The abbreviations ZAO and OAO are familiar even to those who are not involved in business, so deciphering them is not difficult. This different shapes joint stock companies (JSC) - closed and open, differing from each other in the possibilities of selling shares and managing the company. A few years ago, a legislative reform was carried out giving more correct names these subjects economic activity.
What is NAO
In 2014, the definitions relating to the organizational and legal forms of legal entities were revised. Federal Law No. 99 of May 5, 2014 amended the legislation and abolished the concept of closed joint stock company. At the same time, a new division was introduced for business entities, distinguishing them according to the criterion of openness to third parties and the possibility of third-party participation.
Article 63.3 of the Civil Code (CC) defines new concepts. According to the article, business societies are:
- Public (software). These are companies whose shares are freely traded in accordance with Law No. 39 of April 22, 1996 “On the Securities Market”. An alternative requirement for classifying an organization as software is to indicate its public nature in its name.
- Non-public (BUT). All others that are not public.
The legislative language does not clearly define public society, and is based on the exclusionary principle (everything that is not software is BUT). Legally, this is not very convenient because it creates a clutter of language when trying to define terms. The situation is similar with establishing the meaning of a non-public joint stock company (NAO). It can only be determined by analogy (NAO is an AO with signs of NO), which is also uncomfortable.
But the legal procedure for transition to new definitions is simple. Law No. 99-FZ recognizes as public joint-stock companies all joint-stock companies created before September 1, 2014 and meeting the qualification criteria. And if such a company, as of July 1, 2015, has an indication in its charter or name that it is public, but in fact is not a PJSC, then it is given five years to begin public circulation of securities or re-register the name. This means that July 1, 2020 is the final date when, according to the law, the transition to the new wording must be completed.
Organizational and legal form
Public and non-public joint stock companies are distinguished according to Article 63.3 of the Civil Code. The defining feature is the free circulation of the company's shares, so it would be a mistake to mechanically translate old definitions into new ones (for example, to assume that all OJSCs automatically become PJSCs). According to the law:
- Public joint stock companies include not only open joint stock companies, but also closed joint stock companies that have publicly placed bonds or other securities.
- The category of non-public joint-stock companies includes joint-stock companies closed type, plus – JSCs that do not have shares in circulation. At the same time, the category of non-commercial organizations will be even wider - in addition to non-profit joint-stock companies, this also includes LLCs (limited liability companies).
Considering the specific nature of a closed joint stock company, which simplifies the task of concentrating assets in the hands of a group of individuals, combining it into one group with an LLC is quite logical. The legislative need to create a category of non-profit organizations becomes extremely clear - this is the unification into one group of business entities that exclude outside influence. At the same time, a non-public limited liability company can be transformed into a non-public joint stock company without any particular difficulties ( reverse process is also possible).
The difference between a public joint stock company and a non-public one
When comparing PJSC and NJSC, it is important to understand that each of them has its own advantages and disadvantages, depending on specific situation. For example, public joint-stock companies provide more opportunities for attracting investments, but at the same time they are less stable in corporate conflicts than non-public joint-stock companies. The table shows the main differences between the two types of business entities:
| Characteristics | Public JSC | Non-public joint-stock companies |
| Name (until July 1, 2020, the previous wording will be recognized by law) | Mandatory mention of public status (for example, PJSC "Vesna") | Indication of lack of publicity is not required (for example, JSC Leto) |
| Minimum size authorized capital, rubles | 1000 minimum wages (minimum wages) | |
| Number of shareholders | Minimum 1, maximum unlimited | Minimum 1, when the number of shareholders begins to exceed 50 people, re-registration is required |
| Trading shares on the stock exchange | ||
| Possibility of open subscription for placement of securities | ||
| Preferential acquisition of shares | ||
| Presence of a board of directors (supervisory board) | You don't have to create |
Characteristics and distinctive features
From a legal point of view, a non-public joint stock company is a special category of business entities. Among the main distinctive features relate:
- Restrictions on the admission of participants. These can only be the founders. They act as the only shareholders, since the company's shares are distributed only among them.
