A public joint-stock company is a new term in Russian civil law. At first glance, it may seem that NGOs and public joint-stock companies are the new names for CJSC and OJSC. But is that really so? Read more to find out more about the llp company registration in India.
What is a Public Joint Stock Company?
Federal Law No. 99-FZ (hereinafter referred to as Law No. 99-FZ) of May 5, 2014 was issued in addition to several new articles of the Civil Code of the Russian Federation. One of them, is art. The Civil Code of the Russian Federation 66.3 introduces a new classification of joint ventures. The already familiar CJSC and OJSC have now been replaced by NAO and PJSC – non-public and. This is not the only change. In particular, the notion of an additional liability company (ALC) has now disappeared from the Civil Code of the Russian Federation. However, they are not particularly popular: as of July 2014, according to the Consolidated State Register of Law Firms, there were only about 1,000 in Russia – 124,000 CJSCs and 31,000 OJSCs.
What is a Public Joint Stock Company? In the current version of the Civil Code of the Russian Federation, it is a joint-stock company in which shares and other securities can be sold on the market for free.
The rules of a public joint-stock company apply to the joint-stock company, whose charter and name specify that the joint-stock company is public. For PJSCs established before 09/01/2014, its company name contains a reference to the ad, a rule established by paragraph 7 of Art. Such PJSCs without public issuance of shares prior to 27. 07/01/2020 of the “Amendments …” Act dated June 29, 2015 No. 210-FZ must:
- Apply to the Central Bank with the application for registration of stock statement,
- Remove the word “public” from its name.
In addition to shares, a joint-stock company may issue other securities. However, art. The Civil Code of the Russian Federation provides advertising status only for bonds that can be converted into 66.3 shares. As a result, NGOs may introduce securities into public circulation, with the exception of convertible stocks and securities.
What is the difference between a public partnership and an open company?
Consider is different from JSC. Although the changes are not fundamental, their ignorance will seriously complicate the lives of PJSC management and shareholders.
If previously the obligation to publish information about the activities of the OJSC was unconditional, now a public entity has the right to apply to the Central Bank of the Russian Federation with an application for exemption from it. Although public and non-public organizations can take advantage of this opportunity , it is best suited for public publishing.
In addition, for an OJSC to include information about a single partner in the charter, as well as to publish this information. Now it is sufficient to enter the data in the consolidated state register of law firms.
Advance right to purchase shares and securities
An open joint-stock company has the right to issue additional shares and securities in its charter cases, subject to preferential purchase by existing shareholders and bondholders. The Public Joint Stock Exchange is liable in all cases governed solely by federal law on “joint stock companies” dated December 26, 1995 No. 208-FZ (hereinafter Law No. 208-FZ). References to articles in the Society are no longer valid.
Registration, commission counting
If in some cases the OJSC is allowed to maintain the shareholders’ own register, then the public and non-public joint stock companies should always outsource this task to specially licensed companies. At the same time, for PJSC, the registrar should be independent.
This also applies to the counting commission. Now, issues related to its capability must be determined by an independent body licensed for the relevant type of activities.
Public and non-public JSCs: What are the differences?
- In general, the rules previously used for OJSCs also apply to PJSCs. NAO, on the other hand, is essentially the former ZAO.
- The main feature of PJSC is the open list of share buyers. NAO, on the other hand, has no right to issue its shares at public auction: such action, by law, automatically converts to PJSC without amendment to the Charter.
- For PJSCs, administrative procedure is strictly enshrined in law. For example, the rule is still preserved so that the competence of the Board of Directors or the Board of Directors cannot include issues to be considered by the General Assembly. On the other hand, a non-public institution can transfer some of these issues to a college organization.
- The status of the participants and the outcome of the general meeting at the PJSC must be confirmed by a representative of the organization-registrar. NAO has a choice: you can use the same mechanism or contact a notary.
- The public non-joint stock companystill has the right to provide for the purchase of shares in advance in a charter or institutional agreement between the shareholders. Such an order is completely unacceptable to the public joint stock company .
