Non-public joint-stock companies have appeared in the business community. And all because the sensational amendments to the Civil Code were adopted. What are they? What types of organizations in accordance with them appeared in Russia? What should the correct name of a non-public joint stock company sound like if we are going to conduct business within the framework of this legal form? We will try to answer these questions and at the same time consider the most remarkable nuances that reveal the essence of legislative innovations.
New law
Such a phenomenon as a non-public joint - stock company is completely new to Russia. This term has been disseminated only after some legislative reforms carried out in September 2014. Then several amendments to the Civil Code of the Russian Federation came into force. According to them, joint - stock companies of open and closed type as types of legal form of work of enterprises received a different name. Now in circulation other terms, namely - "public" and "ordinary" society. What are they?
Public companies now include organizations holding shares and securities that are placed in an open format (or circulated in the market in accordance with the norms of legal acts regulating the circulation of securities). Other types of business companies - CJSC, as well as OJSC - which do not have securities in free circulation, receive the status of "ordinary". Their name sounds like "joint stock company", without any additions. We also note that such a format for organizing enterprises as ODLs, in principle, was not classified and abolished in any way. Thus, firms established before September 2014 should be renamed accordingly. New ones will function in the status established by law.
Nuances of terminology
The new law does not contain a term that would sound just like a “non-public joint-stock company”. Thus, such a legal form as a closed joint-stock company has not received a direct analogue. However, if the organization still has shares, even if they are not launched in free trade, the use of the term "non-public joint-stock company" in relation to them is quite acceptable in an informal manner. In turn, an LLC in which there are no shares (there is only authorized capital) is still called.
So, the main criterion of "publicity" is the open trade in stocks and other securities. In addition, experts note that another aspect is equally important. The "publicity" of the joint-stock company, in addition, should be reflected in its charter.
We also note that under the new law, re-registration of organizations in order to bring their names in accordance with the amendments does not need to be carried out urgently. In addition, in the implementation of the relevant procedure, firms are not required to pay state fees. An interesting fact is that the amendments to the Civil Code of the Russian Federation in question were initiated by the authorities in 2012.
LLC is a non-public company?
With regard to such a legal form of business as LLC, a peculiarity takes place regarding the amendments to the Civil Code of the Russian Federation under consideration. On the one hand, in the new version of the Code, LLC now refers to non-public companies, along with "former" CJSCs. On the other hand, other provisions of the Civil Code of the Russian Federation do not say anything about changing their status. Thus, an LLC is, it seems, a “non-public company”, like a closed company, and at the same time it is an independent organizational and legal form of an enterprise.
Three types of societies
So, what do we have about the amendments to the law? There are three main types of organizations in Russia.
1. Public Joint Stock Companies
These are enterprises that have shares rotating in free circulation. In any case, these are "former" OJSC.
2. Two subtypes of non-public companies:
- AOs that do not have shares in free circulation (these can be both “former” CJSCs and OJSCs with securities not issued for sale), unofficially - “non-public joint-stock company”;
- LLC without shares.
Former ODOs have been abolished. Those firms that managed to register in this status will now be subject to the standards specific to LLCs.
Nuances of re-registration
What do registered firms need to do? Do they need to rename in accordance with the new rules of the Civil Code of the Russian Federation? Lawyers believe that no, based on the content of the norms of amendments to the Code. The fact is that in the 11th paragraph of the 3rd article of the corresponding law on renaming companies, organizations that were created before the amendments came into force and have signs of public ones are automatically recognized as such. In turn, a closed joint-stock company can also not be re-registered, however, only until the moment when amendments to the charter are made, as the 9th paragraph of the 3rd article of the amendment law reads.
Re-registration algorithm
Consider how the re-registration (renaming) of the company should be carried out in practice, if the need for this nevertheless arises. The procedure consists of the following main steps.
First, the company fills out an application on the form number P13001, which is approved by the Federal Tax Service. Then the company attaches the following documents to it:
- protocol of the meeting of founders (shareholders);
- The new charter of a non-public joint-stock company.
A fee, as we said above, does not need to be paid. The next stage is the putting in order of constituent documents. In particular, the acronym CJSC and the corresponding term "closed joint-stock company" should be renamed to AO. After this, it is also necessary to change the structure of the seals, make changes to banking documents, and also send information to partners that now such and such a closed joint stock company is a non-public joint-stock company. In this connection, some experts nevertheless recommend that the renaming procedure be carried out so that counterparties and potential investors can more clearly understand what type of company they are or will be cooperating with. Although the law does not require this by default.
Some experts note, referring to the first paragraph of the 97th article of the Tax Code of the Russian Federation, that AOs that have signs of "publicity" are required to add an appropriate indication in their name. Non-public joint-stock companies, at their discretion, can do the same if the shareholders intend to announce that the securities will go public offering.