- The authorized capital has a lower limit of 100 minimum wages, which is formed by contributing property or cash.
- Registration of a non-public JSC is preceded by the preparation of not only the company’s charter, but also a corporate agreement between the founders.
- NAO management is carried out using general meeting shareholders with notarized recording of the decision.
- The amount of information that a non-public JSC must place in the public domain is much less than that of other types of JSC. For example, non-public joint stock companies, with few exceptions, are exempt from the obligation to publish annual and accounting reports.
Disclosure of information about activities to third parties
The principle of publicity implies placing information about the company’s activities in the public domain. Information that a public company must publish in print (or online) includes:
- Company annual report.
- Annual accounting reports.
- List of affiliates.
- Statutory documentation of a joint stock company.
- Decision to issue shares.
- Notice of a meeting of shareholders.
For non-public joint stock companies, these disclosure obligations apply in a reduced form and apply only to organizations with more than 50 shareholders. In this case, the following will be published in publicly available sources:
- Annual report;
- Annual financial statements.
Certain information about a non-public JSC is entered into the Unified State Register of Legal Entities (USRLE). This data includes:
- information on the value of assets as of the last reporting date;
- information about licensing (including suspension, re-issuance and termination of a license);
- notification of the introduction of surveillance as determined by the arbitration court;
- subject to publication in accordance with Articles 60 and 63 of the Civil Code of the Russian Federation (notifications of reorganization or liquidation of a legal entity).
Charter
In connection with legislative changes caused by the emergence of new organizational and legal forms (public and non-public joint stock companies), JSCs must carry out a reorganization procedure with amendments to the charter. For this purpose, a board of shareholders is convened. It is important that the changes made do not contradict Federal Law No. 146 of July 27, 2006 and must contain a mention of the non-publicity of the organization.
The typical structure of the charter of a non-public joint-stock company is determined by Articles 52 and 98 of the Civil Code of the Russian Federation, as well as Law No. 208 of December 26, 1995 “On Joint-Stock Companies”. Mandatory information that must be indicated in this document includes:
- name of the company, its location;
- information about placed shares;
- information about the authorized capital;
- amount of dividends;
- procedure for holding a general meeting of shareholders.
Organizational management and governing bodies
In accordance with current legislation, the charter of a joint stock company must contain a description organizational structure companies. The same document should consider the powers of governing bodies and determine the procedure for making decisions. The organization of management depends on the size of the company, can be multi-level and has different types:
- General Meeting of Shareholders;
- supervisory board (board of directors);
- collegial or sole executive body (board or director);
- audit committee.
Law No. 208-FZ defines the general meeting as the highest governing body. With its help, shareholders exercise their right to manage the joint-stock company by participating in this event and voting on agenda items. Such a meeting may be annual or extraordinary. The company's charter will determine the boundaries of the competence of this body (for example, some issues can be resolved at the level of the supervisory board).
Due to organizational difficulties, the general meeting cannot resolve operational issues - for this purpose a supervisory board is elected. Issues that this framework addresses include:
- determination of priorities for the activities of a non-public joint stock company;
- recommendations on the amount and procedure for paying dividends;
- increasing the authorized capital of the joint-stock company through the placement of additional shares;
- approval of major financial transactions;
- convening a general meeting of shareholders.
The executive body may be sole or collegial. This structure is accountable to the general meeting and is responsible for the improper performance of its duties. At the same time, the competence of this body (especially in a collegial form) includes the most difficult questions current activities non-public joint stock company:
- development of a financial and economic plan;
- approval of documentation on the company’s activities;
- consideration and decision-making on the conclusion of collective agreements and agreements;
- coordination of internal labor regulations.
Issue and placement of shares
The registration process of a joint stock company is accompanied by the introduction of special securities into circulation. They are called shares, and according to Law No. 39-FZ they give the owner the right:
- receive dividends - part of the company's profit;
- participate in the management process of a joint stock company (if the security is voting);
- ownership of part of the property after liquidation.