- Corporate agreements concluded in PJSC should be published. For the NAO, it is sufficient to inform the company of the fact of termination of such agreement.
- Act no. The procedures provided by Chapter XI.1 of 208-FZ, after September 1, 2014, do not apply to JSCs whose position has been officially determined by changes in the Charter relating to concessions and notices for the repurchase of securities. Non-public.
Corporate agreement in joint-stock companies
An invention of PJSCs and NAOs is a corporate agreement. Under this agreement between the partners, all or some of them exercise their rights in a certain way:
- Take an integrated position in voting;
- Establishing a common price for their shares for all participants;
- Allow or prohibit their acquisition under certain circumstances.
However, the agreement has its limitations: it cannot force the shareholders to always agree with the position of the governing bodies of the JSC.
In fact, there are always ways to establish an integrated position for all or part of the partners. However, changes in civil law have now shifted from the category of “gentleman contracts” to the official plane. Now the violation of the corporate agreement may be a reason to recognize that the results of the general meeting are illegal.
For public companies, such an agreement may be an additional means of management. If all the shareholders (participants) participate in the corporate agreement, many issues related to the management of the company can be resolved not by the charter but by changing the content of the agreement.
In addition, if the powers of the shareholders (participants) under these agreements change drastically, the obligation for non-public sector entities to enter information about corporate agreements into the consolidated state register of law firms has been introduced.
Renaming JSC as a public offering
The public joint stock company should edit consolidation articles for JSCs who have decided to continue working in the status quo . The deadline for this is not established by law, but it is better not to delay it. Otherwise, problems may arise in relations with the opposing parties, as well as the ambiguity of what legal provisions should be applied in relation to the PJSC. Act no. 99-FZ establishes that the unconstitutional charter shall be applied in a manner that is inconsistent with the new provisions of the Act. However, what exactly contradicts and what does not is an important matter.
Renaming can be done in the following ways:
- In an extraordinary meeting of partners specially convened.
- At the partner meeting to determine other current issues. In this case, the change in JSC’s name will be highlighted as an additional item on the agenda.
- At the mandatory annual meeting.
Re-registration of old companies in new public and non-public law firms
The changes only apply to the name – just remove the words “open joint stock company” from the name and replace them with the word “”. Public Partnership “. However, at the same time, it should check whether the provisions of the existing charter are inconsistent with the provisions of the law. In particular, special attention should be paid to the provisions relating to this:
- Board of Directors;
- Advance right of shareholders to purchase shares.
In accordance with Part 12 of Art. 3 of Law No. 99-FZ, if the changes are related to bringing the name in accordance with the law, a company is not required to pay state duty.
In addition to JSCs, advertising and non-advertising signs now apply to other corporate forms of law firms. In particular, the law now directly classifies the LLC as a non-public entity. For a public joint stock company, amendments must be made to the charter. But, under the new law, is it necessary for companies that are considered public companies to do this?
In fact, for public companies, changes are not required. Nevertheless, it is still desirable to make such changes. This is very important for the former ZAO. Otherwise, such a name would be a negative anachronism.
Public Stock Exchange Model Charter: What to Look For?
In the past since the adoption of Law No. 99-FZ, many companies have already implemented the procedure for registering amendments to the Charter. Those who want to do this can use the sample PJSC charter.
However, when using the model, first of all, it is necessary to pay attention to the following:
- Association articles must contain a reference to the ad. Without it, the community would not be public.
- It is mandatory to involve the appraiser to make a property contribution to the authorized capital. At the same time, in the event of a miscalculation, both the partner and the appraiser must respond to the supplement within the exaggerated amount.
- If there is only one partner, it may not be specified in the charter even if there is such a clause in the model.
- At least at the request of shareholders holding at least 10% of the shares can be added to the charter rules regarding the audit procedure.
- Transformation into a non-profit organization is no longer allowed, and there should be no such provisions in law.
This list is not exhaustive, so when using models, be sure to check them carefully with current legislation.
“Public Joint Stock Company”: English translation
As many Russian PJSCs engage in foreign trade activities, the question arises: how should they now be officially called in English?
