Public joint stock company is a new term in Russian civil legislation. At first glance, it may seem that non-public and public joint-stock companies are just new names for CJSC and OJSC. But is this really so?

What does public joint stock company mean?

Federal Law No. 99-FZ dated 05.05.2014 (hereinafter referred to as Law No. 99-FZ) added a number of new articles to the Civil Code of the Russian Federation. One of them, Art. 66.3 of the Civil Code of the Russian Federation, introduces a new classification of joint stock companies. The already familiar CJSC and OJSC have now been replaced by NJSC and PJSC - non-public and. This is not the only change. In particular, the concept of an additional liability company (ALS) has now disappeared from the Civil Code of the Russian Federation. However, they were not particularly popular anyway: according to the Unified State Register of Legal Entities as of July 2014, there were only about 1,000 of them in Russia - with 124,000 closed joint-stock companies and 31,000 open joint-stock companies.

What does a public joint stock company mean? In the current version of the Civil Code of the Russian Federation, this is a joint-stock company in which shares and other securities can be freely sold on the market.

The rules on a public joint stock company apply to a joint-stock company whose charter and name indicate that the joint-stock company is public. For PJSCs created before 09/01/2014, whose corporate name contains an indication of publicity, the rule established by clause 7 of Art. 27 of the Law “On Amendments...” dated June 29, 2015 No. 210-FZ. Such a PJSC that does not have public issues of shares before July 1, 2020 must:

• apply to the Central Bank for registration of the prospectus of shares,
• remove the word “public” from its name.

In addition to shares, a joint-stock company can issue other securities. However, Art. 66.3 of the Civil Code of the Russian Federation provides for public status only for those securities that are converted into shares. As a result non-public companies may introduce securities into public circulation with the exception of shares and securities convertible into them.

What is the difference between a public joint stock company and an open one?

Let's consider difference from JSC. Although the changes are not fundamental, ignorance of them can seriously complicate the life of the management and shareholders of the PJSC.

Disclosure

If previously the obligation to disclose information about the activities of an OJSC was unconditional, now a public company has the right to apply to the Central Bank of the Russian Federation for exemption from it. This opportunity can be taken advantage of public and non-public companies, however, it is for public that liberation is much more relevant.

In addition, JSCs were previously required to include information about the sole shareholder in the charter, as well as publish this information. Now it is enough to enter data into the Unified State Register of Legal Entities.

Preemptive right to purchase shares and securities

The OJSC had the right to provide in its charter for cases when additional shares and securities are subject to preferential purchase by existing shareholders and security holders. Public joint stock company is obliged in all cases to be guided only by the Federal Law “On Joint Stock Companies” dated December 26, 1995 No. 208-FZ (hereinafter referred to as Law No. 208-FZ). References to the charter are no longer valid.

Maintaining a register, counting commission

If in some cases an OJSC was allowed to maintain a register of shareholders on its own, then public and non-public joint stock companies are always required to delegate this task to specialized licensed organizations. At the same time, for a PJSC, the registrar must be independent.

The same applies to the counting commission. Now issues within its competence must be resolved by an independent organization that has a license for the relevant type of activity.

Society management

Public and non-public joint-stock companies: what are the differences?

1. By and large, the rules that previously applied to OJSC apply to PJSC. NAO is basically a former closed joint-stock company.
2. The main feature of a PJSC is an open list of possible buyers of shares. NJSC does not have the right to offer its shares at public auction: such a step, by force of law, automatically turns them into a PJSC even without amending the charter.
3. For PJSC, the management procedure is strictly enshrined in law. For example, the rule still remains that the competence of the board of directors or executive body cannot include issues that are subject to consideration by the general meeting. A non-public company can transfer some of these issues to a collegial body.
4. The status of participants and the decision of the general meeting in a PJSC must be confirmed by a representative of the registrar organization. The NAO has a choice: you can use the same mechanism or contact a notary.
5. Non-public joint stock company still has the right to provide in the charter or corporate agreement between shareholders the right to pre-emptive purchase of shares. For public joint stock company such an order is absolutely unacceptable.
6. Corporate agreements concluded in PJSC must be disclosed. For a NAO, it is sufficient to notify the company of the fact of concluding such an agreement.
7. The procedures provided for by Chapter XI.1 of Law No. 208-FZ regarding offers and notifications of repurchase of securities, after September 1, 2014, do not apply to JSCs that, through changes in the charter, have officially recorded their non-public status.