The putting of securities into circulation is called an issue. In this case, shares may have:
- documentary form, confirming ownership rights with a certificate;
- undocumented, when a record of the owner is made in a special register (in this case, the concepts of “securities” and “issue shares” are conditional).
After the issue, the distribution (placement) of shares among the owners follows. The process is fundamentally different for PJSC and NJSC, implementing different ways making a profit from these companies. A wide channel for the distribution of securities in the first case implies more careful control of activities by government agencies. The table shows the differences between public and non-public joint stock companies in the placement of shares:
| Public JSC | Non-public JSC |
|
| Registration of share issue | It is necessary to register a public prospectus for the issue of securities (a special document with information about the issuer and the issue of shares). | Charter and founders' agreement required |
| Circle of shareholders | Is not limited | No more than 50 people |
| Placement of shares | Publicly on the stock exchange and other securities markets | Among shareholders (or under their control), there is no open subscription and free circulation on exchanges |
| Shareholder's ability to alienate (sell) shares | Under the control of other JSC participants | Free |
Certification of JSC decisions and maintaining the register of shareholders
The General Meeting of Shareholders is the highest body of the company's management, determining the further development of the organization. Wherein, great importance has a legally correct protocol and certification decisions made, relieving participants, board members and managers from mutual claims and disputes about forgery. According to Law No. 208-FZ, protocol documentation must contain:
- time and place of the general meeting of shareholders of a non-public JSC;
- the number of votes belonging to the owners of voting shares;
- the total number of votes of shareholders who participate;
- indication of the chairman, presidium, secretary, agenda.
Hiring the services of a notary will make the protocol more secure and increase the level of reliability of this document. This specialist must personally attend the meeting and record:
- the fact of adoption of specific decisions specified in the minutes of the meeting;
- number of present shareholders of a non-public joint-stock company.
An alternative to contacting a notary would be the services of a registrar who maintains the register of shareholders. Procedure and order of confirmation in in this case will be similar. According to the law, from October 1, 2014, maintaining the register of shareholders became possible only on a professional basis. To do this, joint stock companies must turn to the services of companies with a specialized license. Independent maintenance of the register is punishable by a fine of up to 50,000 rubles for management, and up to 1,000,000 rubles for legal entities.
Change of organizational form
The reform of joint stock companies, begun in 2014-2015 by Law No. 99-FZ, should be completed in 2020. By this time everything official names companies must be re-registered in the form prescribed by law. Depending on the availability of publicity, the former CJSC and OJSC are transformed into PJSC and JSC. Indication of non-publicity by law is not mandatory, therefore the abbreviation NAO may not be used in the official details of the company, and the presence of shares in free circulation allows you to do without the abbreviation PJSC.
The legislation allows changing the form of ownership from PJSC to NAO and vice versa. For example, in order to transform a Non-Public JSC, it is necessary:
- Increase the authorized capital if it is less than 1000 minimum wages.
- Conduct inventory and audit.
- Develop and approve an amended version of the charter and related documents. If necessary, the organizational and legal form is renamed to PJSC (this is not mandatory by law, if there are shares in free circulation).
- Re-register.
- Transfer property to a new legal entity.
Preparation of constituent documents
Special attention when re-registering NAO should be given correct drafting documentation. Organizationally, this process breaks down into two stages:
- Preparatory part. This involves filling out an application in form P13001, holding a meeting of shareholders and preparing a new charter.
- Registration. At this stage, the company details are changed (you will need new seal and forms), about which counterparties should be warned.
Advantages and Disadvantages
If we compare the capabilities of PJSC and NJSC, then each of them has its own pros and cons. But, depending on the specific business situation, one or another option will be suitable. Non-public joint stock companies have the following advantages:
- The minimum authorized capital is 100 minimum wages for a non-public joint-stock company (for a public joint-stock company this figure is 10 times higher). But this plus immediately becomes a minus when compared with the same figure for an LLC - 10,000 rubles, which makes the form of a limited liability company more accessible to small businesses.
- Simplified form of purchasing shares. State registration of the purchase and sale agreement is not required; it is only necessary to make changes to the register.
- Greater freedom in managing the company. This is a consequence of the limited circle of shareholders.
