The director of the enterprise is a hired employee and therefore has the same rights as all other employees of the enterprise, in particular, the right to resign. However, there are situations when the founders do not want to dismiss the director and do not give their consent. So how can a director resign without breaking the letter of the law?
Resignation of the director
The director is the sole executive body of the company and reports to the general meeting of participants and its supervisory board (in case is established) (items 3, 4, Art. 39 “On Limited and Additional Liability Companies” No. 2275-VIII of February 6, 2018 (hereinafter – Law No. 2275).
Therefore, in case of the director’s resignation before the expiry of the agreement (contract) or termination of the contract concluded for an indefinite period, he must first of all inform the participants, that is, initiate the general meeting of the members of the company within two weeks from the date of the resignation application under Art. 38 of the Labor Code (hereinafter – LCU).
The minutes of the general meeting of the participants, which records the decision to dismiss the director and appoint a new one, is be the basis for issuing an order of dismissal, the employment record to the director and making a final settlement with him.
It is also necessary to amend the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations (hereinafter – USR) by submitting a Statement of state registration of changes to the legal entity information contained in the USR (Form 3) approved by the Ministry of Justice No. 3268/5 dated November 18, 2016, and a copy of the decision by the general meeting of the company on changes made to the USR.
Until the changes to the USR are made, the director will formally remain in office.
Resignation of the director without the consent of the founders
What if the general meeting did not take place or the decision to dismiss the director was not taken or the director can not locate the participants at all?
The Ministry of Labor clarifies that in this case the director may exercise his right to resign on the basis of Art. 38 of the Labor Code. To do so, he/she must issue an order recognizing the resignation, indicating in it the reasons that make it impossible to resign in accordance with the established procedure on the basis of the decision of the general meeting of the company (letter of the Ministry of Social Policy No. 15/06/06 186-11 of January 12, 2011).
But first of all, the director must inform the founders of his/her desire to resign. That is, write a request for resignation and send it by registered letter with the description of the attachment and notification of delivery to the addresses of the founders specified in the constituent documents, or their actual place of residence.
If the letter has not been delivered and the actual location of the founder is unknown, documentary evidence of the inability to establish the founder's location is required. To do this, you should contact the law enforcement agencies with a statement on the search for the founder. If the location is notified, the director can sent the request for resignation by mail to a new address, wait for the receipt of the notification of receipt or return of the letter not delivered to the addressee. And after that, the director can issue a dismissal order and make a corresponding entry in his employment record based on this document.
In this case, you should also be notified by letter that the person no longer fulfills the duties of the director, statistical authority, tax office and banking institution where the accounts are opened.
Changes to the USR can only be made upon the decision of the general meeting to change the director. In order to do this without the consent of the stakeholders, the director will have to go to court to sue the employing organization requesting the termination of the employment contract and amending the USR (letter of the Ministry of Social Policy No. 147/06/06/13-13 of August 1, 2013).
As practice shows, the court takes the side of the employee and considers the inaction of the enterprise, its participants regarding termination of employment as unlawful, which violates the claimant's labor rights as an employee.
The person holding the position of director must provide evidence that he/she has made every effort to convene the general meeting of the members of the company, but they did not take place (the founders of the enterprise were duly notified of its holding, letters of delivery were sent to the participants) or that the question of the resignation was included in the agenda of the general meeting of the company, however, the meeting did not take place due to the absence of a quorum, (resolution of the High specialized court of Ukraine for civil and criminal cases No. 6-6793св11of May 25, 2011, the decision of the Darnytskiy district court of the city of Kiev of April 27, 2017 in case No. 753/7773/16-ц).
On the basis of a court decision, the director's powers are terminated, and the company is obliged to record the dismissal of the director in his employment record and register changes in the USR.
Therefore, the director has the right to be resign without the consent of the founders. But in this case, the order of dismissal should be clearly followed, the documents confirming the obstruction of the founders' dismissal or inaction should be prepared and the legal redress should be sought.
