A subject of economic relations organized on the basis of a voluntary agreement of several persons or organizations.
The capital of a joint-stock company is formed through the issue and sale of issued shares. The fundamental purpose of a corporation is to conduct business activities that are aimed at obtaining maximum profits in the interests of shareholders.
A joint-stock company is a legal entity whose capital consists of contributions from shareholders and founders. Shareholders are not liable for the JSC's obligations, due to which their possible losses are limited only by the value of previously acquired securities.
The founders of the corporation are responsible for the performance of the company in the amount of the share contribution contributed to the authorized fund. The main governing body is the general meeting of shareholders. The organizational structure of the joint-stock company is complex, but membership, regardless of share, is reliable.
A share is a financial document that confirms the shareholder’s contribution to the authorized capital of the company and gives him the right to:
- receiving part of the profit (dividend);
- participation in enterprise management;
- receiving a property share if the organization is declared bankrupt or liquidated.
Joint stock companies are represented by two main types.
- Open joint-stock companies (OJSC).
- Closed joint stock companies (CJSC).
Such structures can function in any field of activity: industrial, commercial, intermediary, banking, insurance, etc.
Types of shares in JSC
According to the form of assignment of income, shares of joint stock companies can be divided into two types:
- simple;
- privileged.
In the first case, security holders have:
- the right to vote during general shareholder meetings (one vote = one share. The more securities a shareholder owns, the more significant his vote during meetings);
- the right to receive dividends (part of the profit) in the amount equivalent, the amount of which depends on the results of the corporation’s work and is no longer guaranteed.
Joint-stock companies can independently manage their capital due to the fact that shareholders do not have the right to demand that the company return the deposited amount of funds. If a company fails to pay dividends or stockholders receive new shares instead of cash, shareholders cannot sue for the money or declare the company bankrupt. Each of the shareholders is a co-owner of the capital of the joint-stock company. Each of them voluntarily assumed responsibility for possible risks associated with losses of the enterprise or its bankruptcy. By decision of the meeting of shareholders, the corporation has the right to distribute only part of the profits, leaving the undistributed share at its disposal.
Owners of preferred shares cannot participate in voting during shareholder meetings, but this type of securities gives them the right to receive guaranteed income, regardless of what results the company achieves. In the event of a company's bankruptcy, holders of preferred shares receive the right of first priority in payment of the par value of the securities.
Joint-stock companies maintain an accounting book (register) in which data on the holders of registered shares is necessarily recorded. Registration is required not only upon first receipt, but also upon subsequent resale of securities. This allows you to create a kind of insurance against the purchase of a controlling stake (more than 51% of all issued shares) by people whose financial investments are of dubious origin. Bearer shares are allowed for free circulation on the stock market.
Investments serve as the engine for the development of any business. One of the ways to raise funds is to place securities.
Legal regulation of PJSC activities pursues the goals of achieving maximum attractiveness of financial markets.
What is a public joint stock company?
The legislation does not contain a comprehensive concept of a public joint stock company. However, the signs provided for in Art. 96 Civil Code and Art. 7 of the Law “On JSC” will serve as the basis for its determination.
Features of PJSC
A public joint stock company has all the features inherent in a joint stock company, regardless of its type.
These include the following characteristics:
- Authorized capital divided into shares, confirming their liability rights. The establishment of such a legal entity does not imply other methods (shares or shares).
- Participants respond with the value of their shares. The status of a shareholder implies liability only for the unpaid portion of the shares.
This type of joint stock company is characterized by its own characteristics:
- The corporate name of a public joint stock company must indicate its public status. In practice, this requires the presence of the word “public” before the words “joint stock company”. Legal regulation requires this to protect the interests of investors. It is important that they understand the applicable rules and the minimum and maximum risks before making their investments.
- They may place shares and other securities convertible into shares through public subscription, in accordance with the rules provided for by the legal regulation of financial markets.
Based on the characteristics, we can obtain the following definition. A public joint stock company should be understood as a legal entity whose authorized capital is divided into shares owned by shareholders who are liable for obligations within the value of their contribution to the authorized capital.
Its shares are distributed through open subscription, and the company name contains an indication of its public status.
PJSC is not an independent organizational form, but a separate OKOPF code is provided for it. This indicates that it stands out from other joint stock companies.
What are the positive aspects of PJSC?
Only a small number of large companies in the modern world do not have public status.
This distribution is explained by the main advantages associated with the ease of attracting financial resources on exchanges and other platforms.
Other advantages include banks being more willing to lend to these businesses. They often accept PJSC shares as collateral.
The disadvantages of this form appear in cases of small enterprises. Strict legal regulation and frequently submitted reports require the expenditure of significant financial resources, which small and medium-sized businesses may not always have.
Methods of formation of PJSC
There are 3 ways to form a public joint-stock company:
- Creation. In this case, a new organization is established without succession.
- Reorganization in any form. It involves the implementation of procedures provided for by law, the result of which is the commencement of the activities of a PJSC, which is the legal successor of the original legal entities.
- Situations when a non-public JSC acquires public status. This decision provides for a minimum threshold of 75% of shares of each type (it can be set higher by the charter). You will also need to fulfill other requirements for PJSC.
Requirements applicable to PJSC
The actual ability to attract unlimited financial resources requires special legal regulation. Special requirements accompany both the creation and activities carried out by a public joint stock company.
Creation requirements
A PJSC is created based on the decision of future shareholders. In addition to data typical for other societies, it must decide on the appointment of a registrar.
Only a professional participant in the securities market has the right to carry out such activities. This is due to the fact that it is necessary to ensure maximum transparency in maintaining the register.
The agreement on the creation of a PJSC, which is concluded by the participants, determines the authorized capital, categories of shares to be placed and the procedure for their payment. This document is valid until the end of the period established for payment of shares.
The minimum authorized capital of such a JSC is 100 thousand rubles.
Special requirements for the charter
In addition to other requirements relating to a joint stock company, the charter of a PJSC must contain the following data:
- Full as well as abbreviated corporate name of the organization, indicating its publicity status.
- Mandatory presence of a board of directors, the procedure for its activities and powers. This is due to the fact that the company has a significant number of shareholders, whose rights may be significantly affected without the presence of an intermediate link between them and the executive body. The Board of Directors is a permanent body, which includes only individuals. The minimum composition of this body may include 5 members. If the number of voting shareholders is over 1 thousand, then the minimum size of the board of directors is 7 people, and if the number of such shareholders is over 10 thousand - 9.