Corporate agreement in joint stock companies

An innovation that largely concerns PJSC and NJSC is a corporate agreement. Under this agreement, concluded between the shareholders, all or some of them undertake to exercise their rights only in a certain way:

• take a unified position when voting;
• establish a common price for all participants for the shares they own;
• allow or prohibit their acquisition in certain circumstances.

However, the agreement also has its limitations: it cannot oblige shareholders to always agree with the position of the managing bodies of the joint-stock company.

In fact, ways to establish a unified position for all or part of the shareholders have always existed. However, now changes in civil legislation have transferred them from the category of “gentleman’s agreements” to the official level. Now, a violation of a corporate agreement may even become a reason to recognize the decisions of the general meeting as illegal.

For non-public companies, such an agreement may be an additional management tool. If all shareholders (participants) participate in a corporate agreement, then many issues related to the management of the company can be resolved through changes not in the charter, but in the content of the agreement.

In addition, an obligation has been introduced for non-public companies to enter information about corporate agreements into the Unified State Register of Legal Entities if, under these agreements, the powers of shareholders (participants) seriously change.

Renaming the OJSC into a public joint stock company

For those OJSCs that decided to continue operating in the status public joint stock company, it is necessary to make changes to the statutory documents. There is no deadline for this by law, but it’s better not to delay it. Otherwise, problems may arise in relations with counterparties, as well as ambiguity about what rules of law should be applied to PJSC. Law No. 99-FZ establishes that the unchanged charter will be applied to the extent that does not contradict the new norms of the law. However, what exactly is contradictory and what is not is a moot point.

Renaming can occur in the following ways:

1. At a specially convened extraordinary meeting of shareholders.
2. At a meeting of shareholders that resolves other current issues. In this case, changing the name of the JSC will be highlighted as an additional issue on the agenda.
3. At the mandatory annual meeting.

Re-registration of old organizations into new public and non-public legal entities

The changes themselves can only affect the name - it is enough to exclude the words “open joint-stock company” from the name, replacing them with the words “ public joint stock company" However, it is necessary to check whether the provisions of the previously existing charter do not contradict the norms of the law. In particular, special attention should be paid to the rules relating to:

• board of directors;
• preemptive right of shareholders to purchase shares.

In accordance with Part 12 of Art. 3 of Law No. 99-FZ, the company will not need to pay state duty if the changes concern bringing the name into compliance with the law.

In addition to JSC, signs of publicity and non-publicity now apply to other organizational forms of legal entities. In particular, the law now directly classifies LLCs as non-public entities. For a public joint stock company, changes must be made to the charter. But is this necessary for those companies that, by virtue of the new law, should be considered non-public?

In fact, for non-public companies, making changes is not necessary. Nevertheless, it is still advisable to make such changes. This is especially important for former closed joint stock companies. Otherwise, such a name will be a defiant anachronism.

Sample charter of a public joint stock company: what to pay attention to?

In the time that has elapsed since the adoption of Law No. 99-FZ, many companies have already gone through the procedure of registering changes to the charter. Those who are just about to do this can use the sample charter of a PJSC.

However, when using a sample, you must first of all pay attention to the following:

• The charter must contain an indication of publicity. Without this, society becomes non-public.
• It is imperative to involve an appraiser in order for a property contribution to be made to the authorized capital. Moreover, in the event of an incorrect assessment, both the shareholder and the appraiser must answer subsidiarily within the limits of the overstatement amount.
• If there is only one shareholder, he may not be indicated in the charter, even if the sample contains such a clause.
• It is possible to include provisions on the audit procedure in the charter at the request of shareholders owning at least 10% of the shares.
• Conversion into a non-profit organization is no longer allowed, and there should be no such provisions in the charter.

This list is far from complete, so when using samples you should carefully check them with current legislation.

The term "public joint stock company": translation into English

Since many Russian PJSCs carry out foreign trade operations, the question arises: what should they now be officially called in English?

