporting, communication and ethics. Where the company is listed, it would be expected to comply with the Stock Exchange Listing Rules.

Real Estate Investment Trusts and Companies

Real Estate Trust Schemes are required to register with SEC and must comply with the SEC rules and regulations. Where a scheme is listed, continuing obligations imposed by the Stock Exchange Listing Rules must also be complied with, as public offers are extensively regulated. In addition, REICOs are subject to the governance rules provided under Nigerian company law and the Corporate Governance Code; and the trustees of REITS are usually Trust Companies which are held to the same standard. For REITs, the Trust Deed will be expected to provide wide-ranging investor protection provisions.

Norway

Norway

Aksjeselskap/AS (private limited company)

The shareholders’ meeting is the supreme governing body of the company and elects the board of directors. Appointing a managing director is optional. If the company has appointed a managing director, he or she must report to the board of directors at least once every four months.

The company must keep its own accounts and, as a general rule, appoint a certified auditor. Companies with an operating income of less than NOK 6 million, a balance sheet amount of less than NOK 23 million and less than an average number of 10 full-time employees may decide to dispense with auditing the annual accounts. This decision can be made by the shareholders’ meeting giving the board of directors a power of attorney enabling the board to decide to dispense with the audit. Dispensing with an audit is not recommended by DLA Piper. The company must also submit annual accounts, including the auditor’s report if applicable, to the Register of Accounts.

If the company conducts a business which is subject to VAT, it must also be registered in the VAT Register. Letting real estate is not normally subject to VAT, although voluntary registration has been introduced for those letting business premises for activities that are liable for VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.

The company can distribute its non-restricted equity as dividends to shareholders as long as its equity (including restricted equity) and liquidity, after the distribution, are adequate in terms of the risk and the scope of the company’s business. The company’s board must assess whether this requirement will be fulfilled.

Allmennaksjeselskap/ASA (public limited company)

The shareholders’ meeting is the supreme governing body of the company and elects the board of directors. The board of directors appoints a managing director who is responsible for day-to-day management and must report to the board of directors every month. Appointing a managing director is not optional.

The company must keep its own accounts and appoint a certified auditor. It must submit annual accounts, including the auditor’s report, to the Register of Accounts.

If the company conducts a business which is subject to VAT, it must also be registered in the VAT Register. Letting real estate is normally not subject to VAT, although voluntary registration has been introduced for those letting business premises for activities that are liable for VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.

The company can distribute its non-restricted equity as dividends to shareholders as long as its equity (including restricted equity) and liquidity, after the distribution, are adequate in terms of the risk and the scope of the company’s business. The company’s board must assess whether this requirement will be fulfilled.

Kommandittselskap/KS (limited partnership)

Limited partnerships have considerable flexibility to determine their own corporate governance through their by-laws. Voting and profit participation rights can be freely allocated.

The unlimited partner (komplementar) (or the board of directors) can appoint one or more general managers. The general manager does not have the same decision making powers as a general manager in a general partnership. Limited partners (kommandittister) may have certain limited rights of approval in relation to management decisions. Appointing a board of directors is optional.

If the partnership conducts business which is subject to VAT, it must also be registered in the VAT Register. Letting real estate is not normally subject to VAT, although voluntary registration has been introduced for those renting out business premises for activities that are subject to VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.

Ansvarlig selskap/ANS (general partnership with unlimited liability) and ansvarlig selskap/DA (general partnership with pro rata liability)

The partnership has considerable flexibility to agree its own corporate governance through its by-laws. All partners are jointly and severally liable for the general partnership’s liabilities. Responsibilities, voting and profit participation rights can all be freely allocated. Appointing a board of directors is optional.

If the partnership conducts business which is subject to VAT, it must also be registered in the VAT Register. Letting real estate is not normally subject to VAT, although voluntary registration has been introduced for those renting out business premises for activities that are subject to VAT. This allows them to deduct input VAT on the purchase of goods and services used in their property rental business.

Poland

Poland

Limited liability company 

Considerable flexibility on corporate governance may be provided for in the company's articles of association. A limited liability company must have a management board and hold shareholders' meetings.

Where the share capital exceeds PLN 500,000 and the number of shareholders is more than 25, a supervisory board, consisting of at least three members, is compulsory. In other cases it is optional. Rules concerning the supervisory board are normally set out in the articles of association. If the articles of association do not include such provisions, the members of both the management and supervisory boards will be appointed and dismissed by the shareholders' meeting. Members of the management board cannot be members of the supervisory board and vice versa, but members of management and supervisory board can be selected from shareholders and non-shareholders.

The management board of directors represents the company (detailed rules of representation may be provided for in the articles of association), although for some activities the consent of the shareholders' meeting is required (eg the purchase and sale of real estate), unless the articles of association specifically state otherwise. The consent of the shareholders' meeting is also required for the acquisition of any asset by the company at a price which exceeds 25% of the share capital and is not less than PLN 50,000, if the transaction takes place within two years of the initial registration of the company, unless the transaction is allowed for in the articles of association.