- Lack of opportunity for the general meeting of shareholders to expand its competence. This is due to the fact that the management of large companies is complex, and many ordinary shareholders may not have the relevant competence. Therefore, management functions are carried out indirectly, through the board of directors and the governing body, acting under the control of an intermediate structure. The effectiveness of the latter is revealed by the reporting of PJSC.
The provisions of the charter relating to the limit of shares that can be owned by one person, as well as restrictions on their sale, are considered invalid.
If we are talking about transferring a non-public JSC into a public one, then the provisions of the charter must be adapted to the new requirements.
However, the greatest difficulties are not associated with correctly filling out all the fields of the registration application and entering the required code for the relevant inspection. Large expenses will require a significant amount of information that will have to be processed during the work of the PJSC.
Requirements for PJSC in the course of its activities
The documents of a public joint-stock company are carefully checked not only during the state registration process, but also throughout its entire activity. At the same time, a mandatory procedure for publishing certain materials is established.
The annual reports of a PJSC, including accounting and financial statements, as well as data on securities, are subject to disclosure. The Law “On the Securities Market” (Article 34) specifies these provisions and requires the disclosure of quarterly reports.
Based on these provisions, consolidated accounting documents for every 3 months are subject to publication.
A message about the place and time of the general meeting of shareholders, boards of directors and their decisions should be publicly available.
In addition, we are talking about the formation and termination of powers of executive bodies, approval of major transactions, approval by the issuer of internal regulations, placement and repurchase of securities, as well as the recommended amount of dividends and the procedure for their payment. This list includes more than 50 items, which are united by the fact that they reflect data on the financial well-being of the PJSC.
Compliance with these requirements should indicate the openness of the company, making it more attractive to investors.
An organization may be exempt from publishing a number of information provided it submits a reasoned application. Requirements for this include ceasing publicity status.
The familiar abbreviation OJSC began to fade into oblivion - according to Federal Law No. 99 of 05/05/14, this organization is being replaced by public joint-stock companies. It’s worth figuring out whether there are differences between OJSC and PJSC, what are the characteristic features of this form of organization of activity, and who can now become a shareholder. And today we will talk about the number of participants in a public joint-stock company, governing bodies, as well as how to open a public joint-stock company (it).
Public joint stock company as a type of legal entity
Concept and essence
In fact, a PJSC is a complete analogue of an open joint-stock company - now it is a more specific form of organizing activities, indicating the degree of publicity.
PJSC (Public Joint Stock Company) may differ:
- Choice of activity.
- Number of shareholders.
- Management organization.
In all other cases, all PAOs have similar features. The features that characterize a public joint stock company are quite specific and cannot be confused with other forms of organizing activities.
Read about the joint stock company below.
The video below talks about how joint stock companies are being replaced by PJSCs and similar organizations:
Characteristics
The first thing that distinguishes a PJSC from and several other forms of organization of activities is the presence of shares. At the same time, it also has them, but here PJSC has its own characteristics.
Two characteristic features of PJSC:
- Free sale of shares.
- Unlimited number of shareholders.
A public joint stock company (PJSC) also has its pros and cons:
The disadvantages of this form are liability for obligations with personal property for the debts of the joint-stock company and the need for an external audit of activities every year. It is important to know that personal liability directly depends on the size of the shareholding.
This form of organization has much more advantages - in fact, any shareholder is a co-owner of the business. Anyone can become a member of a PJSC with small investments, without having any entrepreneurial skills.
For the main initiators of the creation of a public joint stock company, this approach to organizing activities makes it possible to attract additional material resources to the business, maximizing the chances of successful development of the enterprise.
A public joint stock company is somewhat different from other forms of entrepreneurship in its management bodies. Such companies now have additional opportunities.
Controls
The supreme governing body is the general meeting of shareholders. In PJSC their meetings are now forced to be attended by registrars or notaries. Depending on the type of activity, the size of the company and the presence of subsidiaries, a different structure of management bodies is possible.
The basis of the management structure looks like this:
- General Meeting of Shareholders
- Supervisory Board (Directors)
- CEO
- Executive Directorate
- Audit committee.
The structure can be more ramified - several directors are legally allowed. It is also possible for legal entities to participate in the management bodies.
Currently, the number of members of a collegial governing body cannot be less than five. All members of the board cannot participate with their shares during decision-making at the general meeting of PJSC participants. These aspects are usually reflected in the constituent documents.
Read below about the constituent documents of a public joint stock company, the number, composition and responsibility of participants.
A specialist will tell you about PJSC registration in the video below:
Constituent documents and participants
The documents of the PJSC and its corporate name legislate the need to indicate the publicity of the organization. The main constituent document of a PJSC is the charter of the organization, which defines the full and abbreviated name of the company, the rights of shareholders, the size of the authorized capital, the management structure and much more.
Previously, the opportunity for preemptive acquisition of shares by persons who were already their holders was available to OJSC participants. Public joint stock companies are now guided only by federal laws; now they cannot provide for such purchase features in their charters. This gives anyone the opportunity to purchase shares without regard to existing shareholders.
Shareholders of PJSC have the same rights as participants of open joint-stock companies. This does not depend on the size of the shareholding. They can:
- Receive dividends
- Study a number of documents
- Be part of the governing bodies
- Manage your own shares
- Participate in the general meeting of shareholders
- In the event of liquidation of the PJSC, claim part of the property.
At the same time, the participants also have responsibility - the debts of the PJSC apply to its participants according to the volume of their shareholding. Members of the organization are responsible with their personal funds if the property of the PJSC is not enough to pay off debt obligations. At the same time, the personal obligations of shareholders do not play a role for the joint-stock company; the PJSC is not responsible for the debts of its participants.
Read below about the minimum authorized capital of a public joint stock company.
Capital Formation
The capital of the PJSC is provided by its shareholders in different proportional shares. For a public joint stock company, the minimum authorized capital is set at 100,000 rubles. Property contributions are also acceptable - their value is determined by an independent appraiser.
According to changes from 2014, now 3/4 of the authorized capital must be paid before registering a PJSC. The rest is due throughout the year.
The public joint stock company replaced the OJSC. New nuances have appeared in this organizational form of activity, but the principle remains the same - shareholders form capital, have voting rights and the opportunity to receive dividends. They also retained responsibility for repaying the debt obligations of the joint-stock company. The management structure has the opportunity to branch out, and the openness of data has become even more public.
