Appointing a Foreign National as Chairman of the Board of Directors

A board of directors ordinarily elects a Chairman to coordinate its activities. But what happens when the candidate in question is a foreign national? This article examines the procedural aspects involved in lawfully formalising the relationship between a legal entity and a foreign individual serving as Chairman of the Board of Directors.

Corporate Status

The starting point for understanding the applicable procedure is the correct determination of the Chairman's legal status. The Chairman of the Board of Directors is not a member of the company's executive body; rather, the Chairman constitutes a separate governing body within the company's corporate governance framework. The Chairman's activities do not constitute an employment function within the meaning of the Labour Code of the Russian Federation (Article 11 of the Labour Code). Neither the Joint-Stock Company Law nor the Limited Liability Company Law requires the conclusion of a civil law contract with the Chairman, since the position is filled by election by a simple majority of the board (unless the company's internal documents provide otherwise). The Chairman's powers and the manner of exercising them are governed by the company's articles of association and internal regulations.

However, a foreign national cannot lawfully carry out any activity on Russian territory without the requisite authorisation documents. Accordingly, in order to establish the scope of powers, applicable terms, and mutual obligations, it is necessary to enter into a civil law agreement.

The question then arises as to who will act as the company's signatory to that agreement. As a general rule, this is ordinarily the company's General Director. However, where the agreement is to be concluded with a person who is themselves part of the governing body, it is common practice to delegate signing authority to another individual in order to avoid a conflict of interest. If the general meeting of participants (founders) has resolved to enter into the agreement and has authorised a specific participant (founder) to sign it, that person will act as the company's authorised signatory.

An agreement with a member of the board of directors is frequently treated as a related-party transaction, which means that prior approval must be obtained from the general meeting of participants or from the board of directors itself — with the interested party excluded from the vote. The subject matter of such an agreement typically covers services relating to the organisation of board activities, advisory functions, or representative duties, but expressly excludes any employment function within the meaning of the Labour Code.

Once all corporate formalities have been completed — that is, once the Chairman has been duly elected and the transaction has been approved — the company may proceed with obtaining the necessary authorisation documents for the Chairman's lawful activity in Russia.

Highly Qualified Specialist Work Permit

Standard employment authorisation documents — such as a general work permit or a work patent — fall outside the scope of this section, as they are intended for non-executive employees rather than senior management, a category to which the position of Chairman of the Board clearly belongs.

For senior management positions, Russian legislation provides for a special status: that of a Highly Qualified Specialist (HQS), established under Article 13.2 of Federal Law No. 115-FZ "On the Legal Status of Foreign Nationals in the Russian Federation." Under this framework, the company is not required to obtain a preliminary permit to attract foreign labour; it may apply directly to the competent migration authorities with an application for the issuance of a work permit for the specialist concerned.

The principal features of the HQS work permit lie in its duration — it is issued for a period of up to three years in accordance with the terms of the contract — and in the associated benefits. Notably, both the specialist and their family members are entitled to obtain a permanent residence permit through a simplified procedure. Family members are also eligible for accompanying visas valid for the duration of the HQS work permit.

Upon issuance of the HQS work permit, the employer becomes subject to an obligation to file quarterly notifications confirming salary payments. Failure to comply with this requirement gives rise to administrative liability and financial penalties.

Conclusion

The process of appointing a foreign national as Chairman of the Board of Directors is a complex procedure that sits at the intersection of corporate and immigration law. Internally, the company must ensure that the Chairman is duly elected, that the related-party transaction is properly approved where required, and that all relevant corporate formalities are observed. In dealings with state authorities, the principal mechanism is obtaining of an HQS work permit for the Chairman. Adherence to these rules and requirements is what ensures the legitimacy of a foreign executive's presence and activity within a Russian company.

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