- Restrictions on Disclosure. Not all shareholders want information about their share in the authorized capital or the number of shares to be available to a wide range of people.
- A less risky investment for investors than a publicly traded company. Absence open bidding shares are good protection from the unwanted possibility of a third party purchasing a controlling stake.
- Lower office costs than PJSC. The requirements for non-public documentation are not as serious as for those that are to be made public.
If we compare it with a public joint-stock company, then non-public joint-stock companies have a number of disadvantages. These include:
- The closed nature greatly limits the ability to attract third-party investments.
- The process of creating a company is complicated by the need for state registration of the issue of shares (in addition, this leads to an increase in the authorized capital).
- The decision-making process may be in the hands of a small group of people.
- Limits on the number of shareholders of 50 people compared to unlimited quantity at a public joint-stock company.
- Difficulties with leaving the membership and selling your shares.
Video
The concept and characteristics of a public society
Public and non-public companies are organized and operate in accordance with legal norms.
The activities of organizations are regulated by regulations and provisions of the Civil Code Russian Federation.
The division into public and non-public companies became relevant after the adoption of changes to legislation in 2014.
The main differences between public and non-public companies concern manipulation of shares.
A public company is a form of functioning of a legal entity, which implies the free circulation of company shares on the market. Shareholders, members of the company, have the right to alienate shares that belong to them.
Characteristic features of a public society:
- Shares are traded freely on the market.
- There is no need to open a savings account.
- No need to deposit before registration cash to form the authorized capital.
- There are no restrictions on the number of shareholders.
- Investment processes are transparent and public.
The governing body of the company is the meeting of shareholders. The meeting can make decisions and regulate the activities of the company within the framework provided by the law.
The competence of the meeting of shareholders includes important issues of the activities of a legal entity. Current management is carried out by the director or directorate, who are the executive branch of the company.
The board of directors also has the right to resolve all issues, with the exception of problems within the competence of the meeting of shareholders.
The audit commission performs the control function.
Feature: members of the board of directors cannot be members of the audit committee.
A meeting of the company's shareholders is held annually - the dates must be specified in statutory document organizations.
The concept and characteristics of a non-public company
Non-public company is a form of organization of a legal entity, distinctive feature which is the lack of possibility of free alienation of shares. Shares are distributed only among the founders.
Signs and features of a non-public company:
- Limited number of society members (the number should not exceed 50).
- Capital can be money, securities, property.
- The closed nature of the distribution of shares.
- There is no indication of the public nature of the company in the charter document.
- A restriction on the authorized capital has been introduced - no less than 10,000 rubles.
- Shares cannot be listed on stock exchanges.
The registrar maintains the register of company participants. Shareholder decisions must be confirmed by a registrar or notary.
Features of public and non-public companies
Features of the activities of public and non-public companies are determined by legal norms.
The main law regulating the activities of legal entities is the Civil Code.
Recent changes in legislation concern the organization and features of the work of societies:
- Decisions made by members of the society must necessarily be confirmed by a registrar or notary - thus, the procedure has become more complicated, since before the introduction of such changes confirmation was not mandatory.
- A provision has been introduced requiring an annual audit.
- Liquidation of this legal entity is impossible if the company has not paid all obligations to creditors.
- If a reorganization is carried out, it is necessary to secure all changes in the transfer deed - without this, it is impossible to transfer rights and obligations to the legal successor.
- One organization, by law, can have several directors.
- When registering, do members of the company have to pay? authorized capital, the remaining amount - within a year after the moment of official registration.
- If capital is contributed not by money, but by property, it is necessary to use the services of an independent property appraiser. Capital can be formed by securities.
- Financial responsibility lies with the managers - if necessary, creditors can demand that the manager cover losses.
Charter of the company, list of provisions that may be included in it
The charter of the company is the main document on which the activities of the partnership are based, has a regulatory nature and determines the features of the functioning of the legal entity.
The provisions of the document are accepted by shareholders upon registration of the company.
The document must indicate the norms and rules of internal and external relations of the company.
The Charter contains a general and a special part.
