About the Operation of a Limited Liability Company (LLC)

The mere thought of starting a business is already an important step toward the business world. If you have decided to establish your own company, here is some useful information regarding the operation of an LLC.

The highest governing body of an LLC is the General Meeting of Members, which must be convened at least once a year by the managing director or members representing ¼ of the share capital, according to the rules set out in the founding document (articles of association). If no provisions were made at the time of establishment, the invitation must be sent by registered mail at least 10 days prior to the scheduled date of the General Meeting, specifying the agenda.

The General Meeting is responsible for making decisions on the strategic matters of the LLC (e.g., approval of the financial statements, appointment of the managing director, distribution of dividends, exclusion or admission of members, managing director’s powers, amendment of the founding document, increase or decrease of the share capital, etc.).

The General Meeting has a quorum if the absolute majority of the members and shares (company interests) are represented. However, for amendments to the founding document, the unanimous consent of all members is required, unless otherwise stated in the founding document.

A rule states that each share entitles the holder to one vote, which can be exercised by the members in person or, if permitted by the founding document, through correspondence. The law also allows the use of technological means (e.g., videoconference, email, etc.), but the relevant rules must be previously established.

A resolution that is unlawful or contrary to the provisions of the founding document may be challenged within 15 days by a member who did not attend the meeting or who voted against the resolution and requested that their position be recorded in the minutes.

In a single-member LLC, there is no General Meeting, so the founder alone makes decisions on the company’s key issues. In the case of a single-member LLC, the procedural rules required for a General Meeting do not apply, so there are no rules for issuing or content of invitations or for voting. The only requirement is that the sole member must document their decisions in writing.

According to the law, the sole member can hold employee status within their own company.

The management of the LLC and its legal representation are carried out by one or more managing directors, selected either from among the members or from third parties.

The managing directors exercise their representative rights independently or jointly, and they are required to sign on behalf of the company in the manner and form specified in the signature specimen.

Members are free to transfer their shares to each other, but transferring shares to third parties is only possible if it is approved by a resolution of members representing ¾ of the share capital.

Starting a business today is a serious challenge, but a good understanding of the market, a well-thought-out business plan, perseverance, the right attitude, and involving the right professionals will bring the desired success.