Until the full amount of the authorized capital is paid, it is impossible for a PJSC to organize an open sale of its shares.
This video will tell you what joint-stock companies can hide:
Both for the state and for society as a whole, the division of persons into individuals and legal entities has special importance. Moreover, it is a fundamental factor for many articles of the Civil, Administrative, Labor and other codes of the Russian Federation.
Comparison of a legal entity and an individual
In order to take into account the interests of individuals as much as possible, you need to know whether this person is an individual or a legal entity. Legal capacity, risks, properties - for individuals and legal entities many differences. So, first let's look at these two concepts.
Individual is a person, with or without citizenship, who has responsibilities and rights simply because he exists. By virtue of his birth, he has legal capacity, and legal capacity is determined by his age. Legal capacity and legal capacity can only be limited by a court decision, or in accordance with the law.
Entity is an organization that has been registered in accordance with all the rules defined by law. This organization may have as its main goal both making a profit and simply working for a society or idea.
Legal entities, as a rule, have an organizational form. So, the most common form is an LLC, but a legal entity can also be a joint stock company, etc.
Let's consider the main differences between an individual and a legal entity.
- Emergence. Thus, an individual arises at the moment of his birth, an organization at the moment of its registration.
- Capacity. The organization is valid from the moment of its registration until the moment of liquidation. An individual can be either partially or fully capable depending on age and medical indications.
- Responsibility. A company can only be brought to civil and administrative liability; in addition to the above, a person can also be held criminally liable.
- Termination of activities. An individual ceases to exist only at the time of death, a company - after the completion of its liquidation process.
Advantages of opening an LLC
A limited liability company is considered the most optimal organizational form when creating a company among entrepreneurs. Let's look at the main positive aspects of creating an LLC.
OOO - the simplest organizational form of all possible for opening an organization. However, even it has some disadvantages, which, compared to the advantages, do not seem so significant.
Thus, the number of company members cannot exceed 50 people. If the number of participants goes beyond this limit, then the entrepreneur must reorganize the company. Moreover, if the management structure of an LLC changes, then each change must be accompanied by amendments to the constituent documents.
Closed list of non-profit organizations
On September 1, 2014, the Civil Code of the Russian Federation entered amendments regarding non-profit organizations. In particular, a special closed liver for non-profit organizations was created.
Thus, non-profit organizations that were founded before September 1, 2014 were required to bring their name into compliance with this list at the first opportunity to make changes to the constituent documents.
This list includes the following types of non-profit organizations:
- , including charitable ones;
- cooperatives (for example, gardening or garage cooperatives);
- public organizations (political parties, territorial self-governments, etc.);
- unions (for example, commercial and industrial);
- homeowners associations;
- Cossack societies;
- communities;
- autonomous non-profit organizations;
- religious companies;
- public legal organizations.
The changes that were made to the Civil Code of the Russian Federation are primarily related to the fact that before them there was confusion in the forms of non-profit companies. Thus, the list of non-profit companies allowed for registration was expanded, and each form had its own rules.
The changes also affected the provision of profit-making by non-profit organizations. They were allowed to receive income, but for this the organization must have property worth at least 10 thousand rubles.
Similarities and differences
In other forms, conducting an organization's activities appears to be a more complex process. OJSC, PJSC, CJSC have both disadvantages and advantages in relation to LLC. Let's look at the main ones.
Like LLCs, CJSCs, OJSCs and PJSCs, they accept as the main constituent document charter. In the case of a closed joint stock company, the registration process is more complex and involves not only making an entry in the Unified State Register of Legal Entities, but also registering with the FSFM (Federal Service for Financial Markets) for the purpose of issuing shares. The authorized capital of a closed joint stock company, unlike an LLC, does not consist of shares, but of the number of shares of participants.
The number of participants in a CJSC can be any, as in OJSC and PJSC. LLC implies a number of participants of no more than 50 people. You can sell a share in an LLC based on the minutes of the general meeting of participants, while in a closed joint-stock company a participant must sell shares to other community members.
In the case of an OJSC, everything is a little simpler: when leaving the company, a participant can sell shares both to its other participants and to complete strangers.
As a rule, when publishing about constituent documents there is no need to commit, while when creating a closed joint-stock company, publication of open reporting is required. OJSC, like LLC, does not imply publications.
PJSC is the least common form of non-profit organization only because the authorized capital of the company must be 1000 times the minimum wage or more. There are no restrictions on the number of participants in PJSC. It is not obliged to publish reports publicly.
Thus, it is quite difficult for an inexperienced specialist to understand all aspects of the activities of the above-mentioned organizational forms of enterprises. To summarize, we can conclude that an LLC is suitable for small organizations that do not intend to issue shares and also scale their activities. If an entrepreneur has a really big business in mind, then a joint stock company is more suitable for him.
Registration procedure and subsequent procedures
In order to start activities, regardless of the form of organization, the enterprise must be registered. Registration is a complex procedure and requires the entrepreneur to go through mandatory stages, regardless of the chosen form of ownership.
Thus, a package of documents for registration must be submitted to the Federal Tax Service. Documents are provided either personally by the entrepreneur or sent by mail. Also, one of the most common methods of submitting documents is electronic document management.
The applicant for registration of any of the above-mentioned legal entities can be either the founder or the head of the future organization. Each document submitted to the tax office for registration, if it contains more than one sheet, must be bound and numbered, and also certified either by the founder himself or by a notary.
In order to register a legal entity, it is necessary to pay a fee in the amount of 4 thousand rubles. The date of submission of documents is the date when the Federal Tax Service received the package of papers for registration. As soon as the documents are accepted, information about them is entered into the registration book.
The applicant must be issued a receipt for receipt of documents. If he submitted the documents not in person, but by mail, then a receipt is sent to his address on the business day following receipt of the documents.
Registration is carried out within 5 working days, during which the tax office verifies the accuracy of the data provided for registration. After registration of the newly formed organization, a certificate is issued confirming the fact of its registration.
After registration with the Federal Tax Service, the tax office transfers documents for registration to extra-budgetary funds, which, as soon as possible, register the new organization with them. The moment of registration is the date the enterprise is registered with the tax authority.
Sometimes registration is refused, and there is a a few reasons:
- provision of an incomplete package of documents;
- making errors during registration;
- the rules for the name of the organization were violated (the Civil Code of the Russian Federation contains certain requirements for company names);
- lack of date on documents (in particular on the charter);
- failure to pay state registration fees;
- indication of false data or falsification.