The first contains general provisions activities and their relationship with state laws.
The special part reflects the individual characteristics and characteristics of the activities of a legal entity, therefore this part cannot be identical for two different companies.
The text of the document must indicate:
- Name of company.
- Address/Metro of registration of the company.
- Type of legal entity.
- Features of the organization's capital.
- Rights of society participants.
- Features and controls.
- Responsibility of participants.
The charter must reflect the specifics of electing the audit commission, holding meetings of shareholders, and paying income on shares.
Concept and functions of a corporate agreement
Corporate agreement (agreement) - characteristic economic society. For the legal field of the Russian Federation, this documentation is an innovation. The purpose of signing a corporate agreement is to fix an agreement on the implementation of certain corporate rights.
The text of the agreement may indicate actions and methods for exercising corporate rights. by legal means. Participants of a company who have decided to enter into a corporate agreement must notify the company of which they are members.
A corporate agreement is concluded between members of an organization and represents the interests of this category of participants of a legal entity.
Information presented in the contract is publicly available if we're talking about about public societies. In non-public companies, the information specified in the contract is confidential - this is an important feature of this type of company.
The information specified in the corporate agreement can expand and clarify the provisions of the organization's charter.
The parties to the agreement, by signing this document, can regulate certain aspects of the management of the organization, exercise rights or refuse to exercise them, in certain circumstances.
Participants may, in accordance with the agreement, acquire or alienate shares of the authorized capital. The provisions of the agreement must not contradict the law.
A corporate agreement cannot:
- Force a participant to vote in a certain way;
- Determine or change the structure and features of management of a legal entity;
- Change the competence of functional units of a legal entity, whose functions are defined by the constituent documents;
- Create certain obligations for persons who did not participate in signing the document;
- Disclose the information contained in the document, unless otherwise permitted by law.
The presence of contradictions between the text of the agreement and the charter of the company does not make the agreement invalid.
Also, the validity of the contract is not interrupted if one of the participants withdraws from this agreement and terminates the right of a party to the contract.
If all participants of the company are members of the corporate agreement, a decision that contradicts its provisions may be declared invalid.
An important feature of the document is that it is drawn up in writing and must be signed by the parties to this agreement.
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Types of joint stock companies
Comparison Public and non-public joint stock companies
Doner 12/20/2018 21:24
Good afternoon The main difference is the different placement and circulation of shares. PJSC: all of its securities and shares are offered by public offering and are publicly traded in accordance with applicable securities laws. NAO: operate closed, their shares or securities cannot be placed by public subscription, since they are not publicly traded. Minimum authorized capital PJSC: 100 thousand rubles. NAO: 10 thousand rubles. Differences in controls PJSC: A board of directors (collegial management body) must be assembled, which includes at least 5 members. At the general meeting, only those issues that fall within its competence in accordance with the law are discussed. It is impossible to delegate certain powers of the general meeting to the board of directors. NAO: it is not necessary to assemble a board of directors. If it is created, it can assume all the functions of the board. The General Meeting is able to independently resolve issues that are not provided for by law. However, it is better to spell this out in the charter in advance. If any issues relate to the competence of the general meeting, they can be referred to the board of directors. Scope of Disclosure PJSC: they must disclose the information completely, plus they do not have the right to hide the content of the corporate agreement. NAO: are not required to disclose information or may provide it incompletely. The importance of confirmation of acceptance definite decision shareholders, and is it necessary to indicate which shareholders were present? PJSC: information can only be confirmed by the holder of the register, just like the composition of shareholders. NAO: The registry holder can also confirm the information, but his duties can be delegated to a notary. Who usually gives consent to the alienation of a block of shares? PJSC: No one’s consent is needed, and it is also impossible to establish a rule requiring it to be obtained. NAO: No one's consent is required. But sometimes, the charter contains information about obtaining the consent of certain shareholders or the company to alienate shares. Who has the right to purchase shares? PJSC: shareholders cannot receive any preference to purchase shares. But there are exceptions - this right applies to additionally issued shares, as well as securities convertible into shares. NAO: provides in advance in its own charter the rights of shareholders, incl. for the purchase of shares if they are sold by other shareholders. What is the purpose of limiting the number of shares a particular shareholder owns? Do such shares have a par value, and is the maximum number of votes granted to one shareholder taken into account? PJSC: All of the above restrictions are absent. NAO: Some of the restrictions can be prescribed in the charter, taking into account the decision of the shareholders, which they made unanimously. What determines the name of a joint stock company? PJSC: It is impossible to do without the word “public”; accordingly, the abbreviated name of the company will begin with the word “PJSC”. NAO: The concept of “non-public” is not specified, it is not added anywhere, that is, you can get by with the phrase “JSC”. How is the placement of preferred shares carried out? PJSC: You cannot issue any preferred shares if their price is lower than the price of ordinary shares. NAO: on the contrary, they are able to place preferred shares if their price is less than ordinary ones.