Shareholders' meetings must be held at least once a year. 

Joint stock company 

Considerable flexibility on corporate governance may be provided for in the company's articles of association. A joint stock company must have a management board, a supervisory board and hold shareholders' meetings.

The supervisory board must have at least three members and, in the case of public companies, at least five members. Rules concerning the supervisory board and the management board are normally set out in the articles of association. If the articles of association do not include these, members of the supervisory board will be appointed and dismissed by the shareholders' meeting. Members of the management board are appointed and dismissed by the supervisory board and they may also be dismissed or suspended by the shareholders' meeting, unless the articles of association state otherwise. Moreover, they cannot be members of the supervisory board and vice versa.

The management board represents the company (detailed rules of representation may be provided for in the articles of association), although for some activities the consent of the shareholders' meeting is required (eg the purchase and sale of real estate), unless the articles of association specifically state otherwise. The consent of the shareholders' meeting (passed by two thirds of the votes) is also required for the acquisition or disposal of any asset at a price which exceeds 10% of the paid-up share capital, if the transaction takes place within two years of the initial registration of the company.

General shareholders' meetings must be held at least once a year. 

Limited partnership 

Considerable flexibility on corporate governance can be provided for in the partnership agreement.

In principle, a limited partner does not have the right to manage the partnership, but the partnership agreement may provide otherwise.

The unlimited partners (Komplementariusz) must, by law, represent the partnership in relationships with third parties. A limited partner can represent the partnership only by means of a power of attorney. For activities outside the normal scope of the business, the consent of the limited partner is required, unless the partnership agreement provides otherwise.

A limited partner is liable for the partnership's obligations only up to the amount contributed to partnership capital and any amount over and above this stipulated by the partnership agreement (Suma komandytowa). 

Unlimited partnership

Considerable flexibility on corporate governance can be provided for in the partnership agreement. All partners are entitled to manage the business, unless this is otherwise stated in the partnership agreement. In the case of activities outside the normal scope of business, the consent of all partners is required.

Closed-end real estate investment fund

The management company is subject to supervision by the Polish Financial Supervisory Commission and must obtain authorization to create and operate investment funds in accordance with the Polish Investment Funds Act.

Portugal

Portugal

Sociedade por Quotas (SQ)

An SQ is typically a smaller business controlled by a limited number of individuals and/or companies. An SQ is managed by one or more directors (Gerentes). Activities carried out by its directors bind the company in relation to third parties but the directors have their capacity limited by the company's purpose, by-laws and by shareholders' resolutions.

Sociedade Anónima (SA)

An SA is normally a larger business with a relatively complex administrative and supervisory structure. It is typically managed by a board of directors, although it is possible to have a single director if the share capital of the company does not exceed €200,000.

Considerable flexibility on corporate governance under a self-regulation approach can be provided for in the by-laws.

Three forms of corporate governance are possible:

  • a sole director or a board of directors and a supervisory board: both are appointed by the shareholders' meeting
  • a sole director or a board of directors, including an audit committee and a single auditor, or
  • a sole manager or a board of managers appointed and supervised by a general council (whose members must be shareholders). The general council and the audit board or single auditor are appointed by the general shareholders' meeting.

It is also possible to appoint a company secretary (this is mandatory for listed companies).

Romania

Romania

The basic principle of Romanian law concerning corporate governance is that the general meeting of the entity has general powers to decide matters of interest to the entity, irrespective of the type of entity, apart from an unlimited partnership.

Unlimited partnership

The partners are jointly liable without limit for the obligations of the partnership. Each director has the right to represent the company, unless otherwise stipulated by the partnership's constitution. Where the constitution prescribes that the directors should operate together, decisions should be taken unanimously; in the event of disagreement among the directors, the partners representing the absolute majority of the registered capital will take the decision. The partners representing the absolute majority of the registered capital may elect one or more directors among themselves, establish their powers, their term of office and their possible remuneration, unless otherwise stipulated by the constitution.

Limited partnership

The management of a limited partnership is in the hands of one or more unlimited partners. A limited partner may carry out activities on behalf of the entity, only on the basis of a special power of attorney authorising certain actions, granted by the company's representatives and registered at the Commercial Registry. If it acts outside its authorised scope, the limited partner becomes jointly liable without limit to third parties for all the company's obligations, as from the date it carried out the relevant activity.

Joint stock company

The main corporate body of a joint stock company is the General Meeting. As regards the bodies under its control, a joint stock company may employ either a one-tier corporate governance system (ie the company may have one director or a Board of Directors consisting of an odd number of members), or a two-tier system (ie the company is run exclusively by a Management Board monitored by a Supervisory Board). For joint-stock companies the General Meeting is either ordinary or extraordinary, depending upon the issues under consideration. The quorum and voting conditions differ for ordinary and extraordinary General Meetings.

