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The Administration Board of the Enterprise

 

September 27, 2024

 

By Thals R Volmar

 

 

Notice: Like many articles the author has written on the subject of business, mainly commercial, this article is new. That said,oncepts that are already familiar at the management and administration level are revised and defined from a deep reflection angle. Students and professionals who want to integrate any part of this article into their work should be careful, otherwise they must understand the subject and be able to explain and support it.

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The administration board of the enterprise, AB, is composed of the general administration and the supervisory board. The theme of administration board has its foundation in the framework of a series of reflexions initiated by the author on the functioning of the enterprise. The steps aim to promote a model of administration and business management that is easy to operate for smooth operations. We have often heard of the board of directors of the enterprise, however, this notion seems ambiguous at the theoretical and practical level. The board of directors of an enterprise is the subject of legislation, that said, countries have developed laws to allow entrepreneurs to build their businesses within the standards of laws.

 

Indeed, each type of enterprise has a legal structure that takes into account the legislation in force. Entrepreneurs who are called upon to build any business must first choose its form. Speaking of the board of directors, the legislation is diverse and presents nuances of divergence from country to country and are not entirely strict on the constitution of the board of directors. The latter should be carried out based on the size, type and place occupied by the enterprise on the national and/or international market. We have often heard of the board of directors in large joint-stock companies and large companies that have opted for a structure to allow them to administer their business wisely.

 

On this line of thinking, we understand that a small enterprise does not need a board of directors; and any other enterprise that has a large enough structure could have a board of directors, and yet this is not the case. The board of directors should not be a conflicting mechanism although it is clearly defined in the company's articles of association and/or bylaws, it should be a body that should allow any enterprise not only smooth operations, but also to integrate it into it as an administrative body. The enterprise cannot have several executive heads once we know, in practice, that it has directors with delegated powers who act on a daily basis to ensure the success and survival of the enterprise.

 

in this context, we supplement the theme of board of directors with an administration board. As we said at the beginning, the AB consists of the general administration and the supervisory board. The last concept is not entirely new since in Germany, the problem of board of directors has already been raised  and the supervisory board has already been decided. However, we have compensated for the shortcomings to allow this concept a general scope. The administration board of the enterprise, by definition, is the aggregated administrative body established by the chairman or the majority shareholder or the majority partner or the owner of the enterprise and having dual mission, that of monitoring and that of administering the enterprise, and having to lead the latter on the path to success and sustainability.

 

The general administration, then plays an active role while the supervisory board plays a passive role. The supervisory board works hand in hand with the general administration in terms of advice and control and cannot, under any circumstances, be an executive body that can engage the enterprise in any business. The supervisory board may consist of natural and/or legal persons - consultants, consulting firms, agencies, etc. - and must have a secretary whose tasks are the collection of data from the management board, coordination, etc.; the functions of supervisory board of the enterprise must be defined in advance in the enterprise's articles of association and/or bylaws and must be simple and consistent as far as possible. The supervisory board has a fiduciary duty towards the chairman or the majority shareholder or the majority partner or the owner or the shareholders or the partners.

 

in the case of an enterprise that does not have a majority shareholder or partner, it must designate or choose at the general meeting a person to fulfill this function. The supervisory board is at passive if it consists of resource persons who have permanent seats, however, it is at acute passive if it consists only of representatives of the shareholders or partners. Therefore, the supervisory board, by definition, is the fiduciary body responsible for monitoring the actions, as the case may be, the performance and development of the enterprise on the one hand, and for providing advice to the general administration and/or the management board on the other hand. The supervisory board of the enterprise can make recommendations, can participate in the development of objectives and policies, etc., of the enterprise, but it should not be a decision-making body.

 

In short, we are not removing the theme board of directors, however, we have reformulated it under the concept of management board. The management board of the enterprise, by definition, is the set of executives or directors appointed by the general administration and who have delegated powers to help it manage the enterprise for its smooth running and conrete results. In fact, the management board is made up of the general administration and its senior menagement. They manage the day-to-day operations of the eneterprise.