The essence and characteristics of public and non-public societies
In order to understand how to determine the status of a particular society, it is necessary to analyze the norms that define these categories.
Public society - a joint stock company whose shares and securities convertible into its shares:
publicly posted (through open subscription);
and/or publicly traded under the terms and conditions required by securities laws.
Rules about public societies also apply to joint stock companies, the charter and company name of which contain an indication that the company is public (Clause 1, Article 66.3 of the Civil Code of the Russian Federation).
Public company is a business company based on shares (securities), who are placed and circulate among an indefinite circle of people. This is a society with an unlimited and dynamically changing composition of participants. Publicity means that the corporation focuses on an unlimited number of participants (shares are offered for sale to a wide range of people).
Public companies are characterized by a large number of diverse shareholders. In order to ensure a balance of interests of the latter, the activities of such joint-stock companies are primarily regulated by imperative norms, which prescribe unambiguous, standard rules of conduct for participants in the corporation. The use of standards that cannot be changed at the discretion of the prevailing participants in the society guarantees the attraction of investors.
Public companies borrow on the securities market among an unlimited number of people; they cover a larger array of diverse investors: institutional (state, banks and investment companies), collective (collective investment funds, pension funds), small individual investors. The activities of public companies are to a greater extent regulated by imperative norms designed to ensure a balance of interests of a heterogeneous and dynamically changing mass of investors. Therefore, this type of economic society, unlike a non-public one, has little freedom of intra-corporate self-organization.
Non-public company - a business company that does not meet the criteria established by law for public companies. This is a limited liability company and a joint stock company that does not meet the criteria specified in paragraph 1 of Art. 66.3 of the Civil Code of the Russian Federation (clause 2 of Article 66.3 of the Civil Code of the Russian Federation).
Non-public companies are, firstly, business companies whose shares are placed among a predetermined circle of persons and are not publicly traded. Secondly, this category includes companies based on a low-current asset - a share in the authorized capital of an LLC. Such companies are focused on a limited, small, predetermined number of participants. They can use special mechanisms to control the personal composition of their participants and they have much more freedom of internal corporate self-organization.
The activities of non-public companies are primarily regulated by dispositive norms of legislation, allowing for the establishment of individual rules of conduct (interaction) for corporation participants at their discretion. Non-public companies do not borrow from open market. They are addressed with more dispositive norms; they have potentially greater freedom of internal corporate self-organization - that is, the ability to establish rules of interaction at their own discretion.
Currently, the divide between strong mandatory regulation of intracorporate relations and significant dispositive principles passes between two types of business companies - joint stock and limited liability companies. The reform of the Civil Code of the Russian Federation shifted it along the line of public and non-public companies.
Criticism is expressed about the unification into a general type of business company (non-public) of various types of business companies: joint-stock companies based on shares and limited liability companies based on shares in the authorized capital. According to some experts, this leads to a mixture of these essentially different economic societies.
One of the organizational and legal forms, which until September 1, 2014 was provided for by the legislation of the Russian Federation (Civil Code of the Russian Federation, Article 95) for commercial organizations. A company established by one or several persons, the authorized capital of which is divided into shares of the size determined by the constituent documents; Participants of such a company jointly and severally bear subsidiary liability for its obligations with their property in the same multiple of the value of their contributions, determined by the constituent documents of the company.
Additional liability company– a commercial organization with a number of participants of at least two and no more than fifty, the authorized capital of which is divided into shares of sizes determined by the constituent documents.
Control. The supreme body is the general meeting of participants; The executive body is the board or directorate and (or) director or general director. The control body is the audit commission or auditor.
Rights:-receive part of the profit, vote at the general meeting of participants; -receive information about the activities of the company; - leave the company regardless of the consent of other participants and receive part of the value of the company’s property corresponding to the share in the authorized capital; -sell your share to other participants or third parties; -to receive, upon liquidation of the company, part of the property remaining after settlements with creditors.
Responsibilities: - make a contribution to the authorized capital; -take part in the management of the company; - not to disclose confidential information about the activities of the company.
Peculiarities. In general, additional liability companies were subject to the provisions of the legislation of the Russian Federation on limited liability companies, with the exception of the subsidiary liability provided for the participants of such a company, which they bore for the obligations of the company jointly and severally with all their property in the same multiple of the value of their contributions, determined by the founders documents of the company. Thus, for participants in companies with additional liability, there was no limitation of liability, which is provided to participants (shareholders) of other forms of business partnerships and companies.