In the one tier system, the members of the first Board of Directors are appointed when the company is formed, whilst subsequent members ones are nominated or removed by the ordinary General Meeting. The Board of Directors (generally) or the ordinary General Meeting (if so stipulated in the company's constitution) appoints or removes the president of the Board of Directors who coordinates the board's activity.

The Board of Directors holds meetings at least once every three months ensuring the day-to-day management of the company. If not otherwise provided in the company's constitution, the legal quorum is half of the total number of members, and generally decisions can be passed by a majority of the members present. The Board of Directors may delegate the management of the company to one or more managers, one of these being designated general manager. The Board of Directors may also remove these managers.

Partnership limited by shares

The corporate governance of a partnership limited by shares is similar to that of a joint stock company with a one tier management system. The management is entrusted to one or more unlimited partners. The general meeting of shareholders may dismiss the directors with the approval of the majority required for extraordinary meetings. Unlimited partners who are directors cannot participate in the proceedings of the general meetings for the election of censors or, as the case may be, of the financial auditor, even if they hold shares in the partnership.

Limited liability company

The management of a limited liability company is in the hands of directors acting under the control of the general meeting of shareholders and of the auditors. For limited liability companies, although the law does not make a distinction between ordinary and extraordinary general meetings as it does for joint-stock companies, it does establish different quorum and voting conditions depending on the issues under debate. The general rule is that an absolute majority of shareholders and an absolute majority of the share capital is required to pass a resolution. Limited liability companies are managed by one or more directors, who may also be shareholders of the company. The directors may be appointed either by the company's constitution or through a resolution of the General Meeting.

Russia

Russia

Limited liability company (OOO)

A limited liability company may have either a two-tier management structure (the general meeting of participants and the general director) or a three tier management structure (the general meeting of participants, the board of directors and the general director).

The general meeting of participants is the supreme governing body of the company. Normally, at the general meeting each participant has the number of votes corresponding to its participation interest.

The formation of a board of directors is non-mandatory but can be required by a company's charter, which will also set out the board's powers.

Resolutions of the general meeting of participants or the board of directors may be required in relation to certain transactions (eg approval of major or interested-party transactions). The company's charter can stipulate that any transactions in relation to real estate require an approval by the relevant managing body.

The company's general director (the sole executive) manages the company's affairs and represents it on a day to day basis. In addition, a management board, headed by the general director, can be elected. The general director and the management board are appointed and dismissed by the shareholders' meeting, unless the company's charter states otherwise.

From 1 September 2014 the company can stipulate that the functions of the general director may be performed by more than one person.

Non-public joint stock company (AO)

A joint stock company may have either a two-tier management structure (the general meeting of shareholders and the general director) or a three tier management structure (the general meeting of shareholders, the board of directors and the general director).

The shareholders are the supreme governing body of the company. Generally, at a general meeting each shareholder has a number of votes which corresponds with the number of their shares.

The board of directors undertakes the general management of the company. Its authority is stipulated in the legislation and can be broadened in the company's charter. However, the law does not require a non-public AO to form a board of directors if the number of shareholders is less than 50. In such a case the company's charter may provide that the powers of the board of directors are exercised by the general meeting of the shareholders.

Resolutions of the general meeting of shareholders or the board of directors may be required in relation to certain transactions (eg approval of major or interested-party transactions). The company's charter can stipulate that any transactions in relation to real estate require an approval by the relevant managing body.

The company's general director (the sole executive) manages the company's affairs and represents it on a day to day basis. In addition, a management board, headed by the general director, can be elected. The general director and the management board are appointed and dismissed by the shareholders' meeting, unless the company's charter states otherwise.

From 1 September 2014 the company can stipulate that the functions of the general director may be performed by more than one person.

Slovak Republic

Slovak Republic

Limited liability company

The company must have a managing director (konateľ) and a general meeting (valné zhromaždenie). In addition, it may appoint a supervisory board (dozorná rada). The company must be managed by one or more managing directors, who may, either independently or jointly, act and sign on the company's behalf. Management is governed by the articles of association. A general meeting of shareholders makes decisions on matters as set down by law and provided for in the articles of association.

Joint-stock company

The company must have three corporate bodies: a board of directors (predstavenstvo), a general meeting (valné zhromaždenie) and a supervisory board (dozorná rada). The company is managed by a board of directors consisting of individuals only. The board of directors is normally appointed by the general meeting or in some cases by the supervisory board.

Unlimited partnership

The partnership is managed by each partner solely and independently unless the articles of association stipulates joint management by all partners. The articles of association may allow a high degree of flexibility in corporate governance, voting rights and profit allocation.

Each partner has full liability for the obligations of the partnership and this cannot be limited.

Limited partnership

The partnership has two categories of partners: general partners (komplementár) and limited partners (komanditista). Limited partners must contribute a minimum amount of €250 to the partnership.

Day-to-day management can only be conducted by general partners but other matters are decided by all partners. There are no restrictions on the allocation of voting and profit rights by the articles of association.

