A closed joint-stock company is a commercial organization that is opened by one or more founders. It can be foreign citizens or citizens of the country in which the company is opened, but their number should not be more than 50 people. For a CJSC, there is the smallest amount of authorized capital under Russian law, which is 100 minimum wages. Its payment can be made in cash or property. After registration, the company is given no more than three months to pay half of this amount or more. Another nine months is given to pay the rest of the amount.
Features
A closed joint-stock company is a convenient solution in the sense that the liability of its participants extends only to the funds for which shares were purchased. If the company needs to be closed, they will not incur any additional material costs. At the same time, successful business will allow shareholders to receive certain dividends from securities. Closed Joint-Stock Company (CJSC) is also distinguished by the impossibility of distributing its securities. In fact, they belong exclusively to a narrow circle of persons, the data on which are included in the charter of the enterprise. Moreover, under the ban, the alienation of shares without the consent of the other participants of the enterprise to unauthorized individuals or legal entities. Work in a company is not accompanied by mandatory involvement in shareholders. All this becomes a powerful obstacle to attracting third-party investments in the main activities of the organization.
But if it was possible to change the composition of the shareholders included in the closed joint-stock company, the founders should not notify any government agencies about this. On the procedure for the establishment and operation of a closed joint-stock company, everything is prescribed in the Civil Code and some federal laws.
Background and Basics of Creation
Although a certain share of joint-stock companies was present in the USSR economy, the modern history of such entrepreneurship started only in the second half of the nineties of the last century, after the RSFSR Council of Ministers adopted the Regulation on joint-stock companies and limited liability companies. Now there are several documents that regulate the activities of such organizations:
- The Civil Code of the Russian Federation, part one, articles 96-106.
- Federal Law No. 208 – Federal Law of 12/26/96 "On Joint-Stock Companies".
- The Arbitration Code of the Russian Federation.
- Federal Law "On Banks and Banking", as well as other laws that spell out how organizations operate in the financial market.
- Federal Law "On the Privatization of State Property" and related documents.
Features of the activity
Joint stock company open and closed are two types of legal form that have certain similarities and differences. In modern Russian legislation there is no data on whether these forms of entrepreneurship are different or they can be only two varieties. To better understand what a joint stock company is open and closed, a list of their mutual differences will be presented below.
Distinctive features
So, we come to the definition of the differences between the two types of legal form of activity. A closed joint-stock company is an organization whose shares are distributed exclusively among the founders or other persons determined in advance. Such an enterprise is denied the right to subscribe for shares. Participants are not allowed to distribute securities among a wide range of legal entities and individuals.
CJSC shares
Another characteristic of a closed joint-stock company is that the capital of such a company is divided into parts that are dispersed among a limited number of shareholders. Each of them has obligations in relation to the property of the organization, as well as liability to the extent of these obligations. The distribution of shares among shareholders can be carried out in various ways, but at the stage of creation this happens only between the founders. Each of them has the right to subsequent sale of securities to new members of the CJSC, among which sometimes even hired workers' organizations.
The situation in other countries
Abroad, the state is engaged in stimulating the distribution of company shares among representatives of the labor collective. For example, in the USA, companies that practice this approach receive tax breaks in the amount of 5-25% of the main rate. Therefore, work in a closed joint-stock company is often accompanied by the acquisition of part of the shares. But not all members of the workforce are ready to become shareholders. Most are quite satisfied with the status of an employee, as they are not ready to take risks, becoming co-owners of the company's securities.
CJSC and LLC
Earlier, the Law on Enterprises and Entrepreneurship was in force on the territory of the Russian Federation, according to which the CJSC was not separated in any way from the LLC as a legal form. These two types of organizations still have a number of similar features:
- The formation of the authorized capital with its subsequent division into shares is exactly the same. Each member of such an organization owns his personal share, which serves as the object of his possession, disposal and use.
- The responsibility of shareholders in both forms of ownership is exactly the same; participants bear the risk of losses only within the limits of ownership of shares.
- The distribution of property and income of this business company due to liquidation is completely identical. The property and profit of each of these business entities shall be distributed according to the shares of participants in the authorized capital, unless otherwise indicated in the constituent documentation.
- The closed joint-stock company, like the LLC, suggests that its participants have the same roles in its management. The capabilities of each shareholder directly depend on the size of its part in the authorized capital, unless the constituent documentation contains other information.
- In ZAO and LLC, the nature of participation is closed, which implies a clearly fixed composition of participants, the presence of restrictions on this composition, the mandatory consent of all participants when attracting a new one.
- Both of these forms of organizations apply the same approach to determining the capabilities of an institution by a single person. At the same time, a joint-stock company cannot belong to a single participant in the event that it is another business company that includes only one founder.
Legislative changes
In recent years, active work has been carried out so that it is impossible to identify a closed joint-stock company with an LLC, therefore, in the process of developing the Civil Code of the Russian Federation and the laws that followed it, the distinguishing features that these forms of organizations have been established are:
- LLCs can issue securities, but cannot issue shares, which allow determining the share of legal entities and individuals in the authorized capital with the subsequent calculation of dividends. A CJSC is obliged to issue securities. In this case, it is mandatory to register the shareholders, where all members of the organization will be entered, which is not used for LLC.
- The shares of LLC participants in the authorized capital can be divided into any number of parts, while the shares of the shareholders of the company are indivisible. This means that no participant can sell or transfer his share of the authorized capital.
- CJSC shares are not only an indicator of ownership, but also an object of inheritance. It turns out that the successors to the shareholders of the CJSC must be accepted as members in the process of entering into the right of inheritance. In LLC such a feature is missing.
- In the event of withdrawal from the LLC, participants may demand the allocation of shares in the property belonging to them, if it is prescribed in the charter, but the shareholders of the company are not entitled to make such demands. It turns out that the shareholders do not have the opportunity to insist on the return of the funds contributed by it to the CJSC or to pay the cost of its shares, they can only ask the rest of the participants to give their consent to the transfer of shares to other shareholders or third parties. This may require a reorganization of the company.
- In a closed joint-stock company, a register of shareholders must be kept, in which it is required to indicate information about each registered person, as well as the size and composition of the block of shares that belongs to him.
- Joint stock company open and closed is taxed differently. In the process of issuing new shares, the LLC is obliged to pay a tax of 0.8% of the nominal value of the issued securities.
- In LLC, the cost of opening is always less than in a company.
Closed Joint-Stock Company: establishment
Sometimes a closed joint-stock company is formed due to the fact that the founders want to create a joint-stock company, although LLC could also become the object of foundation. This is due to the fact that the term “joint-stock company” sounds much more solid and impressive than a limited liability company. The inhabitants perceive such a business as more stable, respectable and prestigious. Therefore, a private entrepreneur will try not to miss this opportunity by disguising himself as a shareholder of a closed joint-stock company with a single founder.
Classic approach
A closed joint-stock company is an association of the capital of participants, the composition of which should be formed as a result of the personal choice of each of the shareholders. Any person who has bought at least one share of a closed joint-stock company becomes a professional co-owner of this joint-stock entrepreneurial company, which has some important features:
- shareholders do not have subsidiary liability associated with the obligations of the structure to creditors;
- A closed joint-stock company possesses property completely separate from the property of shareholders, and therefore, in case of insolvency of the company, the risk of shareholders will only be due to the depreciation of shares owned by them;
- CJSC shareholders have property and personal rights.
If we talk about working in a company, then there are no differences from other organizations. Employment, payment of wages and bonuses, as well as dismissal are carried out in accordance with labor law.