International corporate governance: corporate entities and board structures | Practical Law

International corporate governance: corporate entities and board structures | Practical Law

An update on corporate entities and board structures in different jurisdictions, drawn from the PLC Cross-border Corporate Governance and Directors' Duties Handbook 2010, which answers key questions about corporate governance from the perspective of practitioners in 23 jurisdictions.

International corporate governance: corporate entities and board structures

Practical Law UK Legal Update 6-502-8699 (Approx. 4 pages)

International corporate governance: corporate entities and board structures

by PLC Cross-border
Published on 30 Jul 2010
An update on corporate entities and board structures in different jurisdictions, drawn from the PLC Cross-border Corporate Governance and Directors' Duties Handbook 2010, which answers key questions about corporate governance from the perspective of practitioners in 23 jurisdictions.
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What are the main corporate entities in a given jurisdiction? Is a unitary or dual board structure required? Can the CEO be the chairman? These three questions are commonly asked in a cross-border business environment. The table below briefly answers these questions in relation to ten jurisdictions, for example, China, France, Germany and Russian Federation. For information in relation to other jurisdictions, see the fully revised and updated PLC Cross-border Corporate Governance and Directors' Duties Handbook 2010, a multi-jurisdictional guide to corporate governance law and lawyers worldwide. Answers to questions can be compared across a number of jurisdictions by using the Country Q&A tool.

Summary of corporate structures in certain jurisdictions

Different corporate entities, which require either a unitary or dual board structure, are used across different jurisdictions. A comparative table, summarising main corporate entities in ten jurisdictions and including information relating to how boards are structured and restrictions on certain board appointments, is set out below. This information is drawn from the latest PLC Cross-border Corporate Governance and Directors' Duties Handbook 2010.
Jurisdiction
Main corporate entities
Does it have a unitary or dual board structure?
Can the chief executive be the chairman?
Canada
Business corporations formed under the federal Canada Business Corporations Act (CBCA corporations) or an equivalent provincial statute.
For CBCA corporations, unitary.
For CBCA corporations, the same person can be both chairman and chief executive, although for publicly-traded companies this is increasingly uncommon.
China
Limited liability company (LLC).  
Joint stock company (JSC).
Companies generally have a two-tiered board structure comprising a board of directors (or a sole executive director without a board), and a board of supervisors (or one to two supervisors without a board). 
Yes.
France
Société anonyme (SA). 
Société par actions simplifiée (SAS). 
Société à responsabilité limitée (SARL). 
An SA can have a unitary or dual board structure. Unitary board structures are more commonly used.
Yes in a unitary board structure, depending on the bye-laws. In a dual board structure, a management board member cannot simultaneously sit on the supervisory board. 
Germany
Limited liability company (Gesellschaft mit beschränkter Haftung) (GmbH).  
Stock corporation (Aktiengesellschaft) (AG).
A GmbH must have a unitary (management) board. It must have a dual board structure (management and supervisory boards) if it employs more than 500 employees.  
An AG must have a dual board structure. 
Generally, simultaneous membership in management and supervisory board is prohibited.
Ireland
Private limited liability companies. 
 Public limited liability companies.
Unitary.
Yes, although in listed companies it is recommended that the same person should not assume both roles.
Italy
Limited liability company (società a responsabilità limitata) (Srl).  
Share company (società per azioni) (SpA).
Both unitary and dual boards are available.
Yes, although in a listed company if the chairman is the CEO, a head independent director should be appointed.
Russian Federation
Limited liability companies (obschestvo s ogranichennoy otvetstvennostiyu) (LLC).  
 Joint stock companies (aktsionernoye obschestvo) (JSC). 
Unitary or dual board , except that an open JSC with more than 50 shareholders must have a supervisory board.
The general director cannot serve concurrently as the chairman of the supervisory board.
Switzerland
Stock company (société anonyme/Aktiengesellschaft/società anonima). 
Limited liability company (société à responsabilité limitée/Gesellschaft mit beschränkter Haftung/società a garanzia limitata).
Companies have a unitary board structure (that is, a board of directors (conseil d'administration/Verwaltungsrat/consiglio d'amministrazione) presided by a chairman). 
The board determines whether a person can simultaneously be chairman of the board and chief executive officer (CEO), based on the company's needs and the availability of senior management (SCBP).
UK
Private limited companies.  
Public limited companies.
Unitary.
Yes, although it is recommended that the same person should not assume both roles, especially in relation to listed companies.
US
(The answers relate to federal securities and Delaware law.)
Private corporations. 
Public corporations.
Almost always unitary.
Yes, although separation of these roles is seen as good governance, particularly in the current economic climate.
For further information on corporate entities and board structures, see the PLC Cross-border Corporate Governance and Directors' Duties Handbook 2010, a multi-jurisdictional guide to corporate governance law and lawyers worldwide.