Responsibility. Participants in such a company bear subsidiary liability for its obligations with their property in the same multiple of the value of their contributions, determined by the constituent documents of the company. In the event of bankruptcy of one of the participants, his liability for the obligations of the company is distributed among the remaining participants in proportion to their contributions, unless a different distribution procedure is provided for by the constituent documents of the company. The rules of the Code of the Russian Federation on LLCs apply to a company with additional liability.
Non-public joint-stock company (NAO) (Closed joint-stock company, CJSC)
This is a joint stock company, the shares of which are distributed only among its founders or other predetermined circle of persons.
Features of the JSC. Its advantage is that the founders bear limited liability for the debts of the organization they created within the value of the contributions made to the authorized capital. CJSC is today one of the most common organizational and legal forms of commercial organizations in the field of small and medium-sized businesses. The form of a closed joint stock company often gives rise to dangerous misconceptions. Shareholders believe that they are reliably protected from unwanted partners entering their business, because the law states that a shareholder, before selling shares to a third party, must offer other shareholders to buy the securities alienated to them. Unfortunately, this requirement is easy to circumvent. The rule is mandatory only in case of alienation for compensation; if a gift or inheritance occurs, then this rule does not apply.
Responsibilities. Before selling shares to a third party, a participant in a closed joint-stock company must offer other shareholders to buy the securities alienated by him. In cases provided for by the law on joint stock companies, a closed joint-stock company may be required to publish an annual report, balance sheet, and profit and loss account for public information.
Profit distribution. In a closed joint-stock company, shares are distributed only among a pre-determined (closed) circle of persons (for example, only among its participants). If there is 1 participant, then this must be reflected in the charter (clause 6 of article 98 of the Civil Code of the Russian Federation). In a closed joint-stock company, the possibility of new shareholders appearing in the company cannot be completely ruled out. Before selling shares to a third party, the shareholder must offer other shareholders to buy the securities alienated by him. The number of participants in a closed joint stock company must not exceed the number established by the law on joint stock companies.
Public and non-public companies as subjects of business law
Federal Law No. 99-FZ, adopted on May 5, 2014, amended civil legislation regarding the organizational and legal forms of legal entities. On September 1, 2014, the new provisions of Article 4 of the first part of the Civil Code of the Russian Federation came into force:
1. This form of legal entity, such as a closed joint stock company, has now been abolished.
2. All business entities are divided into public and non-public companies.
What are public and non-public joint stock companies
Public joint stock company is considered public if its shares and securities publicly posted or circulated on the securities market. A joint stock company is also considered public if the charter and company name indicate that the company is public. All other joint stock companies (JSC) and limited liability companies (LLC) will become non-public
What is a public company
Such organizations are subject to mandatory disclosure requirements about owners and affiliates, as well as material facts that could affect the issuer’s activities. This is necessary in the interests of potential shareholders to increase the transparency of the process of investing in the company's securities.
Public companies are characterized by the following features:
- the company's shares can be purchased and freely sold by an unlimited number of persons;
Information about ownership structure and results economic activity joint stock company is in open sources;
Securities of a public company are placed on the stock exchange or sold by public subscription, including through advertising;
Data on completed transactions with the company's shares (their quantity and price) are available to all market participants and can be used to analyze the dynamics of the value of securities.
Conditions for classifying a company as a public company
According to the new standards (Article 66.3. No. 99-FZ), a joint-stock company is recognized as public in 2 cases:
1. The company issues its shares for free circulation through open subscription or placement on the stock exchange, in accordance with the Law “On the Securities Market”.
2. The name and charter indicate that the organization is public.
If an existing company has the characteristics of an open joint-stock company, it receives public status, regardless of whether this is mentioned in the company name. CJSC and other organizations that do not have these characteristics are considered non-public.
Consequences of acquiring public status
Publicity of a company implies increased responsibility and stricter regulation of its functioning, since it affects property interests large number shareholders.
1. open joint stock companies operating as of September 1, 2014 must register changes in their corporate name in the Unified State Register of Legal Entities, including an indication of publicity. At the same time, there is no need to make adjustments to the title documents, if they do not contradict the norms of the Civil Code - this can be done the first time the constituent documents of the JSC are changed.
