Partnership in faith is a vestige in the Russian legal system. This form of organization destroys all the theoretical principles for which legal entities were invented. Unfavorable living conditions, as well as the archaic structure made this legal form extremely uncomfortable. And even the most experienced lawyers very rarely meet with companies that have chosen this way of registering a legal entity.
What is a partnership
This is a form of business society, the main purpose of which is to profit. It can consist of at least two persons, which can be only individual entrepreneurs or legal entities.
Why two members? Everything is simple - it is impossible to "partner" with oneself. So there should be at least two investors.
What is regulated
The main regulatory source governing the issue of partnership in faith is the Civil Code of the Russian Federation. This form of legal entity is devoted to a whole subparagraph (Articles 69-86). Perhaps you don’t need to dive into the regulatory framework in more detail, because the likelihood that someone will meet such a company in their practice is extremely small.
The difference between a limited partnership and a full partnership
A full partnership consists of persons who, on the basis of a concluded contract, carry out activities on behalf of the partnership and bear the burden of its obligations.
In partnership with faith, in addition to full partners, there are also limited partners, they are also contributors. These are persons who have made their monetary contribution to the activities of a legal entity and are liable for obligations only to the extent of this monetary amount.
Members
Participants of a partnership in faith may be:
- citizens engaged in entrepreneurial activities;
- legal entities;
- Russian Federation and its subjects;
- state and municipal institutions, but with the permission of the owner of the property. These are the state, the subject of the federation or the municipal district.
It is worth noting that members cannot be state or municipal bodies, as well as certain categories of citizens, in respect of whom the law imposes such a ban.
It is important to remember that one person can be a member of only one partnership in faith.
Historical reference
Partnership is one of the first historically established forms of legal entities. Its roots go deep into Roman law.
The word "limited" comes from the Italian language and means "to deposit", thus characterizing the essence of the contributions that the comrades in faith make to the joint capital.
This form of organization has become popular in the West and especially in the United States of America. This is explained by the fact that the Western world is distinguished by a high corporate and business culture, and business contacts were established not one hundred years ago. Due to this fact, partners can fully trust each other, without fear of losing not only capital, but also personal property. This is how faith partnerships appeared: capitals united, and business activity increased. In Russian realities, this legal entity has acquired a truly ugly form.
Rights
The rights in a partnership in faith for each investor are established in Russian law. This is a closed list, which can be expanded by the memorandum of association, but local documents cannot make it narrower.
What rights does a fellow faith have:
- make profit from the activities of the organization in the manner prescribed by the memorandum of association and in the amount of its share in the share capital;
- require the formation of financial reports on the activities of a legal entity in the manner prescribed by the memorandum of association;
- to leave the partnership at the end of the financial year and receive the invested funds back;
- transfer his contribution to another partner, since it is the founders who are entitled to the initial purchase of a share in the legal entity’s share capital.
Additional rights of general partners, as well as investors of a limited partnership shall be established by the memorandum of association with the consent of each member of the company.
Control
Limited partners cannot participate in the management of a legal entity. Their role ends in contributing and being able to receive reports on the organization’s activities.
Full partners can manage the partnership in faith in the following forms:
- it is initially presumed that each partner can carry out activities on behalf of the company, unless otherwise established by the memorandum of association. At the same time, no one has the right to dispute the transaction with third parties, referring to the fact that one of the partners was not authorized to complete it. An exception is the case when the transaction was completed, and the third party knew that the representative was not authorized to complete it;
- memorandum of association may provide for the option of the sole management of the organization by one or a group of several partners;
- comrades can decide on joint management of the organization. In this case, the transaction will require the consent of each member of the organization.
In fact, this is not the limit. The memorandum of association allows you to think over any options for the management organization of a limited partnership. But do not forget: the law requires that full partners carry out activities on behalf of the company.
Responsibility
The weak point of this legal form is the full responsibility prescribed by law for ordinary comrades.
They jointly and severally respond not only with their share in the share capital, but also with personal property. So bankruptcy can end in very sad consequences. The pleasant side is only that each participant in a partnership of this form is responsible in accordance with the percentage of his contribution to total capital.