Dubrovina Svetlana Borisovna 21.12.2018 14:31
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I agree with my colleague.
Zakharova Elena Alexandrovna 22.12.2018 10:00
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Paragraph 2 of Chapter 4 of the Civil Code contains general rules on business partnerships and societies. The general rules are contained in Articles 66-68, these articles have been amended since 09/01/14. Article 66 establishes the legal definition economic company– is a corporate commercial organization with an authorized capital divided into shares; property created from the contributions of the founders belongs to him by right of ownership.
Features of a business company:
- 1. Availability of membership.
- 2. Availability of authorized capital, divided into a certain number of shares or shares.
- 3. Property belongs to the company by right of ownership.
- 4. The presence of corporate rights among the company's participants in relation to the company.
- 5. Management is carried out by forming a general meeting, decisions are made by voting.
- 6. General legal capacity of a business company.
Article 66.3 – public and non-public companies.
A new classification for Russian law into public and non-public companies is being introduced. The meaning of the classification: to protect joint-stock companies whose shares are not publicly placed from excessive regulation of joint-stock legislation.
Criteria for classifying a business company as public:
- 1. The presence in the company name of an indication of the publicity of the company.
- 2. Public placement of the company's shares on the stock exchange; public offering of securities convertible into shares.
The specified criteria are subject to application to those JSCs that were created before 01.09.14 and meet the criteria of publicity. The law established that only joint-stock companies can be public; non-public ones can include limited liability companies and joint-stock companies. The nature of legal regulation within public and non-public companies should differ significantly.
Public companies place shares on the stock exchange through open subscription, have the opportunity to attract any third parties to participate in the company, and, therefore, their actions can violate the rights and interests of an indefinite number of persons. To prevent such violations, the rules regarding the regulation of corporate relations in public companies must be more stringent.
Non-public societies attract close or predetermined circles of people to participate. GK in new edition allows non-public companies to change the general rules established by law and special legislation; such changes are made in the constituent document - the charter. The decision to establish rules other than those provided for by the Civil Code must be made unanimously by all participants in the company. The Civil Code only defines the scope of dispositivity.
The Civil Code provides for the opportunity for non-public companies to change the competence of the general meeting of participants - it can be either narrowed, i.e. Some of the issues that are legally considered by the general meeting can be transferred to the management of a collegial governing body (board of directors), or expanded, i.e., issues that are not considered by the general meeting can be included in the consideration of the general meeting. The Civil Code has established a number of issues that cannot be referred to another body for consideration. Issues that the general meeting always decides:
- 1. Amendments to the charter.
- 2. Reorganization and liquidation.
- 3. Formation of governing bodies (collegial and executive)
- 4. Determination of the amount of par value of a category of authorized shares, as well as determination of the rights that are provided by the shares.
- 5. An increase in the authorized capital, disproportionate to the shares of participants or at the expense of third parties.
- 6. Approval of internal documents that are not constituent.
In the list of issues that relate to the consideration of the general meeting, Article 66.3 does not include issues of distribution of profits and losses. There is no clear opinion in the literature regarding the possibility of transferring the issue of distribution of profits and losses to another body for consideration. The Civil Code contains Article 67.1, clause 2, which establishes the exclusive competence of the meeting of participants of a business company: exclusion of a participant from the company, distribution of profits and losses. The lecturer believes that it should be said here that there is a contradiction between norms 66.3 and 67.1.