Previously, the English word “open joint-stock company” was used in connection with OJSC. By analogy with that, the current public joint stock companies can be called public joint-stock companies. This conclusion is confirmed by the fact that PJSCs have long used the term in relation to companies coming from Ukraine.
In addition, one must take into account the differences in the legal terminology of English-speaking countries. Therefore, by comparison with UK law, the term “public limited company” is theoretically acceptable, and with US law – “public company”.
However, the latter is undesirable because it can mislead foreign contractors. Obviously, the public-joint venture option is optimal:
- It is mainly used only for companies of post-Soviet countries;
- Refers very clearly to the institutional and legal form of society.
So, finally, what about innovations in civil law related to public and non-public law firms? In general, they make the system of institutional and legal forms for business entities in Russia more logical and compliant.
Making changes to the rules is easy. It is sufficient to rename the company in accordance with the new rules of the Civil Code of the Russian Federation. One step forward can be considered the legalization of agreements between shareholders (a corporate agreement under Article 67.2 of the Civil Code of the Russian Federation).
Various business entities, partnerships and cooperatives can cause chaos. Many people do not understand why different forms of activities should be created. It is worth understanding their differences. This will allow you to choose the best option. Therefore, we will find out how a common partnership differs from a limited partnership and what is the difference between a public and non-public partnership.
What is the difference between a public partnership and a non-public company?
To begin, we will look at the comparative characteristics of public and non-public joint stock companies. The first thing that distinguishes all types of joint-stock companies is the process of building its capital. For such companies, the issuance of shares is common, but the terms of their acquisition are different. There are also differences in the organization of participants, the amount of authorized capital and mandatory public reporting.
- One of the signs is the free distribution of shares. Anyone who buys shares can become a member of such a company. The number of participants in PJSC is very large and the management is carried out by 4 different types. At the same time, PJSC is obliged to issue open statements annually, and the authorized capital should not be less than 100,000 rubles.
- The main management link is the meeting of the founders. They only have the right to hold shares and their free distribution is unacceptable. The number of NAO participants should not exceed 50. If this number is exceeded, a change in the form of operation is required. When one of the NAO members withdraws, the right to purchase his or her shares is transferred to the other participants. This form of organization does not require the issuance of financial statements, and the authorized capital is at least – 10,000 rubles.
Below is a table comparing the characteristics and differences between public and non-public joint stock companies.
Differences between public and non-public joint stock companies
Now let’s talk about the difference between a common partnership and a limited partnership.
Comparison of general partnership with finite partnership (limited partnership)
These two types of partnerships differ in the form of management and the responsibility of the participants. There are two types of partnerships. There are whole comrades in every kind of such organization. They are only present in PT, and there are also limited partners in a limited partnership. The latter cannot participate in the management of the partnership, nor can they respond to debts greater than the amount of their contribution. The two types of public partners are responsible for all their assets, regardless of the size of the stake in the company.
- A common partnership refers to the equal rights and obligations of all participants. There should not be less than two of them, but at the same time they should be or. Each participant has 1 vote, and decisions are made unanimously or by a majority of participants, depending on the instructions in the association’s memorandum. The shareholders accept full responsibility for all their assets.
- There are 2 types of participants. Some of them do not have a role in the administration and accept minimal responsibility – these are comrades-in-arms. They do not have the right to vote in decision making and are only responsible for the amount of their contribution to the partnership debt. The second type of participants are full comrades. They are the ones who manage the company according to the recommended features and take full responsibility for the debt obligations that arise.
Differences between business partnerships and production partnerships
There are important differences between the two forms of organization. They also apply to the responsibility of the participants, their number, and even the form of contribution.
Cooperatives are often organized for a specific purpose and a particular type of partnerships are established for profit.
Symptoms of HT
Depending on the number of participants allowed. Full and partial liability for debt liabilities is possible. Public shareholders are responsible for their personal assets, and limited partners only to the extent of their contribution. The choice of form depends on the participants, while the public partners must provide an individual entrepreneur or legal entity.