In a partnership of faith, responsibility is different. After all, there are also limited partners who are responsible within their contribution and thus guarantee the security of their personal property, but do not participate in the management. It turns out a kind of fee investor partnership in faith for a guarantee of financial security.
registration
Registration of business entities on the territory of the Russian Federation is carried out by authorized tax authorities.
To register a limited partnership, you will need the following information:
- name of the future company;
- main activities that the legal entity plans to engage in;
- extract from the Unified Register of Legal Entities or Individual Entrepreneurs for each of the future partners;
- The exact address of the future organization (office, rented building, and so on);
- data on documents proving the identity of the founders of individuals, as well as their tax identification number.
When submitting documents, you will need to pay the state fee, today it is 4,000 rubles. Registration is carried out no later than 30 days in a general manner.
Constituent documents
The only constituent document of a partnership in faith is a constituent agreement. This fact is one of the important differences from other business companies, where the charter is such a document.
The following information shall be reflected in the memorandum of association:
- Name of the organization. The law establishes certain requirements regarding this issue, but we will touch on this later;
- location of the partnership;
- information on the financial component of the share capital (its composition, indicating the shares of each investor and partner, the total amount of the resulting amount);
- the procedure for individual participants to make their contributions;
- the possible liability of each of the participants or the investor of a partnership in faith for violation of their obligations to make contributions.
Changes to the memorandum of association may be made with the consent of all participants, provided that such an opportunity is provided for in the original version of the contract.
The only plus to the existence of this legal form is that there is no requirement for a minimum amount of share capital. Participants of a partnership in faith can form it from any amount. This is important to remember when preparing constituent documents.
Interesting Facts
The name of this form of legal entity is the funniest fact in the entire regulatory regulation of this issue. To avoid intrigue, you can find examples of partnership in faith.
The Civil Code establishes that the name should consist of the name of one of the participants (as a rule they choose the most famous and significant) and the phrase "and company". Or from the names of all participants and the phrase "full partnership / partnership in faith." That is, the company name is "Ivanov and Company" or "Ivanov. Petrov. Sidorov. Full Partnership."
Marketers and business naming specialists cry in a loud voice. The global rules that a company name should as objectively as possible reflect the activities the company is engaged in, the work of the company’s name with the company, and other marketing things — all this was buried by the merciless Civil Code. And, of course, lawyers should not be worried about such moments, but such an archaic attitude to the issue of naming - it looks like anything but the modern market.
The second interesting fact concerns the possibility of a complete comrade coming out. The personal-trusting nature of relations in this legal form of a legal entity implies that a personal change of partnership members can occur only if such an opportunity is provided for in the memorandum of association. Otherwise, if one of the full partners wants to finish things and leave the organization, all the rest has nothing to do but liquidate the company.
Scientists express the view that a partnership in faith is essentially a continuing contract in which each partner is a party to the transaction. Accordingly, the desire of one of the members of the organization to withdraw is the will to terminate this agreement unilaterally.
In general, whatever one may say, the form of housekeeping is very inconvenient. Everywhere comrades are waiting for some difficult obstacles and obstacles.
Scientific disputes
The feasibility of the existence of such a legal form of legal entities is constantly being questioned.
Why do you need a legal entity that does not protect individuals behind its institution? This is a real mystery. An organization that destroys the main reason why such a form of relationship appeared at all is either great stupidity or the desire for archaism.
The risk of losing all your personal property, the inability to pursue a high-quality marketing policy of naming, the inability to be a companion in more than one company are all echoes of Soviet authoritarianism, when there was no real market even, and every step of a potential businessman was monitored, regulated and punished. Partnership in faith is an absurdity that does not fit into the modern civil law system. At the same time, for some reason, it has undergone many times the reforms and reorganizations of the legal entities system in domestic civil law.
More detailed information on scientific disputes can be seen in the works of legal scholars, as well as in the relevant sections of legal conferences.
What will happen next with this legal form? One can only guess. Will the legislator think over and refuse them, along with other rudiments of domestic civil law? Given the practice of reforming the industry, we can say with confidence that no. And partnerships in faith will remain exclusively in nominal form, which business does not need, for which, in fact, this section of the Civil Code of the Russian Federation has been written.