After completing the registration process, the company, regardless of its form of ownership, is required to open a bank account and get a stamp.
Speech by Anton Sitnikov about LLC, OJSC and CJSC in the program “Stroeva.delo”.
Why were OJSC and CJSC abolished?
Discussion of amendments to the Civil Code of the Russian Federation regarding the abolition of OJSC and CJSC began back in 2012. Thus, from September 1, 2014, such forms of organizations ceased to exist.
In addition, the change also affected ALC (additional liability company). Now, instead of OJSC and CJSC, there are public and non-public companies. Let's figure out what the difference is between them.
Public joint stock company is an organization whose shares must be placed on the securities market. Thus, anyone can purchase shares. Moreover, the organization must necessarily indicate in the charter and other constituent documents that it is public.
Organizations registered as a CJSC or OJSC before September 1, 2014 were required to make changes regarding their publicity or non-publicity as soon as possible after the adoption of the amendments.
Non-public joint stock company is an organization that does not place its shares on the securities market. Thus, only a limited number of people can purchase shares.
On September 1, 2014, the ALC was also abolished; now it is a priori considered a non-public joint-stock company without the right to place shares on the securities market.
Changes applicable to such organizations increase the powers of the state to control them. Thus, each joint-stock company, regardless of its publicity, must undergo an annual audit of its activities, which was previously carried out only for open joint-stock companies.
If entrepreneurs do not care about placing their shares on the market, then a non-public joint stock company is more attractive to them in order to reduce reorganization costs and avoid new obligations regarding shares.
This video explains more about the conversion.
Greetings, dear readers. When opening an individual entrepreneur, everything is simple, you just need to choose the right types of activities and choose the optimal form of taxation. In the case of an LLC, everything is more complicated, and in the case where there are many founders, and everything is planned to be done either through a closed joint-stock company or through an open joint-stock company, then the number of differences begins to go off scale. We have collected the most critical differences in one place, you can study the advantages and disadvantages of each type of legal entity organization form, and choose the most optimal one for you. Happy business!
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LLC, CJSC, OJSC: differences and features in simple words, table
When starting a business, every businessman thinks about the organizational and legal form of his future enterprise. He can register a company without forming a legal entity and engage in individual entrepreneurship or register as a legal entity. How they differ - in simple words.
The most common legal entities are LLC, CJSC, OJSC. Each of them has both advantages and disadvantages. Below we will discuss the differences and similarities between LLCs, CJSCs, and OJSCs. However, first of all, let's look at the difference between legal entities.
This is very important, since even lawyers have a huge number of misconceptions about these forms of business, which often leads to unintended consequences.
Legal entity and individual – what is the difference?
The main difference in these concepts is that an individual entrepreneur is an individual with a certain status, while a legal entity is a fiction (they exist only legally, without material embodiment).
In accordance with the law, an individual must be liable for obligations with his property. And in accordance with this, we can conclude that the individual entrepreneur will have to pay for debts that were incurred while running a business, even with property that had nothing to do with the business.
The responsibilities of participants and shareholders are different. Unlike individual entrepreneurs, legal entities are liable for the obligations only of their organization and risk only the value of their shares or shares. Therefore, under unfavorable circumstances, participants in such companies are not responsible for the activities of the organizations.
It can be noted that in this regard, creating a legal entity is more attractive than acquiring the status of an individual entrepreneur.
Advantages of a limited liability company and their types
Now we see the differences between LLC, OJSC, CJSC, and individual entrepreneurs and we can move on to a more detailed examination of the characteristics of LLC, which is the most popular way of doing business in our country. This is justified by its simple registration and subsequent operation.
As already noted, LLC participants risk liabilities only to the extent of the amounts corresponding to their share in the business. It should be noted that the shares of LLC participants are not securities, therefore they are not subject to the provisions of securities legislation. This fact allows you to increase the authorized capital faster and easier than in joint stock companies.
Similarities and differences between a limited liability company, a public limited company and a private limited company
Consider the features of other legal entities.
The form of doing business in joint stock companies is more complex than in LLCs. LLC and JSC have a number of differences - both have their pros and cons.
Below is a comparative table of LLC, OJSC, CJSC in one word.
| Basic signs | OOO | Company | OJSC |
|---|---|---|---|
| Constituent documents | Charter | ||
| Registration | Federal Tax Service (entry in the Unified State Register of Legal Entities) | Inspectorate of the Federal Tax Service (entry in the Unified State Register of Legal Entities) Registration of the issue of shares in the Federal Financial Markets Service | |
| Authorized capital | Shares | Shares (uncertificated securities | |
| Shareholders/Participants | Not > 50 persons | Any quantity | |
| Sale/purchase of shares (shares) | In accordance with the minutes of the general meeting | Closed subscription | Both closed and open subscription |
| Lineup changes | it is not necessary to make changes to the Charter | it is not necessary to make changes to the Charter, unless there is more than one shareholder | |
| Composition of governing bodies | General meeting; Board of Directors (optional). General Director and/or Management Board (Directorate) | General meeting. Board of Directors – optional. In the event that the number of shareholders is > 50 - mandatory. General Director and / or Management Board (Directorate) | |
| Conversion | Reorganization into an ALC, CJSC or OJSC. In this case, it is necessary to notify creditors, as they may make demands for fulfillment of obligations ahead of schedule. | Reorganization into an LLC or ODO. Mandatory notification of creditors. The transformation of a CJSC into an OJSC and vice versa is not a reorganization, so notification of creditors is not required. | |
| Publicity | Publication of information is not required, except in cases of bond issue | Mandatory public reporting | No publication required |
This table shows all the advantages of an LLC over other commercial legal entities:
- greater simplification of the registration procedure;
- no need for an issue;
- optional publication of information about your activities;
- the ability to change the organizational and legal form with fewer problems.
Transformation of CJSC and OJSC into PJSC NAO and LLC, what is it: Video
Authorized capital and profit
In conclusion, we will consider the features of finance of LLC, CJSC, OJSC.
The authorized capital of an OJSC is no less than a thousand times the minimum wage, and a CJSC is no less than a hundred times. Then the minimum for the authorized capital of an LLC is ten thousand rubles.