Registry and Registrar
We also note the fact that the amendments to the Civil Code of the Russian Federation were also accompanied by a number of by-laws. These, in particular, include one of the Bank of Russia Letters. It reflects the obligation of organizations to transfer to the specialized registrar - whether it is an open or non-public joint-stock company - a register of shareholders. This is mandatory for all joint-stock companies, as noted by lawyers, to execute the order of the Central Bank. If an open or non-public joint-stock company has not yet transferred the register of shareholders to anyone, its founders must carry out a number of procedures. Namely:
- choose a registrar, as well as discuss with him the terms of the agreement on maintaining the registry;
- prepare relevant documents and information;
- conclude an agreement with the registrar;
- disclose information (if the joint-stock company is required to do so) about the partner firm;
- notify persons whose data are present in registration documents;
- transfer the register to a partner organization;
- enter registrar information into the Unified State Register of Legal Entities;
The Central Bank ordered all these procedures to be carried out by AO before October 2, 2014.
Relevance of Reforms
What are the practical consequences of reforming a closed joint-stock company and a joint stock company? Experts believe that now the state can control the work of joint-stock companies more actively than before. In particular, all JSCs will have to undergo a mandatory audit, both public and those whose shares are not freely traded. The status of AO securities does not matter. Even for such a form of business as non-public joint-stock companies, an audit becomes a mandatory procedure.
The auditor should not be connected with the interests of the audited JSC or personally with the shareholders of the company. The subject of the audit is the accounting as well as the financial statements. Unscheduled inspections can be initiated by owners of more than 10% of the corporation's assets (shares or registered capital). The criteria for this procedure may be reflected in the charter of JSC.
We also note that a number of other amendments were introduced to the Civil Code, supplementing those that we are considering. In particular, the company can now employ several people as CEO. However, the charter of a non-public joint-stock company or its "open" analogue should contain information about the powers of each. Interestingly, the position of chief accountant can be exclusively sole. Another significant innovation - some types of decisions made by shareholders of firms must now be notarized.
Significant changes relate, for example, to such a nuance as a way to confirm the list of persons participating in the meeting of shareholders. For public joint-stock companies, the norm is established - the appropriate procedure can be performed by a person who maintains a register of shareholders and simultaneously performs the functions characteristic of the counting commission. These are the innovations. In turn, in such a form of business organization as non-public joint-stock companies, the register can also be maintained by an executive person, but a notary can perform its function, which is related to determining the composition of participants in a meeting. In addition, as some lawyers note, the features of this procedure can also be written in the charter of a non-public society - the law does not directly prohibit this.
Also, the new edition of the Civil Code changed the order of transformation of one society into another. Now AO can become an LLC, a business partnership or a cooperative. However, the joint-stock company loses the right to become a non-profit organization.
Corporate agreement
Amendments to the Civil Code also introduced a new term into legal circulation - the “corporate agreement”. It may be concluded by shareholders of companies. If they do this, then if the joint-stock company is public, the contents of the document should be disclosed (though, the actual rules governing this procedure have not yet appeared). In turn, if the "corporate agreement" was a "former" CJSC, a non-public joint-stock company, then the law does not require disclosing its details.
Changes to the charter
There are a number of nuances that are useful to pay attention to the owners of the joint-stock company, who decided to amend the charter of the organization. The new edition of the Civil Code contains a number of new requirements for this constituent document. Consider the points that a typical charter of a non-public joint stock company may contain. Knowing them can be useful both when creating a new company, and when re-registering an existing one. So, the form of the charter of a non-public joint-stock company should include the following paragraphs:
- company name of the organization;
- an indication that it is public (if the actual activities and type of shares are consistent with that);
- the procedure and conditions under which an audit is required, requested by shareholders who own at least 10% of the securities;
- name of the settlement where the company is registered;
- a list of rights and obligations of the founders of the company;
- Features of the procedure in which some shareholders notify others that they will go to court with independent claims;
- a list of rights established for persons forming the collegial management structure of the company;
- information on the distribution of powers between various internal corporate structures.
What other nuances does the work on the charter include? One can note the following fact: when a non-public joint stock company is registered, it is not required to enter information on the sole shareholder in the main constituent document. Or, for example, information about how the composition of participants in joint stock meetings is determined - the law in this sense gives owners of non-public companies relative freedom of action.
A sample sample of the charter of a non-public joint-stock company, which we set out above, can also be supplemented by a number of provisions. True, this requires a unanimous decision of the founders. But if it is received, then the inclusion of the following provisions in the constituent document is permissible:
- on the attribution of issues resolved at the general meeting to the competence of the collegial management structure of the company;
- on the determination of cases leading to the creation of an audit commission;
- about how the meeting of shareholders is carried out in a special manner;
- on the procedure for granting the preemptive right to purchase securities that are converted into assets of the company;
- on the procedure for consideration by the general meeting of those issues that, according to legal acts of the Russian Federation, are not within its competence.
This is a very rough sample of the charter of a non-public company. However, we touched upon the key nuances that are useful for entrepreneurs to pay attention to.