A closed joint stock company is A joint stock company open and closed

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

A closed joint stock company is a commercial organization that is opened by one or more founders. These may be foreign citizens or nationals of the country in which the company is opened, but their number should not exceed 50 people. For a CJSC, there is the smallest amount of authorized capital under Russian law, which is 100 minimum wages. Payment can be made in cash or property. After the registration of the company, no more than three months are given to pay half of this amount or more. Nine more months are 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 members extends only to the funds for which the shares were purchased. If the company needs to close, they will not incur any additional material costs. At the same time, successful business conduct will allow shareholders to receive certain dividends from securities. Closed Joint Stock Company (CJSC)differs also in the impossibility of distributing its securities. In fact, they belong to an exclusively narrow circle of persons, whose data are included in the charter of the enterprise. At the same time, alienation of shares without the consent of the other participants in the enterprise to outside individuals or legal entities is prohibited. Work in a CJSC is not accompanied by mandatory involvement in shareholders. All this becomes a powerful obstacle to attracting outside investment in the core activities of the organization.

But if it was possible to change the composition of shareholders belonging to a closed joint-stock company, the founders should not notify any state structures about this. Everything about the procedure for the creation and functioning of a CJSC is spelled out in the Civil Code and some Federal laws.

Background and foundations of creation

Although there was a certain share of joint-stock companies in the economy of the USSR, the modern history of such entrepreneurship started only in the second half of the nineties of the last century, after the Council of Ministers of the RSFSR adopted the Regulations on joint-stock companies and limited liability companies. Now there are several documents that regulate the activities of such organizations:

- Civil Code of the Russian Federation, part one, articles 96-106.

- Federal Law No. 208-FZ dated 12/26/96 "On Joint Stock Companies".

- Arbitration Code of the Russian Federation.

- Federal Law "On banks and banking activities", as well as other laws that prescribe the procedure for the activities of organizations in the financial market.

- FZ"On the privatization of state property" and related documents.

Features of activity

Joint-stock company open and closed - these 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 whether they can be only two varieties. To better understand what an open and closed joint-stock company is, a list of their mutual differences will be presented below.

Distinguishing Features

So, we have come to the definition of the differences between the two types of organizational-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 deprived of the right to subscribe for shares. Participants and distribution of securities to a wide range of legal entities and individuals are not allowed.

ZAO Shares

Another characteristic of a closed joint stock company is that the capital of such a firm is divided into parts that are dispersed among a limited number of shareholders. Each of them has rights of obligation in relation to the property of the organization, as well as responsibility within the limits of these obligations. The distribution of shares among shareholders can be done in various ways, but at the stage of creation this happens only between the founders. Each of them is en titled tosubsequent sale of securities to new members of the CJSC, which sometimes even include hired workers.

Situation in other countries

Abroad, the state is engaged in stimulating the distribution of shares of the company among the representatives of the labor collective. For example, in the United States, companies that practice this approach receive tax benefits in the amount of 5-25% of the main rate. Therefore, work in a CJSC is often accompanied by the acquisition of a part of the shares. But not all members of the labor collective are ready to become shareholders. Most are content with the status of an employee, as they are not willing to take the risk of becoming co-owners of the company's securities.

CJSC and LLC

Earlier, the law "On Enterprises and Entrepreneurship" was in force in the Russian Federation, according to which a CJSC was in no way separated from an 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, the participants bear the risk of losses only within the limits of ownership of the shares.

- The distribution of property and income of this economic company due to liquidation is completely identical. The property and profit of each of theseof business entities is distributed according to the shares of participants in the authorized capital, unless otherwise specified in the constituent documentation.

- A closed joint-stock company, like an LLC, assumes that its participants have the same roles in its management. The capabilities of each shareholder directly depend on the size of its share in the authorized capital, unless the constituent documentation contains other information.

- In CJSCs and LLCs, 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 take the same approach to defining the capacity of an institution by a single person. At the same time, a joint-stock company cannot be owned by a single participant if it is another business company that includes only one founder.

Changes in legislation

- LLC can issue securities, but cannot issue shares that allow determining the share of participation of legal entities and individuals in the authorized capital with subsequent accrual of dividends. A CJSC is obliged to issue securities. At the same time, it is mandatory to draw up a register of shareholders, where all participants will be included.organization that 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 shareholders of the CJSC are indivisible. This means that no member can sell or assign their share of the share capital.

- CJSC shares are not only an indicator of ownership, but also an object of inheritance. It turns out that the legal successors of the CJSC shareholders must necessarily be accepted as participants in the process of entering into the right of inheritance. LLC does not have this feature.

- In the event of withdrawal from the LLC, the 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 CJSC are not en titled to make such demands. It turns out that the shareholders do not have the opportunity to insist on the return of the funds deposited by the CJSC or on payment of the value of its shares, they can only ask the other participants to give their consent to transfer the shares to other shareholders or third parties. This may require the reorganization of CJSC.

- In a closed joint-stock company, a register of shareholders must be kept, which requires information about each registered person, as well as the size and composition of the block of shares that he owns.

- An open joint stock company and a closed joint stock company are taxed differently. In the process of issuing new shares, an LLC is obliged to pay a tax, the amount of which is 0.8% of the nominal value of the issued securities.

- In an LLC, the cost of opening is always less than in a CJSC.

Closed Joint Stock Company: Establishment

Sometimes a CJSC is formed due to the fact that the founders want to create a joint-stock company, although an LLC could also become an 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. Residents perceive such a business as more stable, respectable and prestigious. Therefore, a private entrepreneur will try not to miss this opportunity, disguising himself as a shareholder of a CJSC with a single founder.

Classic approach

A closed joint stock company is an association of capitals 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 CJSC becomes a professional co-owner of this joint-stock entrepreneurial firm, which has some important features:

- shareholders are not subject to subsidiary liability related to the structure's obligations to creditors;

- CJSC has property completely separated from the property of shareholders, and therefore, in the event of the insolvency of the company, the risk of shareholders will be only due to the depreciation of shares owned by them;

- CJSC shareholders have property and personal rights.

If we talk about working in a CJSC, then there are no differences from other organizations. Recruitment, payroll andbonuses, as well as dismissal are carried out in accordance with labor laws.