Previously, the English term “open joint-stock company” was used in relation to JSC. By analogy with it, the current public joint stock companies can be called a public joint-stock company. This conclusion is confirmed by the practice of using this term in relation to companies from Ukraine, where PJSCs have existed for a long time.

In addition, the difference in right-wing terminology in English-speaking countries should also be taken into account. Thus, by analogy with UK law, the term “public limited company” is theoretically acceptable, and with US law - “public corporation”.

The latter, however, is undesirable, since it may mislead foreign counterparties. Apparently, the public joint-stock company option is optimal:

• it is used mainly only for organizations from post-Soviet countries;
• quite clearly marks the organizational and legal form of society.

So, what can ultimately be said about innovations in civil legislation concerning public and non-public legal entities? In general, they make the system of organizational and legal forms for commercial organizations in Russia more logical and harmonious.

It is not difficult to make changes to the statutory documents. It is enough to rename the company according to the new rules of the Civil Code of the Russian Federation. A step forward can be considered the legalization of agreements between shareholders (corporate agreement in accordance with Article 67.2 of the Civil Code of the Russian Federation).

From September 1, 2014, the types of joint stock companies have changed. Instead of open and closed joint-stock companies, the concepts of public and non-public are now used. Changes were made by Federal Law No. 99 dated 05/05/2014. “On amendments to Chapter 4 of Part 1 of the Civil Code of the Russian Federation” (hereinafter referred to as Federal Law No. 99). According to the new definition, Companies can now be public - the shares of which are placed and circulated in the public domain and (or) in their name and charter there is an indication of publicity (applies to former JSCs) and non-public - all others, which include LLCs and former CJSCs ( Article 66.3 of the Civil Code of the Russian Federation).

At the same time, all JSCs that meet the definition of publicity became automatic from September 1 and changes to the Civil Code made by Federal Law No. 99 are applied to them. As for JSCs, if the Company decides to remain closed, that is, non-public according to the new rules, then to it , until they make changes to the constituent documents, the provisions of Federal Law No. 208 of December 26, 1995 will apply. about JSC. In general, such a form as a closed joint-stock company is abolished. However, in the future there will be no need to change the name of non-public companies and add the word “non-public”, but you will only need to remove the word “closed”, leaving just JSC.

Today, the most common organizational and legal forms of doing business in our country are the Non-Public (Closed) Joint Stock Company (formerly CJSC). There is a fairly large amount of information about LLC on our website, thanks to which each of our visitors has probably already understood many issues related to the establishment of an enterprise in this organizational and legal form. But until now there has been no mention of a non-public joint-stock company. That is why we decided to correct this misunderstanding, and we bring to your attention a review article telling about the main points of registering an enterprise in the form of a joint-stock company.

Authorized capital of a non-public joint-stock company (CJSC)

The main difference between a non-public JSC (CJSC) and an LLC is the method of forming the authorized capital: unlike an LLC, where it consists of shares of participants, in a JSC the authorized capital is formed by shares. It is important to note here that shares are securities, while a share in the authorized capital of an LLC represents the property right of a participant.

Specifically for the formation of the authorized capital, the shareholders of a non-public JSC (CJSC) issue shares, and also carry out their state registration. This is one of the main points that distinguishes a JSC from an LLC and extends it to the legislation on the securities market and the protection of investor rights. However, there are still similarities between a JSC and an LLC in terms of the authorized capital: just as the participants of an LLC have the opportunity to attract additional investments into the Company in the form of additional contributions to the authorized capital, so the shareholders of a non-public JSC can attract investments in the form of an additional issue of shares.

Shareholders of non-public joint-stock company (CJSC)

There is one more point that significantly distinguishes a non-public JSC (CJSC) from an LLC, and it is that the possibility of new shareholders cannot be completely excluded in a JSC. The only limitation in this regard is the pre-emptive right to purchase shares when selling to a third party. The main purpose of the pre-emptive right is to enable shareholders to remove a third party from participation in the Company, and it can only be achieved if the sale of shares does not take place at all; the sale of shares to a third party did not take place, and they were sold to the shareholders of the Company, and also in the event that, under the agreement, rights and obligations were transferred to the person with the pre-emptive right to purchase.