SJSC

Similar to joint-stock companies and limited liability companies, SJSC shall create the following corporate bodies: a board of directors (predstavenstvo) and a general meeting (valné zhromaždenie). However, creation of a supervisory board is voluntary and depends on the respective articles of association.

Spain

Spain

Limited liability company – sociedad de responsabilidad limitada (SL)

Considerable flexibility is granted to the members in relation to the setup, by-laws and rules for internal governance for an SL. SLs are intended to be more closely held entities than sociedades anónimas (SAs), and so shares are generally not freely transferable (unless acquired by other shareholders, family members or companies within the same group); and representation at the general meeting is limited.

Other important features of the legal regime for an SL are as follows:

  • The share capital must be fully paid up and divided into shares. These may have different characteristics and therefore may carry different voting rights. Non-voting shares can be issued with a total face value of up to 50 percent of the total issued capital
  • The effectiveness of the monetary contributions made at the time of incorporation, or in connection with any capital increase, must be verified by a notary public.
  • No independent appraiser's report on non-monetary contributions is required, although the founders and shareholders are jointly and severally liable for the validity of any non-monetary contributions made. Similarly, in relation to capital increases, the directors of the company are liable for any differences between the value of the non-monetary contributions stated in their report and their real value.
  • Shareholders can appoint and remove directors. The company can be managed by a sole director, two or more directors acting jointly or jointly and severally, or by a board of directors, formed by a minimum of three directors and a maximum of twelve directors

Public company – sociedad anónima (SA)

The main features of the legal regime of a sociedad anónima are as follows:

  • The minimum subscribed capital for an SA is €60,000. At least 25 percent of the face value of all the shares must be paid up on incorporation
  • The capital must be divided into shares. These can be registered shares (acciones nominativas) or bearer shares (acciones al portador). Preferred shares can be created as a separate class and may include shares entitled to a preferential dividend. Non-voting shares can be issued with a total face value of up to 50% of the total paid-up capital.
  • Shareholders can appoint and remove directors. The company can be managed by a sole director, two joint directors, two or more directors acting jointly and severally, or by a board of directors comprising at least three members
  • Where an SA is managed by a board of directors, the board will represent the company in any dealings with third parties in its business activities
  • The quorum for a board meeting is the presence of half the board members plus one. Board resolutions are generally adopted by absolute majority of the directors attending. The company by-laws may provide that board resolutions require the approval of a higher percentage of the directors.

Limited partnership – sociedad en comandita (S.en Com. or S. Com.)

There are two kinds of partner:

  • General partners (socios colectivos)
  • Limited liability partners (socios comanditarios)

General partners are jointly and severally liable, up to the whole of their net worth, for the debts of the partnership. Limited liability partners are only liable for the amount of their contribution. Management is exercised exclusively by the general partners.

Partnership limited by shares – sociedad en comandita por acciones (S.Com. p. A.)

There are two kinds of partner:

  • General partners (socios colectivos)
  • Limited liability partners (socios comanditarios)

General partners are jointly and severally liable, up to the whole of their net worth, for the debts of the partnership. Limited liability partners are only liable for the amount of their contribution. Management is exercised exclusively by the general partners. The difference between this and a sociedad comanditaria is that the capital of the company is divided into shares.

General partnership – sociedad de responsabilidad colectiva

The sociedad de responsabilidad colectiva must be incorporated by virtue of a public deed in which following details must be included:

  • The names and addresses of the partners
  • The corporate name
  • The name of the partners who have been entrusted with the management of the company
  • The company’s purpose
  • The capital contribution of each partner
  • The duration of the company

The amounts, if any, for their annual expenses, should be allocated to each partner manager.

The company’s name must include the name of all, some or one of its partners, including the addition of the words "y compañía".

All partners, whether or not they are managers, are jointly and severally liable for the debts of the partnership up to the whole amount of their personal net worth.

Real estate investment fund – fondo de inversión inmobiliario (FII)

All decisions relating to the investment policy of the fund must be taken by the management company or SG (sociedad gestora). In particular, the SG handles the management of assets, the administration (accounting and legal services, advice to clients, appraisals and assessments of liquidation value, compliance with applicable regulations, etc) and the marketing of the participation units in the fund. Another entity, the depository or custodian, is entrusted with the custody and deposit of the securities. Both the fund and the SG are regulated by the CNMV (National Securities Market Commission), which requires reports every three, six and twelve months. Specifically, the SG is required to inform the CNMV and the shareholders on a regular basis about the activities of the SG and the fund.

Real estate investment company – sociedad de inversión inmobiliaria (SII)

If self-managed, the corporate governance of an SII is handled by the board of directors. If the SII appoints an SG for the purposes of administration and representation, the SG handles the management of assets, the administration (accounting and legal services, advice to clients, appraisals and assessments of liquidation value, compliance with applicable regulations, etc) and the marketing of the shares in the company. The SII is regulated by the CNMV, which requires reports every three, six and twelve months.

