All companies must have a board of directors, but can manage without a managing director.

In a regular limited liability company, it is up to the company's general meeting to decide whether the company should have a managing director. In other words, it is not mandatory to have a managing director in a limited liability company. This is in contrast to a public limited company (ASA), where a managing director is mandatory.

The decision to have a managing director or not must be viewed in the context of the board's duty to ensure that the business is organized in a responsible manner. Typically, there will be little need for a managing director in cases where the company is straightforward and perhaps has only one shareholder who also acts as the sole director of the company.

The general manager is appointed by the board unless the articles of association stipulate that this shall be done by the general meeting.

Several daily managers?

The Companies Act allows for a company to have several managing directors. In such cases, this must be specified in the articles of association. When there are several managing directors, they can either share areas of responsibility or each have full authority as managing director.

General manager and board member at the same time?

There is no prohibition against holding the position of managing director and at the same time serving on the board, or possibly being chairman of the board. This is very common for the many small limited companies in the country. Nor is there any requirement that the managing director be a member of the board. It is often the case that the managing director participates in board meetings, but without being a member of the board.

General manager or managing director?

The Companies Act uses the term "daily manager." However, there is nothing to prevent one from using the more old-fashioned term "managing director." The provisions of the Act regarding daily managers apply to anyone who has the task of managing the company, regardless of their title.

If you have any questions about the role of the general manager and the board of directors, the lawyers in our corporate law practice group will be happy to assist you.