As recently as July 1, 2009, one of the significant differences between an LLC and a non-public JSC (CJSC) was the ability of an LLC participant to leave the Company at any time by demanding payment of the value of his share in the authorized capital (in money or property). However, the law on LLC, which entered into force on July 1, 2009, establishes a restriction on this previous right, leaving the possibility of free exit from the LLC only if this is specifically stated in the charter of the Company.

As for rights, in a non-public joint-stock company (CJSC) the system of their distribution between the Company’s shareholders is built on a slightly different principle. Thus, the rights of shareholders in a joint-stock company depend on the category of shares owned by it, which, in turn, can be ordinary or preferred. But at the same time, the charter of a non-public joint-stock company cannot establish different rights or obligations for owners of only ordinary shares or only one type of preferred shares, since all ordinary shares (as well as all preferred shares of the same type) provide their owners with rights identical in content .

Payment of the authorized capital of a non-public joint-stock company (CJSC)

When creating a non-public JSC (CJSC), payment of the authorized capital before its state registration is not required. However, there is a limitation on its payment: the authorized capital of the JSC must be paid in at least 50% within 3 months from the date of state registration of the Company.

One more nuance. In the event that a joint-stock company pays for its authorized capital with property, it is necessary to evaluate this property in advance by an independent appraiser, which is now required to be done in an LLC, regardless of the amount of property being valued.

Transfer of the register of shareholders to an independent registrar

Also, all joint-stock companies, both public and non-public, should pay attention to the fact that from October 1, 2014, all registers of shareholders must be maintained by specialized registrars who have the appropriate license. This obligation was introduced by Federal Law No. 142 of July 2, 2013. “On amendments to subsection 3 of section I of part one of the Civil Code of the Russian Federation” last year. At the same time, as the Bank of Russia notes in its recent letter, no JSC has any exceptions for transferring the register if they were previously maintained independently. Therefore, be careful and have time to transfer the register of shareholders on time so as not to get fined up to 1 million rubles.

The essence and characteristics of public and non-public societies

In order to understand how to determine the status of a particular society, it is necessary to analyze the norms that define these categories.

Public society - a joint stock company whose shares and securities convertible into its shares:

publicly posted (through open subscription);

and/or publicly traded under the terms and conditions required by securities laws.

The rules on public companies also apply to joint-stock companies, the charter and company name of which contain an indication that the company is public (Clause 1, Article 66.3 of the Civil Code of the Russian Federation).

Public company is a business company based on shares (securities), who are placed and circulate among an indefinite circle of people. This is a society with an unlimited and dynamically changing composition of participants. Publicity means that the corporation focuses on an unlimited number of participants (shares are offered for sale to a wide range of people).

Public companies are characterized by a large number of diverse shareholders. In order to ensure a balance of interests of the latter, the activities of such joint-stock companies are primarily regulated by imperative norms, which prescribe unambiguous, standard rules of conduct for participants in the corporation. The use of standards that cannot be changed at the discretion of the prevailing participants in the society guarantees the attraction of investors.

Public companies borrow on the securities market among an unlimited number of people; they cover a larger array of diverse investors: institutional (state, banks and investment companies), collective (collective investment funds, pension funds), small individual investors. The activities of public companies are to a greater extent regulated by imperative norms designed to ensure a balance of interests of a heterogeneous and dynamically changing mass of investors. Therefore, this type of economic society, unlike a non-public one, has little freedom of intra-corporate self-organization.

Non-public company - a business company that does not meet the criteria established by law for public companies. This is a limited liability company and a joint stock company that does not meet the criteria specified in paragraph 1 of Art. 66.3 of the Civil Code of the Russian Federation (clause 2 of Article 66.3 of the Civil Code of the Russian Federation).

Non-public companies are, firstly, business companies whose shares are placed among a predetermined circle of persons and are not publicly traded. Secondly, this category includes companies based on a low-current asset - a share in the authorized capital of an LLC. Such companies are focused on a limited, small, predetermined number of participants. They can use special mechanisms to control the personal composition of their participants and they have much more freedom of internal corporate self-organization.