Real estate investment Trust – sociedad anónima cotizada de inversión inmobiliaria (SOCIMI)

The SOCIMI must comply with all the regulations of the regulated stock market or of the multilateral trading system (MAB Circular 8/2016) on which the company is listed. In addition, the company must also meet specific requirements, including:

  • To invest at least 80 percent of the assets of the company in urban real estate for leasing
  • To hold the assets leased for a minimum period of three years, and
  • To distribute 80 percent of the profits obtained from rent and 50 percent of the profits obtained from the sale of real estate among the shareholders
Sweden

Sweden

Limited liability company

The Swedish corporate governance model is defined by legislation, self-regulation and tradition. Applicable regulations include the Swedish Companies Act (Aktiebolagslagen), the Accounting Act (Bokföringslagen) and the Annual Account Act (Årsredovisningslagen). In addition to these, there are a number of self-regulating frameworks such as the new Code of Corporate Governance (Bolagskoden) which applies to Swedish companies whose shares are listed on a regulated market in Sweden. There are also unwritten rules governing attitudes and traditions that have evolved over time.

The Swedish system is based on a strict division of power and responsibilities between the shareholders (exercised at the general meeting), the board of directors, the managing director and the auditors. In a private limited liability company the board of directors can consist of one or two individuals, provided at least one deputy director is appointed. A public limited liability company must have at least three directors. If a managing director is appointed, he has the authority to represent the company and sign on its behalf in relation to the day-to-day administration and management of its affairs.

Partnership

A trading partnership exists where two or more legal entities or individuals agree to conduct a commercial enterprise in this form, and the partnership is formally registered. All partners are jointly and severally liable for the obligations of the partnership. There are no statutory provisions requiring formalities such as shareholders' meetings or a board of directors. However, the partnership agreement may set out more detailed regulations for governance.

The Partnerships Act (Lag om handelsbolag och enkla bolag) also allows for the formation of limited partnerships. In this case, general partners (Komplementärer) are liable for all the debts of the partnership while limited partners (Kommanditdelägare) are liable only up to the amount of capital they have contributed. There are also limitations on who can be appointed as a general partner (for example, foundations and not-for-profit associations cannot be general partners). Unless otherwise agreed, a limited partner must not take any active role in running the partnership's business and must not sign on its behalf.

Thailand

Thailand

Limited Company

The Civil and Commercial Code of Thailand provides comprehensive regulations on the rights and obligations of the company, its directors and its shareholders.

Property Fund

Property funds are required to comply with the Securities and Exchange Act and the Securities and Exchange Commission regulations.

REIT

Similar to property funds, the fiduciary duty and duty of care under the Securities and Exchange Act and the Securities and Exchange Commission regulations are applicable to the REIT manager and the trustee.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

(a) Within Abu Dhabi and outside the Abu Dhabi Global Market free zone

Limited liability company (LLC)

An LLC must:

  • appoint a UAE-certified financial auditor before the end of its first year of business, and the company accounts must be certified by such auditor each fiscal year;
  • hold a general assembly (shareholders' meeting) each year for all shareholders; and
  • appoint a general manager to manage the company. The general manager can be of any nationality.

The shareholders of the LLC can choose whether to have a board of managers or not.

Public joint-stock company (PJSC)

There are greater corporate governance requirements, as one would expect, with a PJSC compared to an LLC. Since a PJSC is required to be listed it has to comply with the governance requirements of the relevant stock exchange. These include various disclosure requirements to be met and the publication of accounts and other statements. Emirates Securities and Commodities Authority (ESCA) has also issued a corporate governance code, adherence to which is mandatory for PJSCs.

Additionally, if new shares are offered, the existing shareholders have a pre-emption right before they are offered to the public (except when shares are being issued to "strategic investors" outside of the pre-emption regime).

Private joint-stock company (private JSC)

A private JSC must have a board of directors consisting of between three and 12 directors and each director's term is no more than three years (subject to re-election). From the directors, there must be a chairman and such chairman must usually be a UAE national.

The corporate governance requirements for a private JSC are less strict than a PJSC. Since private JSCs are not listed entities they are not bound by the same disclosure requirements as PJSCs, unless the private JSC voluntarily chooses to adhere to the corporate governance code which is mandatory for PJSCs.

(b) Within the Abu Dhabi Global Market free zone

There is no concept of a general manager, but a private company must have at least one director. The directors will be responsible for management and can bind the company individually as against third parties

Directors of companies in Abu Dhabi Global Market free zone are subject to increased and more detailed fiduciary duties (particularly around conflicts of interest and acceptance of benefits from third parties) compared to on-shore companies. Companies are also subject to increased administration, company secretarial compliance requirements and filings must be made with the Abu Dhabi Global Market Registrar.

A comparatively high level of information will be publicly available through Abu Dhabi Global Market (including annual accounts and names of directors).

United Arab Emirates - Dubai

United Arab Emirates - Dubai

a) Within Dubai and outside of the free zones

Limited liability company (LLC)

An LLC must:

  • Appoint a UAE-certified financial auditor before the end of its first year of business, and the company accounts must be certified by such auditor each fiscal year 
  • Hold a general assembly (shareholders' meeting) each year for all shareholders, and 
  • Appoint a general manager to manage the company. The general manager can be of any nationality.