Increasing the authorized capital of an LLC is much easier than that of a JSC, because this can only be done after registering the issue of shares, which is a rather expensive procedure. And finally, in all the considered forms of entrepreneurship, profits are distributed in the form of dividends, which increases the tax burden on organizations.
In general, depending on the planned type of business and the number of founders, you can choose a suitable form of business from those discussed above.
From the site: http://sooo.ru/otkrytie-zakrytie-ooo/pered-otkrytiem/osnovnye-otlichiya-ooo-zao-i-oao.html
The difference between a closed joint stock company and an LLC - what are they, differences from individual entrepreneurs
In everyday life, we often come across dozens of different abbreviations that denote legal forms of business activity: LLC, CJSC, NPO, individual entrepreneur and much more.
Why are economic entities called differently if, de facto, they are engaged in the same business? LLC and CJSC are especially often confused, although these legal forms differ significantly from each other. Despite the apparent simplicity of the terms, it is worth studying them more carefully and understanding the main differences.
A closed joint-stock company is a joint-stock company whose authorized capital is divided between participants through shares. The key characteristic of a legal form is its “closedness”. The number of shareholders cannot exceed 50 people, while shares are alienated only among a limited circle of persons, which include the founders.
The free circulation of shares of the enterprise is difficult, which is due to the peculiarities of the activity. If the number of persons holding shares has increased to 51 people or more, the association is subject to re-registration as an OJSC within a year.
LLC is a commercial company, the authorized capital of which is divided in certain shares between the founders.
This legal form is one of the most popular in Russia due to simple registration, loyalty of legislation, as well as other factors. An LLC can include no more than 50 people, and participants have the right to engage in various types of commercial activities.
Thus, the maximum number of participants in LLCs and CJSCs is the same: it should not exceed 50 people. In addition, participants in both types of commercial entities do not need to publish their reports annually. The authorized capital of an LLC cannot be less than 10 thousand rubles, and for a closed joint-stock company the minimum value is 100 minimum wages (that is, also 10 thousand rubles).
To start operating an LLC, it is necessary to prepare documents in the form of a constituent agreement and charter, for a closed joint stock company - only the charter. The joint stock company issues securities that are subject to registration with the Central Bank. It is possible to increase the authorized capital of a closed joint-stock company only through an additional issue of shares. The management structure of an LLC has a general meeting and a general director, while a CJSC has a board of directors.
conclusions
- Change of composition. If the founder of an LLC alienates his share, then this transaction requires mandatory state registration, and the data is entered into the Unified State Register of Legal Entities. When alienating shares of a closed joint-stock company, no changes are made to the register, and notarization is not required.
- Increase the authorized capital. An LLC can increase the share of participants by amending its constituent documents. To increase the authorized capital of a closed joint-stock company, an additional issue is required.
- Access to information about participants. Information about the founders of an LLC is in the public domain, information about the shareholders of a closed joint-stock company is closed.
- Managment structure. An LLC has only a general director and a general meeting, while a CJSC also has a board of directors.
From the site: https://thedifference.ru/chem-otlichaetsya-zao-ot-ooo/
What is the difference between OJSC and CJSC and LLC?
The main difference between an LLC and a CJSC is the division of the authorized capital into shares of participants in a limited liability company and into shares in a closed joint-stock company.
According to the charter of an LLC, the issue of shares is not possible, and shares of a closed joint stock company are securities that are subject to securities laws. JSC participants are obliged to comply with these laws and bear responsibility in case of their violation.
The procedures for increasing the authorized capital in LLC and CJSC are also different. An increase in the authorized capital of an LLC occurs after documents with the consent of all participants.
In a closed joint stock company, for this purpose, it is necessary to issue new shares, therefore, due to numerous costs, this procedure is much more complicated: additional shares are issued and changes are made to the company's charter, their state registration is required, as well as registration of additional shares.
The charter of an LLC can be drawn up in such a way that the organization can be closed to access by third parties - it can be completely prohibited and significantly limit the possibility of new participants joining.
This is achieved by prohibiting in the LLC charter the possibility of alienation by participants of their shares in favor of third parties or if it is necessary to obtain the consent of all LLC participants for the entry of third parties. As for the closed joint stock company, its charter is drawn up in such a way that the appearance of third parties among the participants is possible in the event of gratuitous alienation of shares in their favor by one of the existing participants.
The receipt of profit by the LLC participants is stipulated in the charter; it does not directly depend on the shares of the participants.
CJSC participants receive dividends, the amount of which directly depends on the category of shares they own. The law also provides for the timing of the payment of dividends to the participants of a closed joint-stock company. All information about the participants of an LLC and their shares in the enterprise is contained in the Unified State Register of Legal Entities, and anyone can request an extract with the data of a particular LLC. Data about the participants of the closed joint-stock company are entered into a special register of shareholders, the information in which is closed to unauthorized persons.
An open joint-stock company (OJSC) is created to conduct business on a large scale, all of its shares are in free circulation. Shareholders may alienate their shares to third parties without coordinating their actions with other participants of the JSC. Subscription to issued shares can be either open or closed.
The number of shareholders of an OJSC is not limited, and the authorized capital must be at least 100 thousand. There are also differences between forms of ownership in the methods of liquidation of a legal entity, and the liquidation of an LLC differs from the liquidation of joint stock companies.
From the site: http://www.ufreg.com/novosti/chem-otlichaetsya-oao-ot-zao-i-ooo.html
What is the difference between an LLC and a CJSC: the main differences and features
People who want to start an independent business are often interested in the similarities and differences in the organization of the most popular commercial structures, namely a closed joint stock company and a company whose liability for debts is limited by the size of its authorized capital.
But in 2009, the legislation changed, and since then the procedure for selling such companies has become much more complicated. Therefore, businessmen began to register their newly created companies and firms as closed joint stock companies.
What is the similarity between a closed joint stock company and a company whose liability for debts is limited by its authorized capital? Let us examine in more detail the differences, as well as the pros and cons of LLC and CJSC. Firstly, both companies are commercial structures, dividing their authorized capital into parts in accordance with the number of founders of a particular company of one of the two above-mentioned types.
Secondly, the minimum amount of their authorized capital required by law is exactly the same, and amounts to ten thousand rubles.
Thirdly, the owner of the property of both types of companies, regardless of whether it was formed through the contributions of its founders and other participants or appeared in the process of carrying out economic activities, is this company itself, and not its participants (founders ).