Without the need for personal labor contributions from participants, HT in any form often involves a set of capital and experience. , In which one participant must be socially renamed if remaining.
Individuals who are unable to provide funding may become members. As a share, personal property or labor is allowed to contribute. The number of members of a co-operative should not be less than five, although their liability is a subsidiary, it has certain features. When the number of participants is less than 5, the co-op is obliged to change the format or take additional members with his voluntary consent.
According to the charter, the liability may be limited to a certain amount. The law allows its value to be linked to the size of the share. At the same time, the size of the stock may vary from one participant to another. Cooperative members are not needed by everyone
What is a public company?
Public companies are joint-stock companies whose bonds are traded freely on the stock exchange. Such companies are required to publish information about their owners and subsidiaries, as well as significant facts that may affect the performance of the issuer. This is necessary in the interests of potential shareholders to increase the transparency of the process of investing in company securities.
Public companies are characterized by the following features:
- Shares of the Company may be purchased and sold freely by an unlimited number of persons;
- Information about the ownership structure and decisions of the joint venture company’s economic activities is in open source;
- A public company’s securities are placed on the stock exchange or sold through an open subscription, including the use of advertising;
- Data on completed transactions by company shares (their number 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 a public company in 2 cases:
- Under the “Securities Market” Act, a company sells its shares for free circulation by placing them on a public subscription or on the stock exchange.
- The name and charter indicate that the system is public.
If an existing company has the characteristics of an open joint-stock company, it acquires general status, regardless of whether it is named in the company name. CJSC and other organizations that do not have these features are recognized as non-public.
From the moment of assignment of status, the activities of public enterprises in Russia are regulated by the laws of joint-stock companies (No. 208-FZ of December 26, 1995) and securities (No. 39-FZ of April 22, 1995). 1996).
Consequences of gaining general status
Advertising of a company implies increased liability and strict control of its operations as it affects the property interests of a large number of shareholders.
- In accordance with paragraph 7 of Article 3 of Law No. 99-FZ, the name and block documents of law firms must be brought in accordance with the new version of the Civil Code. That is, open joint stock companies operating on September 1, 2014 are required to register changes to their company name in the Consolidated State Register of Law Firms, including a sign for advertising. At the same time, there is no need to make changes in the title documents unless they are in violation of the provisions of the Civil Code – this can be done in the first change in the block documents of the JSC.
- From the moment the status of the advertisement in the name of the company is fixed in the Consolidated State Register of Law Firms, it acquires the right to place its shares in the bond market.
- A public company must have a joint board of directors of at least 5 members.
- The maintenance of the register of shareholders of the public JSC is transferred to an independent licensed entity.
- The company has no right to interfere in the free circulation of its shares: to impose restrictions on the size and value of the package in the hands of an investor, to give individuals an advance right to purchase securities, and to prevent any alienation. Shares at the request of the shareholder.
- The Provider is obligated to keep information about its activities in the public domain:
- Annual report;
- Annual financial statements;
- List of subsidiaries;
- JSC Charter;
- Decision to issue shares;
- Notice to hold a meeting of shareholders;
- Other data provided by law.
In fact, changes in the law will not significantly affect joint-stock companies that are open in legal form and essence. As of September 2014, most CJSCs and OJSCs did not place their bonds on the stock exchange, but placed them in the circle of limited individuals, which were only “on paper” as joint-stock companies. In fact, they were limited liability companies where the participants received shares in lieu of shares in the authorized capital. Now this position of non-public companies is stable.
Since September 1, 2014, the types of joint-stock companies have changed. Instead of open and closed joint-stock companies, concepts are now used – public and not public. Changes were made by Federal Law No. 99 dated 05.05.2014. “On Amendments to Chapter 4 of Part One of the Civil Code of the Russian Federation” (hereinafter – Federal Law No. 99). Under the new definition, companies can now be public – their shares are placed and distributed in the public domain and (or) advertising in their name and charter (applicable to former OJSCs) and non-public – all retirement, including LLC and former CJS. .C (Article 66.3 of the Civil Code of the Russian Federation).