The shareholders of the LLC can choose whether to have a board of managers or not.

Public joint-stock company (PJSC)

There are greater corporate governance requirements, as one would expect, with a PJSC compared to an LLC. Since a PJSC is required to be listed it has to comply with the governance requirements of the relevant stock exchange. These include various disclosure requirements to be met and the publication of accounts and other statements. Emirates Securities and Commodities Authority (ESCA) has also issued a corporate governance code, adherence to which is mandatory for PJSCs.

Additionally, if new shares are offered, the existing shareholders have a pre-emption right before they are offered to the public (except when shares are being issued to "strategic investors" outside of the pre-emption regime).

Private joint-stock company (private JSC)

A private JSC must have a board of directors consisting of between three and 12 directors and each director's term is no more than three years (subject to re-election). From the directors, there must be a chairman and such chairman must usually be a UAE national.

The corporate governance requirements for a private JSC are less strict than a PJSC. Since private JSCs are not listed entities they are not bound by the same disclosure requirements as PJSCs, unless the private JSC voluntarily chooses to adhere to the corporate governance code which is mandatory for PJSCs.

b) Within the Jebel Ali Free Zone Authority

Jebel Ali Free Zone Authority offshore company

A JAFZA offshore company must have a minimum of two directors, a general manager and a company secretary at all times.

The directors remain in office for a period determined by the shareholders.

There are no UAE residency requirements on the directors, general manager and company secretary of the offshore company. It will not be possible for the offshore company to obtain a UAE visa for any of its officers.

UK - England and Wales UK - England and Wales

UK - England and Wales

Limited partnership

A limited partnership must have a general partner (GP), who is the only partner with the authority to commit the partnership to a binding contract. Limited partners (the investors) cannot participate in the management of the partnership or they risk losing their limited liability status. Limited partners can be consulted on strategic issues and their consent can be reserved on constitutional and specific issues (generally through an Investor Advisory Committee) without prejudicing their limited liability. The GP will normally be a corporate SPV (single purpose vehicle), owned or controlled by the fund's sponsor. In joint venture limited partnerships, the GP may be jointly controlled by the joint venture investor/parties.

Limited liability partnership

Although a limited liability partnership (LLP) has its own legal personality distinct from its members, it has membership interests instead of share capital. These interests can be classified into different types in much the same way as share capital. An LLP can be run by a management committee appointed by its members. It can have a corporate managing member if desired (which can be a separate LLP).

Investment syndicate trust

The trust is run by trustees – normally consisting of two corporate trustees – owned by the sponsor/manager of the syndicate. The trustees generally delegate the day-to-day management of the property to a property manager who makes recommendations on key decisions, for example, purchase, sale, rent review and leasing.

Property unit trust

The trustee acts as the custodian and overseer of the fund, which will be run by a Financial Conduct Authority (FCA) authorized manager in the UK (of which England and Wales form part). For a non FCA-authorized unit trust, the position will be governed entirely by the Trust Deed and by the agreement with the asset manager, which will contain substantial investor protections on a wide range of issues.

Limited company

UK company law provides a comprehensive code regulating the rights and obligations of the company, its directors and its shareholders. If a private company has external shareholders (for example a private equity or venture capital investor), various detailed governance controls will be built into the constitution of the company and into the shareholders agreement to protect the position of investors.

Public limited company

In common with private limited companies, UK company law provides a comprehensive code regulating the rights and obligations of the company, its directors and its shareholders. Public limited companies are in certain regards subject to more stringent corporate governance requirements than private limited companies. If a public limited company has external shareholders (for example a private equity or venture capital investor), detailed governance controls will be built into the constitution of the company and into the shareholders agreement to protect the position of investors.

Safeguards apply in the case of a public limited company since, subject to compliance with the requirements of the FSMA 2000 (Prospectus) Regulations (which, with certain exceptions, require the production of a prospectus), a public limited company can offer its shares to the public. In practice, such an offering will either be made on a restricted basis to pre-qualified investors within the exemptions from the requirement to produce a prospectus, or in accordance with the rules of the relevant Stock Exchange with a fully compliant prospectus.

REIT – Real estate investment trusts

To qualify as a REIT, the shares of the company (or the principal in the case of groups) must be listed either listed on the Official List of the London Stock Exchange (or a foreign equivalent) or traded on a recognized stock exchange, which now extends to other London based exchanges, AIM and ISDX, throughout the accounting period. The listing/trading requirement is relaxed in a new REIT's first three accounting periods but a REIT can benefit from this relaxation only once. The REIT must comply with the Financial Services and Markets Act 2000 (FSMA) and the continuing obligations for listed companies imposed by the Listing Rules and the Model Code. There is a further requirement that shares are actually traded. Therefore, an investment in a REIT is generally liquid. For these reasons, REITs are often attractive to retail investors.