Fourthly, both CJSC and LLC have only their Charter as a constituent document, and the law does not require any information about their founders to be provided in this document, nor is it required to indicate their total number.
Fifthly, when registering a company of either type, its founders draw up an agreement on the creation of a new commercial structure, which does not have the legal force of a constituent document.
Sixth, both CJSC and LLC can be created by only one person, who is called the sole founder.
Seventh, the founders of both types of society can only be citizens, only existing commercial and other structures, or both.
Eighth, the law provides participants of both CJSC and LLC with the right to be informed about the state of affairs of the relevant company, the right to familiarize themselves in the prescribed manner with the summary documents of the accounting carried out by it, the right to jointly distribute the income received by the company, and upon completion of the liquidation process - the right to receiving part of the property of a CJSC or LLC in kind, or its value in money.
Ninth, for the debts of both the CJSC and the LLC, its participants bear exclusively additional, or so-called. subsidiary liability, i.e. they must pay them only if the property and funds of such a society itself are not enough to pay them off.
CJSC and LLC differ from each other only in the way a participant leaves its membership. Legally, there is no possibility for shareholders of closed joint-stock companies to exit them: they can only sell or donate the shares they own.
With their alienation, the membership of the participant who parted with these securities in the corresponding CJSC also terminates. The participants of the LLC, who do not issue any securities, donate or sell their shares in order to leave it. That is, the whole difference lies in the fact that in the first case we are talking about shares that can be issued both in the form of a document (printed) and in uncertificated form, and in the second case we are talking about shares, the presence of which is confirmed only by the relevant records.
From the site: https://wikilaw.ru/biznes/chem-otlichaetsya-ooo-ot-zao/
What is the difference between a PJSC and an OJSC
Among the variety of existing organizational and legal forms of legal entities, the name “Open Joint Stock Company” differed from others in that it was the most understandable.
Joint-stock company" - means that the participants of this association are holders of shares of this enterprise, which they bought or otherwise acquired ownership of. Open”, as opposed to “closed”, means that these shares can be circulated in the public domain, i.e.
From September 1, 2014 of the Russian Federation No. 99-FZ dated 05/05/14, which introduced changes to the Civil Code, in particular to the names and content of certain legal forms of ownership.
The name PJSC - Public Joint Stock Company - was assigned by the above-mentioned law to the same OJSC. The legislator simply excluded the concept of “open” (OJSC) and “closed” (CJSC) joint stock company. This means that a PJSC differs from an OJSC in that it is, in fact, a new name for the same association of shareholders. JSCs will exist for a short time until changes are made to their charter. Next they must decide and become “public”. The law introduces the concept of “public” and “non-public”. “Public” implies the same free circulation of shares and bonds of a given company.
The new law adopted amendments that increased the requirements for the regulation of certain aspects of the activities of PJSCs, in contrast to OJSCs.
In addition to the fact that the characteristics of a PJSC are the open placement of shares and bonds and their admission to exchange trading, the company must also justify the name “public”. What does it mean? PJSCs will have a more open information policy: hold shareholder meetings more often, allow inspections, etc. Before the adoption of the new law, a legal entity with the organizational and legal form of an OJSC was required to hire a lawyer or legal organization to support its activities.
Now it will be necessary to use the services of special registrars to maintain a register of shares; decisions of shareholder meetings will have to be certified by a notary or registrar. The requirements for auditing are also increasing.
From the site: http://www.ami-tass.ru/news/chem-otlichaetsya-pao-ot-oao.html
What is the difference between a public joint stock company and an OJSC?
What does public joint stock company mean?
Federal Law No. 99-FZ dated May 5, 2014 (hereinafter referred to as Law No. 99-FZ) added a number of new articles to the Civil Code of the Russian Federation. One of them, Art.
66.3 of the Civil Code of the Russian Federation, introduces a new classification of joint stock companies. The already familiar CJSC and OJSC have now been replaced by NAO and PJSC - non-public and public joint-stock companies. This is not the only change.
What does a public joint stock company mean? In the current version of the Civil Code of the Russian Federation, this is a joint-stock company in which shares and other securities can be freely sold on the market.
The rules on a public joint stock company apply to a joint-stock company whose charter and name indicate that the joint-stock company is public. For PJSCs created before 09/01/2014, whose corporate name contains an indication of publicity, the rule established by clause 7 of Art. 27 of the Law “On Amendments...” dated June 29, 2015 No. 210-FZ. Such a PJSC that does not have public issues of shares before July 1, 2020 must:
- apply to the Central Bank for registration of the prospectus of shares,
- remove the word “public” from its name.
In addition to shares, a joint-stock company can issue other securities. However, Art. 66.3 of the Civil Code of the Russian Federation provides for public status only for those securities that are converted into shares. As a result, non-public companies can put securities into public circulation with the exception of shares and securities convertible into them.
What is the difference between a public joint stock company and an open one?
Let's consider the difference from an OJSC public joint stock company. Although the changes are not fundamental, ignorance of them can seriously complicate the life of the management and shareholders of the PJSC.
Disclosure
If previously the obligation to disclose information about the activities of an OJSC was unconditional, now a public company has the right to apply to the Central Bank of the Russian Federation for exemption from it. Public and non-public societies can take advantage of this opportunity, but it is for public ones that the exemption is much more relevant.
In addition, JSCs were previously required to include information about the sole shareholder in the charter, as well as publish this information. Now it is enough to enter data into the Unified State Register of Legal Entities.
Preemptive right to purchase shares and securities
The OJSC had the right to provide in its charter for cases when additional shares and securities are subject to preferential purchase by existing shareholders and security holders. A public joint stock company is obliged in all cases to be guided only by the Federal Law “On Joint Stock Companies” dated 26.
Maintaining a register, counting commission
If in some cases an OJSC was allowed to maintain the register of shareholders on its own, then public and non-public joint stock companies are always required to delegate this task to specialized organizations that have a license. At the same time, for a PJSC, the registrar must be independent.
The same applies to the counting commission. Now issues within its competence must be resolved by an independent organization that has a license for the relevant type of activity.
Society management
For an OJSC, the board of directors was a mandatory body only if the number of shareholders of the company was more than 50. Now, a collegial body with at least 5 members is an integral part of the PJSC. You can learn how to draw up a regulation on such a body from the article Regulations on the Board of Directors of a JSC - sample.
Public and non-public joint-stock companies: what are the differences?
- By and large, the rules that previously applied to OJSC apply to PJSC. NAO is basically a former closed joint stock company.
