The difference between CJSC and OJSC: different organizational and legal forms

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In life, many are faced with various terms, for example, related to law or economics. This is a common trend as we are surrounded by thousands of shops, businesses, cafes, malls and other places that can be called a business. The scale and speed are different, but there are not many classifications on paper. It is unlikely that someone will ask you: "Name the difference between OJSC and CJSC", but this is simply useful to know, and it may even be necessary for someone.

What is the legal form

Speaking in legal language, this is a way of managing a particular business entity, enshrined in law. To put it simply, these are the names of the types of various legal entities and individuals conducting various activities. Most often, this refers to various entrepreneurships, but the classification of forms also includes types of non-commercial activities, for example, political parties, cooperatives and other legal entities. Well-known forms are suitable for business: LLC, OJSC, CJSC, IP. There will still be differences, and significant ones, and more will be said about them.in detail.

What is it for

Perhaps, many people think that such subtleties as, for example, the difference between a CJSC and an OJSC complicate life, however, if you understand all this, it becomes easy to understand that organizational and legal forms are needed to streamline various activities in conditions market economy. First of all, this is related to labor protection, taxation, consumer protection, so that business is carried out legally, without various violations. In addition, the forms fix the property rights, duties and responsibilities of the founders of a legal entity.

Basic organizational and legal forms in entrepreneurship

Everyone knows such types of enterprises as:

• individual entrepreneur (IP);
• limited liability company (LLC);
• closed joint stock company (CJSC);
• open joint stock company (JSC)

Each form of the classification has its own goals and objectives, for example, it allows an individual to legally do business or issue their shares to large firms.

Individual entrepreneur

This status allows an individual to do business. Only one person can act as a founder. This explains the fact that IP does not require the formation of a legal entity. However, there are some nuances, for example, that a citizen will meet his ownproperty in the event of any litigation. A positive factor will be that for individual entrepreneurs there is a simplified taxation system where VAT is not required. This form is well suited for small businesses: shops, beauty salons, car washes, etc. However, it will no longer be possible to open a restaurant, since in order to obtain a license for alcoholic products, you need to register a legal entity, for example, a limited liability company.

Open Joint Stock Company

The essence of this legal entity is that it can issue its shares on the market, the number of which may not be limited, this is the main difference between an OJSC and a CJSC. In addition, such enterprises are managed collectively. This role is assigned to the general meeting of shareholders, which performs its functions in accordance with the charter of the organization, as well as the legislation of the Russian Federation. Despite this, operational management can be carried out by one single director. It is important to know that OJSC is a common obsolete name, since since 2014 such firms have been called public joint-stock companies, abbreviated "PJSC". Despite this, many use the established classification.

Closed Joint Stock Company

The main difference between a CJSC and an OJSC is that such an enterprise cannot issue shares for free sale. Securities can only be held by a narrow circle of persons, the founders of the enterprise. Another difference between a CJSC and an OJSC is that the number of shareholders cannot exceed fifty people. In general, enterprisesof this type are more closed due to their organizational and legal form, but this is expressed only in working with securities, which causes difficulties in raising funds, since the issue of shares is possible only within the company. Also, the difference between CJSC and OJSC is the minimum authorized capital. For closed joint-stock companies, it is only 10,000 rubles, and for open ones - 100,000. In addition, you should be aware of legislative changes related to the names of such companies. Now they are simply referred to as joint-stock companies, or "JSC" for short. However, as with the previous name, the principle of operation of firms has not changed. The fourth significant difference between CJSC and JSC is that in closed companies there is a pre-emptive right. Its essence is that if one of the participants decides to sell his block of shares, then the other shareholders will first find out about it. If the founders refuse to buy them, then the holder can make a deal with a third party not related to the enterprise.

Limited Liability Company

Short for OOO. Such organizations are very different from the joint-stock companies described above. The key difference is that such firms do not place their shares and do not work with securities at all. Participation in limited liability companies is built on the principles of shares. Despite this, only one person can act as a founder. Planning in an LLC is carried out with the help of a meeting of participants, and operational management is carried out by an appointed manager, for example, a general director. Such firms arethe most popular organizational and legal forms in Russia. In addition, this name has not undergone any changes, unlike the above CJSC or OJSC.