PAIF – Property authorized investment fund

There is no requirement for a PAIF's shares to be listed or traded on a stock exchange, so various listing requirements will not apply. However, PAIFs which are either a fund subject to the European Union's Undertakings for Collective Investment in Transferable Securities Directives (UCITS) or a non-UCITS retail fund are often preferred by retail investors because they are authorized and regulated by the FCA, thereby affording a level of protection for investors.

UK - Scotland

UK - Scotland

Limited partnership

A limited partnership must have a general partner (GP), who is the only partner with the authority to commit the partnership to a binding contract. Limited partners (the investors) cannot participate in the management of the partnership or they risk losing their limited liability status. Limited partners can be consulted on strategic issues and their consent can be reserved on constitutional and specific issues (generally through an Investor Advisory Committee) without prejudicing their limited liability. The GP will normally be a corporate SPV (single purpose vehicle), owned or controlled by the fund’s sponsor. In joint venture limited partnerships, the GP may be jointly controlled by the joint venture investor/parties.

Limited liability partnership

Although a limited liability partnership (LLP) has its own legal personality distinct from its members, it has membership interests instead of share capital. These interests can be classified into different types in much the same way as share capital. An LLP can be run by a management committee appointed by its members. It can have a corporate managing member if desired (which can be a separate LLP).

Investment syndicate trust

The trust is run by trustees – normally consisting of two corporate trustees – owned by the sponsor/manager of the syndicate. The trustees generally delegate the day-to-day management of the property to a property manager who makes recommendations on key decisions, for example, purchase, sale, rent review and leasing.

Property unit trust

The trustee acts as the custodian and overseer of the fund, which will be run by a Financial Conduct Authority (FCA) authorized manager in the UK (of which Scotland forms part). For a non-FCA-authorized unit trust, the position will be governed entirely by the Trust Deed and by the agreement with the asset manager, which will contain substantial investor protections on a wide range of issues.

Limited company

UK company law provides a comprehensive code regulating the rights and obligations of the company, its directors and its shareholders. If a private company has external investors (for example, a private equity or venture capital investor), various detailed governance controls will be built into the constitution of the company and into the shareholders’ agreement to protect the position of investors.

Public limited company

In common with private limited companies, UK company law provides a comprehensive code regulating the rights and obligations of the company, its directors and its shareholders. Public limited companies are in certain regards subject to more stringent corporate governance requirements than private limited companies. If a public limited company has external investors (for example a private equity or venture capital investor), detailed governance controls will be built into the constitution of the company and into the shareholders’ agreement to protect the position of investors.

Safeguards apply in the case of a public limited company since, subject to compliance with the requirements of the Prospectus Regulations 2005, 2011, 2012, 2013 and 2017 (which, with certain exceptions, require the production of a prospectus), a public limited company can offer its shares to the public. In practice, such an offering will either be made on a restricted basis to pre-qualified investors within the exemptions from the requirement to produce a prospectus, or in accordance with the rules of the relevant Stock Exchange with a fully compliant prospectus.

Public limited companies are also required by the Companies Act to have at least two directors and a company secretary.

REIT

To qualify as a REIT, the shares of the company (or the principal in the case of groups) must be either listed on the Official List of the London Stock Exchange (or a foreign equivalent) or traded on a recognized stock exchange, which now extends to other London based exchanges, AIM and ISDX, throughout the accounting period. The listing/trading requirement is relaxed in a new REIT’s first three accounting periods but a REIT can benefit from this relaxation only once. The REIT must comply with the Financial Services and Markets Act 2000 (FSMA) and the continuing obligations for listed companies imposed by the Listing Rules and the Model Code. There is a further requirement that shares are actually traded. Therefore, an investment in a REIT is generally liquid. For these reasons, REITs are often attractive to retail investors.

PAIF

There is no requirement for a PAIF’s shares to be listed or traded on a stock exchange, so various listing requirements will not apply. However, PAIFs which are either a fund subject to the European Union’s Undertakings for Collective Investment in Transferable Securities Directives (UCITS) or a non-UCITS retail fund are often preferred by retail investors because they are authorized and regulated by the FCA, thereby affording a level of protection for investors.

Ukraine

Ukraine

Limited liability company and additional liability company

On 6 February 2018 the Ukrainian parliament adopted the Law of Ukraine ‘On Limited Liability and Additional Liability Companies’ (LLC and ALC Law), which became effective on 17 June 2018. This law makes the corporate governance in limited and additional liability companies more liberal and progressive, and extend a number of issues that may be regulated by the charter.

The highest governing body of a limited liability company or an additional liability company is the general meeting of participants. This can resolve any issues relating to the company's activities and certain issues must be decided exclusively by the general meeting of participants. The participants, at their own discretion, may additionally determine in the charter other issues, which must be decided exclusively by the general meeting of participants. There is no requirement related to a minimal number of votes to be present for the general meeting of participants be quorate. At the same time, certain issues must be decided by the participants only unanimously. For the other issues, the participants may establish in the charter any other quantity of votes needed for adoption of a decision (in any way not less than a simple majority).