The activities of non-public companies are primarily regulated by dispositive norms of legislation, allowing for the establishment of individual rules of conduct (interaction) for corporation participants at their discretion. Non-public companies do not borrow from the open market. They are addressed with more dispositive norms; they have potentially greater freedom of internal corporate self-organization - that is, the ability to establish rules of interaction at their own discretion.

Currently, the divide between strong mandatory regulation of intracorporate relations and significant dispositive principles passes between two types of business companies - joint stock and limited liability companies. The reform of the Civil Code of the Russian Federation shifted it along the line of public and non-public companies.

Criticism is expressed about the unification into a general type of business company (non-public) of various types of business companies: joint stock companies based on shares and limited liability companies based on shares in the authorized capital. According to some experts, this leads to a mixture of these essentially different economic societies.

What distinguishes a non-public joint stock company from a public company and other forms of business organization? The goal of any joint stock company is to pool capital to jointly solve the company’s problems, compete in the market and increase profits. We tell you what the term “non-public joint stock company” means, its main characteristics and whether it is possible to transform one form into another.

What are public and non-public joint stock companies

A joint stock company is a type of business organization in which the company's authorized capital is divided into shares. It differs from a limited liability company by an unlimited number of participants (an LLC has only up to 50), a longer registration period, and the confidentiality of information about participants to third parties. Information about the founders of a legal entity is available to everyone. All you need to do is go to the Federal Tax Service website and get an extract from the Unified State Register of Legal Entities. This is impossible with AO.

Exists two types of joint stock companies: public and non-public joint stock companies. Until 2014 in Russia they were divided into open and closed. The abbreviations OAO and ZAO are well known to everyone, but are now a thing of the past. They were replaced by public and non-public forms. However, please note that an open society does not fully correspond to a public one, and a closed society does not fully correspond to a non-public one. Along with the name, the working conditions also changed. More details can be found in Federal Law No. 208-FZ.

In public joint-stock companies, participants can alienate, that is, freely sell their shares to third parties. In non-public securities, all securities are initially distributed among all participants, and sales to third parties are possible only after a vote of all shareholders. PJSCs are considered more transparent and easier to attract investors.

The composition of NAW is determined upon registration and remains almost unchanged over time.

Organizational and legal form

Public and non-public business companies are the same form of doing business as an individual entrepreneurship or a legal entity. JSCs operate in the field of medium and large businesses, when the issue of shares is justified from a profit point of view.

The goal of any joint stock company, regardless of its form, is to pool capital to jointly conduct business, compete in the market and increase profits. The founders of a legal entity are liable for the financial obligations of their company with shares of the authorized capital, and in the most problematic cases they bear subsidiary liability: they risk losing part of the property. Shareholders own only the shares and risk only the value of the shares.

A JSC does not have the right to exclude unscrupulous participants from its membership. Also, they cannot leave the company with payment of a share in proportion to its current value. They can sell their shares, but this is a completely different procedure. In addition, in the non-public joint-stock company the sale will have to be agreed upon with other shareholders.

Registration, or rather the issue of shares, takes approximately 1 month versus 5 days for a legal entity. The authorized capital of a non-public company can be only 10 thousand rubles (like an LLC), but for a PJSC it can be at least 100 thousand rubles.

Differences between PAO and NAO

This section provides a cheat sheet on public and non-public companies, which will help you quickly understand the difference between them. The main difference between a PJSC and a non-public joint-stock company (or non-public joint-stock company) is the composition of participants and the procedure for distributing shares between them. Shares of a public joint stock company are sold freely and any person (the so-called “third party”) has the right to purchase them at any time at the market price. At the same time, each shareholder has the right to sell his shares at any time without asking permission from other members of the association.

The maximum number of participants for PJSC and NPJSC is not limited by law, the minimum is the same - 1 person.

A public company publishes more information about itself: it positions itself as open and transparent to investors. This is associated with a multiple increase in its authorized capital - up to 100 thousand rubles against 10 thousand for the Nenets Autonomous Okrug. At the same time, the founders of the joint-stock company have the right not to transfer money to the authorized capital before its registration. A PJSC must have a board of directors or a supervisory board; a non-public JSC can operate without them (up to 50 shareholders).