At the same time, from September 1 all JSCs that meet the ad definition will automatically change and federal law no. Modifications of the Civil Code made by 99 apply to them. According to JSC, if the company decides to close, it is, under the new rules, non-public, until they make changes to the block documents, Federal Law No. 12/26/1995. The rules of 208 apply. About ZAO. Typically, such a form of closed joint-stock company is canceled. However, in the future it is not necessary to change the name of non-public sector companies to include the word “non-public”, but to remove only the word “closed” and leave JSC alone.
To date, the most common institutional and legal forms of doing business in our country are public non-closed (joint) joint venture (formerly CJSC). Our website contains a lot of information about LLC, thanks to which each of our visitors may have already discovered many issues related to setting up a company in this corporate and legal format. But so far no mention has been made of a non-public sector joint-stock company. That’s why we decided to correct this misconception and bring to your attention an overview article that tells you about the key points for registering a company in JSC format.
Authorized Capital of a Non-Public JSC (CJSC)
The main difference between a public non-joint stock company (CJSC) and an LLC is the method of creating authorized capital: Unlike an LLC, which consists of the shares of the participants, the authorized capital in the joint stock company is created by the shares. It is important to note here that shares are securities, while shares in the authorized capital of the LLC are the property of the participant.
To create particularly authorized capital, non-public JSC (CJSC) shareholders issue shares, as well as their state register. This is a characteristic difference between a JSC and an LLC, and it extends to the effect of the law on the bond market and the protection of investor rights. However, there is still a similarity between a JSC and an LLC in terms of authorized capital: just as participants in an LLC can attract additional investment to the company in the form of additional contributions to authorized capital, non-public JSC shareholders can attract investment in the form of additional issue of shares.
Public Non-JSC (CJSC) Partners
There is another point that significantly distinguishes a non-public joint venture (CJSC) from an LLC, and the possibility of new shareholders in a joint venture cannot be completely ruled out. The only restriction is the foreclosure right to purchase the shares when selling to a third party. The main purpose of the foreclosure right to purchase is to help the shareholders remove the third party from participating in the company, and this can only be achieved if the sale of the shares has not taken place; The sale of shares did not take place to a third party, and they were sold to the shareholders of the company, as well as to someone with a prior right to purchase, if the rights and obligations under the contract were transferred.
As of July 1, 2009, one of the notable differences between LLC and non-public JSC (CJSC) is the ability of LLC members to leave the company at any time. Authorized capital (cash or property). However, the law on LLCs, which came into force on July 1, 2009, establishes a restriction on this former ownership, leaving out the possibility of a free withdrawal from the LLC only if it is stated separately in the company charter.
In terms of rights, in a non-public JSC (CJSC), their distribution system among the company’s shareholders is based on a slightly different policy. Therefore, the rights of shareholders in a JSC depend on the type of shares it holds, which may be normal or desirable. But at the same time, the charter of the non-public JSC does not establish different rights or obligations for the owners of ordinary shares or only one type of preferred shares, because all ordinary shares (all preferred shares of the same category) grant the owners the same rights in content.
Payment of Authorized Capital of a Non-Public JSC (CJSC)
When creating a non-public JSC (CJSC), it is not required to pay the authorized capital prior to its state registration. However, there is a limit to its fees: JSC’s authorized capital must be paid at least 50% within 3 months from the date of state registration of the company.
One more subtlety. If a joint-stock company pays its lease capital with the property, the property needs to be assessed in advance by an independent appraiser, which must now be done in the LLC, regardless of the value of the property.
Transferring the shareholders’ record to an independent registrar
Furthermore, all JSCs, public and non-public, from October 1, 2014, should focus on maintaining that all partner records are maintained by appropriately licensed specialized registrars. Federal Law No. dated 02.07.2013. 142 This duty was introduced by. Last year “Amendments to Subsection 3 of Part I of the Civil Code of the Russian Federation”. At the same time, as Bank of Russia points out in its latest letter, there are no exceptions for any JSC to change the register, if they have previously been conducted independently. So, be careful and not to be fined up to 1 million rubles, there will be time to change the record of shareholders in a timely manner.