- The main feature of a PJSC is an open list of possible buyers of shares. NJSC does not have the right to offer its shares at public auction: such a step, by force of law, automatically turns them into a PJSC even without amending the charter.
- For PJSC, the management procedure is strictly enshrined in law. For example, the rule still remains that the competence of the board of directors or executive body cannot include issues that are subject to consideration by the general meeting. A non-public company can transfer some of these issues to a collegial body.
- The status of participants and the decision of the general meeting in a PJSC must be confirmed by a representative of the registrar organization. The NAO has a choice: you can use the same mechanism or contact a notary.
- A non-public joint stock company still has the right to provide in the charter or corporate agreement between shareholders the right to pre-emptive purchase of shares. For a public joint stock company, such an order is absolutely unacceptable.
- Corporate agreements concluded in PJSC must be disclosed. For a NAO, it is sufficient to notify the company of the fact of concluding such an agreement.
- The procedures provided for by Chapter XI.1 of Law No. 208-FZ regarding offers and notifications of repurchase of securities, after September 1, 2014, do not apply to JSCs that, through changes in the charter, have officially recorded their non-public status.
Corporate agreement in joint stock companies
An innovation that largely concerns PJSC and NJSC is a corporate agreement. Under this agreement, concluded between the shareholders, all or some of them undertake to exercise their rights only in a certain way:
- take a unified position when voting;
- establish a common price for all participants for the shares they own;
- allow or prohibit their acquisition in certain circumstances.
However, the agreement also has its limitations: it cannot oblige shareholders to always agree with the position of the managing bodies of the joint-stock company.
In fact, ways to establish a unified position for all or part of the shareholders have always existed. However, now changes in civil legislation have transferred them from the category of “gentleman’s agreements” to the official level. Now, violation of a corporate agreement may even become a reason to recognize the decisions of the general meeting as illegal.
For non-public companies, such an agreement may be an additional management tool. If all shareholders (participants) participate in a corporate agreement, then many issues related to the management of the company can be resolved through changes not in the charter, but in the content of the agreement.
In addition, an obligation has been introduced for non-public companies to enter information about corporate agreements into the Unified State Register of Legal Entities if, under these agreements, the powers of shareholders (participants) seriously change.
Renaming the OJSC into a public joint stock company
For those OJSCs that decide to continue operating as a public joint stock company, changes are required to the charter documents. There is no deadline for this by law, but it’s better not to delay it.
Otherwise, problems may arise in relations with counterparties, as well as ambiguity about what rules of law should be applied to PJSC. Law No. 99-FZ establishes that the unchanged charter will be applied to the extent that does not contradict the new norms of the law. However, what exactly contradicts and what does not is a moot point.
Renaming can occur in the following ways:
- At a specially convened extraordinary meeting of shareholders.
- At a meeting of shareholders that resolves other current issues. In this case, changing the name of the JSC will be highlighted as an additional issue on the agenda.
- At a mandatory annual meeting.
Re-registration of old organizations into new public and non-public legal entities
The changes themselves can only affect the name - it is enough to exclude the words “open joint-stock company” from the name, replacing them with the words “public joint-stock company”. However, it is necessary to check whether the provisions of the previously existing charter do not contradict the norms of the law. In particular, special attention should be paid to the rules relating to:
- board of directors;
- preemptive right of shareholders to purchase shares.
In accordance with Part 12 of Art. 3 of Law No. 99-FZ, the company will not need to pay state duty if the changes concern bringing the name into compliance with the law.
In addition to JSC, signs of publicity and non-publicity now apply to other organizational forms of legal entities. In particular, the law now directly classifies LLCs as non-public entities. For a public joint stock company, changes must be made to the charter. But is this necessary for those companies that, by virtue of the new law, should be considered non-public?
In fact, for non-public companies, making changes is not necessary. Nevertheless, it is still advisable to make such changes. This is especially important for former closed joint stock companies. Otherwise, such a name will be a defiant anachronism.
Sample charter of a public joint stock company: what to pay attention to?
In the time that has elapsed since the adoption of Law No. 99-FZ, many companies have already gone through the procedure of registering changes to the charter. Those who are just about to do this can use the sample charter of a PJSC.
However, when using a sample, you must first of all pay attention to the following:
- The charter must contain an indication of publicity. Without this, society becomes non-public.
- It is imperative to involve an appraiser in order for a property contribution to be made to the authorized capital. Moreover, in the event of an incorrect assessment, both the shareholder and the appraiser must answer subsidiarily within the limits of the overstatement amount.
- If there is only one shareholder, he may not be indicated in the charter, even if the sample contains such a clause.
- It is possible to include provisions on the audit procedure in the charter at the request of shareholders owning at least 10% of the shares.
- Conversion into a non-profit organization is no longer allowed, and there should be no such provisions in the charter.
This list is far from complete, so when using samples you should carefully check them with current legislation.
The term "public joint stock company": translation into English
Since many Russian PJSCs carry out foreign trade operations, the question arises: what should they now be officially called in English?
Previously, the English term “open joint-stock company” was used in relation to JSC. By analogy with it, current public joint stock companies can be called public joint-stock companies. This conclusion is confirmed by the practice of using this term in relation to companies from Ukraine, where PJSCs have existed for a long time.
In addition, the difference in right-wing terminology in English-speaking countries should also be taken into account. Thus, by analogy with UK law, the term “public limited company” is theoretically acceptable, and with US law - “public corporation”.
The latter, however, is undesirable, since it may mislead foreign counterparties. Apparently, the public joint-stock company option is optimal:
- it is used mainly only for organizations from post-Soviet countries;
- quite clearly marks the organizational and legal form of society.
So, what can ultimately be said about innovations in civil legislation concerning public and non-public legal entities? In general, they make the system of organizational and legal forms for commercial organizations in Russia more logical and harmonious.
It is not difficult to make changes to the statutory documents. It is enough to rename the company according to the new rules of the Civil Code of the Russian Federation. The legalization of agreements between shareholders (corporate agreement in accordance with Article 67.2 of the Civil Code of the Russian Federation) can be considered a step forward.