2. From the moment the status of publicity in the name of the organization is recorded in the Unified State Register of Legal Entities, it acquires the right to place their shares on the securities market
3. A public company must have a collegial management body consisting of at least 5 members.
4. Maintenance of the register of shareholders of a public JSC is transferred to independent licensed company.
5. Organization not entitled interfere with the free circulation of their shares: impose restrictions on the size and value of the package in the hands of one investor, give individuals a preemptive right to purchase securities, and prevent in any way the alienation of shares at the request of the shareholder.
6.The issuer is obliged to open access post information about your activities:
annual report;
annual financial statements;
list of affiliates;
JSC charter;
decision to issue shares;
notice of holding a meeting of shareholders;
other data required by law.
Legislators believe that business organizations in the form of closed joint stock companies, in fact, are not joint stock companies, since their shares are distributed among a closed list of participants and may even be in the hands of a single shareholder. Thus, these companies are practically no different from limited liability companies and can be transformed into an LLC or a production cooperative.
Reorganization of a closed joint-stock company into a limited liability company is not required. CJSC has the right to retain shareholder form and acquire non-public status in that case, if he has no signs of publicity.
Amendments to civil legislation practically do not affect OOO. According to the new classification, these legal entities are recognized non-public automatically. They are not assigned any responsibilities for re-registration in connection with the new status.
Non-public joint-stock companies
A non-public joint stock company is a legal entity that meets the following criteria:
the minimum amount of authorized capital is 10,000 rubles;
number of shareholders – no more than 50;
the name of the organization does not indicate that it is public
The company's shares are not listed on the stock exchange and are not offered for purchase by public subscription.
from the corporate name of the company it follows delete the word "closed".
Recognizing a JSC as non-public provides it with much greater freedom in managing its activities compared to a public company. Thus, the former closed joint stock company is not obliged to publish information about its work in open sources. By decision of the shareholders, management of the organization can be completely transferred to the hands of the board of directors or the sole executive body of the company. The meeting of shareholders has the right to independently determine the par value of shares, their number and type, and grant additional rights to individual participants. JSC securities are bought and sold through a simple transaction.
All decisions of the JSC must be certified by a notary or registrar. Maintaining the register of shareholders of a non-public joint stock company is transferred to a specialized registrar.
LLCs as non-public companies
The minimum amount of authorized capital is 10,000 rubles;
Number of participants – maximum 50;
The list of participants is maintained by the company itself, all changes are registered in the Unified State Register of Legal Entities;
The powers of participants are by default established according to their shares in the authorized capital, but can be changed if the non-public company has a corporate agreement or after introducing the relevant provisions into the company’s charter with recording of amendments in the Unified State Register of Legal Entities;
The transaction for the alienation of shares is formalized by a notary, the fact of transfer of rights is entered into the Unified State Register of Legal Entities.
Unlike the documentation of public companies, the information contained in the corporate agreement of a non-public limited liability company is confidential and is not disclosed to third parties.
Registration of decisions of company participants must be carried out in the presence of a notary. However, there are other possibilities that do not contradict the law, namely:
Introducing changes to the charter that define a different method of confirming decisions of the meeting of LLC participants;
Mandatory certification of the company's minutes with the signatures of all participants;
Application technical means, recording the fact of acceptance of the document.
Along with closed joint-stock companies, the form of legal entities ALC (additional liability company) is also excluded from civil law. According to the new rules, such organizations must re-register as non-public LLCs.
The concept and characteristics of a public society
Public and non-public societies are organized and operate in accordance with the law.
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 size 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 to the board of directors general meeting. 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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Ten key differences between a public JSC and a non-public one
Concepts of public and non-public companies
The concepts of public and non-public companies are enshrined in Article 66.3 of the Civil Code.
Public joint stock companies- these are companies that are based on shares (securities) that have a large-scale free circulation market. These are societies with an unlimited and dynamically changing composition of participants.
Non-public joint stock companies- these are business companies based on shares that do not enter the organized circulation market.
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We have presented the main differences between public JSCs and non-public ones in a convenient table
№ |
Difference |
Public JSC |
Non-public JSC |
Legal norm |
| 1 | Placement and circulation of shares is the main difference | Shares and securities that are convertible into shares are placed by public subscription and are publicly traded in accordance with securities laws | Shares and securities cannot be placed by open subscription; they are not publicly traded |
|