The participants may decide to establish a supervisory board for controlling and regulating the activity of a company’s executive body. Upon discretion of the participants the supervisory board may have the authorities to elect an executive body of the company and terminate its powers. The powers of the general meeting of participants, except for its exclusive competence, may also be vested in the supervisory board.

The executive body which carries out the company's day to day business operations and implements the resolutions of the general meeting of participants can be either a board of directors headed by a general director or an individual director. The board of directors/director is elected by the general meeting of participants or the supervisory board (if it is established and has respective authorities). The company's charter may limit the authority of the board of directors/director.

The company's finances are subject to review by an independent auditor (audit firm) upon request of a participant or participants holding not less than 10% of votes in the charter capital of the company.

LLC and ALC Law also provided for a possibility to conclude a corporate agreement (shareholders’ agreement), where the participants may stipulate the framework for effecting their corporate rights and powers (eg terms upon which a participant may/is obliged to sell or buy-out a participatory share). In addition, the participants may issue the irrevocable powers-of-attorney for effecting the obligations under the corporate agreement.   

Joint-stock company

The governing body of a joint-stock company is the shareholders' general meeting. This body can resolve any issues relating to the company's activities except for certain issues, which are exclusive competence of the supervisory board. At the same time, certain issues can only be decided on by the shareholders' meeting. The number of votes of a shareholder is equal to the number of shares held.

Decisions of the shareholders' general meeting are adopted by a simple majority vote of the shareholders present, although there are some issues which require a qualified majority of not less than three quarters of the votes of shareholders present at the meeting.

The shareholders' general meeting is quorate if shareholders holding more than 50% of the total number of votes are present.

Other governing and controlling body of a joint-stock company is the supervisory board. The establishment of a supervisory board is compulsory for public joint-stock companies and banks irrespective of a number of shareholders, and for private joint-stock companies, where the number of shareholders is 10 or more, unless all these shareholders are affiliated to each other. Otherwise it is optional. The members of the supervisory board are elected for the period not more than 3 years by the shareholders' general meeting and must be only individuals.

The executive body, which carries out the company's day to day business operations and implements the resolutions of the general meeting and supervisory board, can be either a board of directors or an individual director. The board of directors/director is appointed by the supervisory board or, if a supervisory board has not been formed, by the shareholders' general meeting. The company's charter may limit the authority of the board of directors/director.

The company's finances are subject to review by an audit committee or an independent auditor (audit firm) in case of review of annual financial reporting of a public joint-stock company. The members of the audit committee are elected by the shareholders' general meeting and must be individuals. The members of the supervisory body, the executive body and other bodies of the joint-stock company as well as persons who have no legal capacity are all barred from being members of the audit committee.

Partnership

The corporate governance of a partnership is set out in the partnership agreement.

A partnership may be managed collectively by all the partners or by one or more partners who are authorized by the others.

Commandite partnership

Only general partners may manage the partnership. Limited partners may not interfere with the general partners' management decisions.

United States

United States

US limited partnership

A limited partnership must have at least one general partner who manages the partnership and its assets. While certain key decisions can be submitted to the vote of the limited partners, the limited partners generally do not participate in day-to-day decisions affecting the partnership. If a limited partner were to participate in the management of a limited partnership, its liability protection could be lost.

US limited liability company

Generally, the operating agreement will describe how the LLC is managed, either by the vote of the members or by the manager. If the LLC is managed by a manager, there are often certain major decisions that are put to the vote of the members. Unlike corporations, there are not generally any formalities (such as corporate minutes) applicable to LLCs.

US general partnership

A general partnership is managed by the vote of its partners. The partners may designate a managing partner to oversee the day-to-day business of the partnership, and delegate certain powers and duties to the managing partner.

Zimbabwe

Zimbabwe

Property unit trust

The asset manager acts as the custodian and overseer of the fund, which will be monitored and overseen by the relevant regulators, that is the Securities and Exchange Commission.

According to the Zimbabwe Stock Exchange listing rules, property companies and listed companies which carry out certain property-related transactions are subject to additional disclosure requirements, principally relating to valuations. Further, property dealing companies may be subject to different treatment depending on the circumstances of each case.

The trustee’s duties are custody of the underlying securities and ensuring that the management company complies with the provisions of the trust deed. The trustee must be qualified under the Collective Investment Schemes Act to act as a trustee

Limited company

The Zimbabwean Companies’ Act provides a detailed synopsis of the rights and regulations of directors and shareholders of a company. The provisions of this Act apply to both the locally resident and foreign shareholders and directors. Further, the Memorandum and Articles of Association of the company will also set out such rights and obligations.

Public limited company

The Companies Act also provided the statutory rights and obligations of the shareholders and directors of the company. The obligations of the company and its officers are more onerous in respect of public limited companies regarding corporate governance, especially as it relates to public share offerings and listing requirements on the Stock Exchange.