The Civil Code allows the refusal to create a collegial body, provided that all the functions of such a body are transferred to a collegial governing body. In a non-public company, it is possible to exclude the audit commission from the body. The Civil Code allows the establishment of a different procedure for preparing, convening and holding a general meeting of participants and shareholders.
Attention! Each electronic lecture notes is the intellectual property of its author and is published on the website for informational purposes only.
Question: Which joint stock companies are public and which are non-public?
Answer: The characteristics of a public joint stock company are established in clause 1 of Article 66.3 of the Civil Code of the Russian Federation.
Public is Joint-Stock Company:
The charter and corporate name of which contain an indication that the company is public, even if the company’s shares are not placed by public subscription and are not publicly traded;
whose shares and securities convertible into its shares are publicly placed (through open subscription);
The shares of which and the securities convertible into its shares are publicly traded under the terms and conditions established by securities laws. Moreover, the charter of such a company and its corporate name may not contain an indication that the company is public.
A joint stock company that does not meet the above criteria is considered non-public (clause 2 of Article 66.3 of the Civil Code of the Russian Federation).
Article 7. Federal Law “On JSC”. Public and non-public companies (as amended by Federal Law No. 210-FZ of June 29, 2015) gives a more complete definition of a public or non-public company.
1. A company can be public or non-public, which is reflected in its charter and corporate name.
2. A public company has the right to place shares and issue-grade securities convertible into its shares through open subscription. Shares of a non-public company and issue-grade securities convertible into its shares cannot be placed through an open subscription or otherwise offered for purchase to an unlimited number of persons.
3. .............................................................................................................................................
In total, we can conclude that the following can be recognized as a public joint stock company:
1. JSC, the charter and name of which indicate this (voluntary publicity). There were no requirements for making such changes to the company’s charter until July 1, 2015.
2. A joint stock company whose shares are publicly placed (by open subscription) or have been placed (clause 1 of the Letter of the Central Bank of the Russian Federation dated August 18, 2014 No. 06 - 52/6680).
3.
A joint stock company whose shares are publicly traded (at organized auctions or by offering to an unlimited number of persons) or have been circulated (clause 1 of the Letter of the Central Bank of the Russian Federation dated August 18, 2014 No. 06 - 52/6680).
4.
A joint stock company whose shares are/were publicly traded. Public circulation means, inter alia, the sale of shares during privatization in ways that presupposed the participation of an unlimited number of acquirers, for example, sales to:
- auction;
- commercial competition;
- investment competition (bidding);
- specialized auction;
- specialized check auction.
To qualify as a public company, it is necessary that at least one transaction takes place during trading. If the privatization plan provided for sale to an unlimited number of persons, but according to the results of the auction not a single deal was concluded, then there is no sign of publicity. Public circulation means circulation carried out only in accordance with securities legislation. Those. not taken into account:
- sale at auction during enforcement proceedings;
- sale at auction during bankruptcy proceedings, etc.
From September 1, 2014, the types of joint stock companies have changed. Instead of open and closed joint-stock companies, the concepts of public and non-public are now used. Changes were made by Federal Law No. 99 dated 05/05/2014. “On amendments to Chapter 4 of Part 1 of the Civil Code of the Russian Federation” (hereinafter referred to as Federal Law No. 99). According to the new definition, Companies can now be public - the shares of which are placed and circulated in the public domain and (or) in their name and charter there is an indication of publicity (applies to former JSCs) and non-public - all others, which include LLCs and former CJSCs ( Article 66.3 of the Civil Code of the Russian Federation).
At the same time, all JSCs that meet the definition of publicity became automatic from September 1 and changes in the Civil Code made by Federal Law No. 99 are applied to them. As for JSCs, if the Company decides to remain closed, that is, non-public according to the new rules, then to it , until they make changes to the constituent documents, the provisions of Federal Law No. 208 of December 26, 1995 will apply. about JSC. In general, such a form as a closed joint-stock company is abolished. However, in the future there will be no need to change the name of non-public companies and add the word “non-public”, but you will only need to remove the word “closed”, leaving just JSC.