From the site: https://rusjurist.ru/akcionernye_obwestva_ao/publichnoe_akcionernoe_obwestvo/v_chem_otlichie_publichnogo_akcionernogo_obwestva_ot_oao/
Comparison of LLC and JSC
| Limited Liability Company | Category | Joint-Stock Company |
| A limited liability company (the generally accepted abbreviation LLC) is a business company created by one or several persons, the authorized capital of which is divided into shares; members of the Company are not liable for its obligations and bear the risk of losses associated with the activities of the Company, within the value of their shares in the authorized capital of the Company. | Concept | A joint stock company (hereinafter referred to as JSC) is a commercial organization whose authorized capital is divided into a certain number of shares certifying the obligatory rights of the Company's participants (shareholders) in relation to the Company. |
| To establish an LLC, it is sufficient to follow the procedures for the founders to make decisions on the issues of establishing an LLC (making a decision, signing the Foundation Agreement, approving the Charter, forming management bodies, etc.) and then going through the procedures for creating an LLC with the registration authority. | Establishment of a legal entity | When creating a JSC, after registration procedures (similar to the establishment of an LLC), it is necessary to go through an additional stage - the initial placement of shares (issue). |
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Controls |
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| Founders/participants may provide in the LLC Charter the possibility of making property contributions without changing the size of the charter capital and the shares of participants. The charter of the LLC may provide that such property contributions may be made disproportionate to the size of the shares of the participants. | Procedure for financing activities | It is impossible to make property contributions to a joint-stock company without increasing the authorized capital (with additional issue procedures). |
| In relation to LLCs, the general requirements for legal entities to comply with the legislation of the Russian Federation apply. | State control | The activities of the JSC are controlled by the Federal Financial Markets Service, including:
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| In an LLC, the procedure for increasing the capital includes the need to make a decision, make appropriate contributions and register changes to the Charter with the registration authority. | Increase the authorized capital | The procedure for increasing the capital, in addition to registering changes to the Charter, requires compliance with the procedures for additional issue of shares, which can take a total of more than six months. |
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Reserve and other funds |
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The sale of participants' shares requires mandatory notarization and subsequent notification of the registration authority about changes that have occurred in the composition of the LLC participants. It should also be noted that:
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Sale of shares/shares | The sale of shares is carried out only through the register of shareholders, which can be maintained either by the JSC itself or by a specialized participant in the securities market.
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| The law allows the founders to provide in the Charter the right to leave the LLC at any time with receipt of the actual value of the share in the manner established by the Charter. | Withdrawal from the membership of a legal entity | The law does not allow a shareholder to terminate participation in a joint-stock company at any time without the procedure of selling his shares. |
From the site: http://www.yurprestizh.ru/sravn
COMPARISON OF LIMITED LIABILITY COMPANY (LLC) AND JOINT STOCK COMPANIES (CJSC AND JSC)
Zezekalo Alexander Yurievich
Ph.D. legal Sciences, Associate Professor KhSU, Abakan
A limited liability company is a business company whose authorized capital is divided into shares of sizes determined by the constituent documents. The participants of an LLC are not liable for its obligations and bear the risk of losses associated with the activities of the company, within the limits of the value of the contributions they made.
A joint stock company is a company whose authorized capital is divided into a certain number of shares; Participants in a joint stock company are not liable for its obligations and bear the risk of losses associated with the activities of the company, within the limits of the value of the shares they own.
Joint stock companies and limited liability companies have much in common.
However, an LLC is a simpler legal form than a CJSC. A limited liability company is the most suitable form for creating a legal entity with a small number of founders. A joint stock company requires a more complex management structure than a limited liability company, despite the fact that it is possible to register a closed joint stock company even with one founder.
Registering an LLC is cheaper (particularly because it does not involve registering the issue of shares).
The most significant features of an LLC, which distinguish it favorably from a closed joint-stock company, are: a fairly simple procedure for creating a limited liability company, which involves preparing a package of documents established by law and sending it to the tax authority.
Unlike the creation of a closed joint stock company, which also requires registration of the issue of shares, the process of creating an LLC is formally completed. All that remains is to register the new legal entity with various funds and open a current account in a suitable bank.
Another advantage of a limited liability company is the protection of the property interests of LLC participants. Each of the participants can leave the Company at any time, demanding payment of the actual value of his share or the allocation of the share in kind. But there is one important point here.
Such a free policy is not always beneficial for the interests of the Company itself in particular, and business in general, for which this may be dangerous. In addition, the Company does not always have available cash to pay for the share of the withdrawing participant, therefore, in order to satisfy the latter’s requirement, the Company has to say goodbye to part of the property necessary for the operation of the LLC. Therefore, a Limited Liability Company is traditionally considered a form of “family” business, in which only trust relationships exist between the founders, and guarantee that there may not be a division of property;
From the point of view of the possibility of doing business, obtaining licenses for a particular type of activity, certification of products, etc., the factors of LLC and CJSC are also equal.
The measure of property liability of LLC participants and participants (shareholders) of a CJSC is the same: LLC participants (CJSC shareholders) are not liable for the obligations of the company and bear the risk of losses associated with its activities, within the value of the contributions they made to the authorized capital (respectively, for a CJSC - owned by them shares).
Separately, it should be said about the possibility of a participant leaving the society. The law does not provide for a participant (shareholder) of a closed joint-stock company to leave the closed joint-stock company.
A shareholder of a closed joint stock company can terminate participation in it only by selling or otherwise assigning his shares to other shareholders, the company itself, or a third party, or after the liquidation of the company. As for LLCs, until July 1, 2009, the founder (participant) of a limited liability company had the right to leave the company at any time, regardless of the consent of other participants, and he had to be paid the value of a part of the LLC’s property corresponding to his share in the authorized capital. Since July 1, 2009, the possibility of a participant leaving an LLC has become significantly more difficult - now a participant can also leave an LLC, but only by alienating (essentially, selling) his share to the company.
This tightening of legislation regarding the possibility of a participant leaving an LLC, on the one hand, makes a limited liability company more reliable and stable, insuring against an unexpected situation when an LLC participant who decides to leave it puts the enterprise on the brink of bankruptcy, since the company’s assets may not be enough to continue its business activities after payment to the withdrawing participant.
From July 1, 2009, any transactions on the alienation (sale, donation, assignment in any other way) of shares in the authorized capital of an LLC can only be concluded in notarial form.
The person alienating the share and the acquirer of the share must jointly visit a notary and certify the agreement concluded between them.
After notarization, documents confirming the change of ownership of the share are submitted to the tax authority for state registration. It is not easy to certify a transaction with a notary - for this you need to collect a solid package of documents (read more about this here)