Today, the most common organizational and legal forms of doing business in our country are the Non-Public (Closed) Joint Stock Company (formerly CJSC). There is a fairly large amount of information about LLC on our website, thanks to which each of our visitors has probably already understood many issues related to the establishment of an enterprise in this organizational and legal form. But until now there has been no mention of a non-public joint-stock company. That is why we decided to correct this misunderstanding, and we bring to your attention a review article telling about the main points of registering an enterprise in the form of a joint-stock company.
Authorized capital of a non-public joint-stock company (CJSC)
The main difference between a non-public JSC (CJSC) and an LLC is the method of forming the authorized capital: unlike an LLC, where it consists of shares of participants, in a JSC authorized capital formed by shares. It is important to note here that shares are securities, while a share in the authorized capital of an LLC represents property law participant.
Specifically for the formation of the authorized capital, the shareholders of a non-public JSC (CJSC) issue shares, and also carry out their state registration. This is one of the main points that distinguishes a JSC from an LLC and extends it to the legislation on the securities market and the protection of investor rights. However, there are still similarities between a JSC and an LLC in terms of the authorized capital: just as the participants of an LLC have the opportunity to attract additional investments into the Company in the form of additional contributions to the authorized capital, so the shareholders of a non-public JSC can attract investments in the form of an additional issue of shares.
Shareholders of non-public joint-stock company (CJSC)
There is one more point that significantly distinguishes a non-public JSC (CJSC) from an LLC, and it is that the possibility of new shareholders cannot be completely excluded in a JSC. The only limitation in this regard is the pre-emptive right to purchase shares when selling to a third party. The main purpose of the pre-emptive right is to enable shareholders to remove a third party from participation in the Company, and it can only be achieved if the sale of shares does not take place at all; the sale of shares to a third party did not take place, and they were sold to the shareholders of the Company, as well as in the case where, under the agreement, rights and obligations were transferred to the person with the pre-emptive right to purchase.
No later than July 1, 2009, one of significant differences LLC from a non-public JSC (CJSC) it was possible for an LLC participant to leave the Company at any time by demanding payment of the value of his share in the authorized capital (in money or property). However, the law on LLC, which entered into force on July 1, 2009, establishes a restriction on this previous right, leaving the possibility of free exit from the LLC only if this is specifically stated in the Company’s charter.
As for rights, in a non-public joint-stock company (CJSC) the system of their distribution between the Company’s shareholders is built on a slightly different principle. Thus, the rights of shareholders in a joint-stock company depend on the category of shares owned by it, which, in turn, can be ordinary or preferred. But at the same time, the charter of a non-public joint-stock company cannot establish different rights or obligations for owners of only ordinary shares or only one type of preferred shares, since all ordinary shares (as well as all preferred shares of the same type) provide their owners with rights identical in content .
Payment of the authorized capital of a non-public joint-stock company (CJSC)
When creating a non-public JSC (CJSC), payment of the authorized capital before its state registration not required. However, there is a limitation on its payment: the authorized capital of the JSC must be paid in at least 50% within 3 months from the date of state registration of the Company.
One more nuance. In the event that a JSC pays for its authorized capital with property, it is necessary to evaluate this property in advance by an independent appraiser, which is now required to be done in an LLC, regardless of the amount of property being valued.
Transfer of the register of shareholders to an independent registrar
Also, all joint-stock companies, both public and non-public, should pay attention to the fact that from October 1, 2014, all registers of shareholders must be maintained by specialized registrars who have the appropriate license. This obligation was introduced by Federal Law No. 142 of July 2, 2013. “On amendments to subsection 3 of section I of part one of the Civil Code of the Russian Federation” last year. Moreover, as the Bank of Russia notes in its recent letter, no JSC has any exceptions for transferring the register if they were previously maintained independently. Therefore, be careful and have time to transfer the register of shareholders on time so as not to get fined up to 1 million rubles.