Types of non-public joint stock companies

Let's consider the main features of non-public business communities. It is not customary to divide them into types, but theoretically they can be classified according to the number of participants, the number of shares and the level of closure. What distinguishes this form of business organization?

Comparative table of PJSC and NPJSC

Characteristics of NAE

NPAO is a non-public company of shareholders, one of the forms of doing business permitted by Russian legislation. It is distinguished by the closed nature of its work, the distribution of shares within existing shareholders, and the ability to sell or alienate shares to third parties is strictly regulated by the general meeting. The number of shareholders is not limited.

To open an authorized capital of 10 thousand rubles is enough. The main goal of NPAO, like any other commercial organization, is to make a profit. But, unlike public ones, members of a non-public association do not set themselves the task of attracting new shareholders and investors.

They provide less reporting and their activities are less transparent. For example, NPAs are not required to publish annual financial statements, since these documents are primarily of interest to investors. There are no prohibited sectors of work for non-public joint-stock companies, that is, they have the right to engage in any commercial activity permitted in the country.

Control Features

NPAO has the right to work without a board of directors and a supervisory commission if the total number of participants does not exceed 50 people. The organization is governed by general meetings of shareholders. Decisions of meetings are certified by notaries. If necessary, a counting commission is formed. However, if the members of the NPAO consider that they need a board of directors or an appointed leader, they simply form it and the number of participants.

The main content of meetings of shareholders of NPJSC is determining the value of the association’s securities, planning their additional issue or reducing the number.

Constituent documents

Initially, the JSC is registered as a limited liability company. Then its founders hold a new meeting and rename the association a “joint stock company.” There is no need to pay state duty for this. Since NPAO is not a public association, the name does not need references or hints of publicity. Now the new charter should be approved (for more details, see the section “Charter of the Company”).

After renaming the following will also change:

• seal;
• bank details.

Participants and founders

The right to participate in an NPAO is limited: shares are owned by the original founders, their heirs, and in rare cases, by “third parties” who have achieved the right to be present in the association. Depending on the share of shares, participants can be divided into ordinary and preferred.

The obligations, rights, and privileges of participants in a non-public joint stock association are fixed by the charter. Typically, NPAO members have the privilege of first refusal: if one of the current owners decides to sell their securities, he must first offer them to other shareholders, and only then to third parties (if this is permitted by the charter).

The activities of the NPAO are not public; it is not obliged to publish financial statements

Authorized capital

The minimum amount is 10 thousand rubles. For example, in an LLC the authorized capital is a monetary amount, then in JSC this is their equivalent in securities. When registering, you do not need to contribute the entire amount of capital; funds can be contributed gradually. After 90 days, at least 50% should be ready.

Charter of the company

A new charter is being prepared after the LLC is renamed into JSC. It is advisable to involve lawyers in the development of this document: this document contains many complexities and nuances that must be observed. What must be included in the charter:

• name with the wording “joint stock company”;
• location;
• rights and obligations of shareholders;
• distribution of powers;
• pre-emptive right to purchase shares and the procedure for approving the sale of securities to third parties;
• audit rules.

Converting forms from one to another

If for any reason the founders decide to transform an NPAO into a PJSC, they have the right to do this if they bring the name and documents of the organization into compliance with the requirements of the law. In particular, you should:

• change the name by adding the term “public” or other reference to the publicity of the organization;
• change the charter in the direction of publicity, remove the section on the pre-emptive right to shares;
• register all changes with the Federal Tax Service.

The procedure is quite simple. But when carrying it out, you should not forget about the authorized capital: for PJSC it is ten times larger, at least 100 thousand rubles.

But transforming a public society into a non-public one is more difficult. It is necessary to hold a general meeting of all shareholders, obtain their consent, prepare new constituent documents, rename and register all changes legally.

Conclusion

Non-public joint stock company or non-public joint stock company is one of the forms of doing business permitted by law. Unlike LLCs and PJSCs, non-public joint-stock companies are more closed to third parties: their shares are not in free circulation, and financial statements, as well as information about the founders, are not publicly available. In this way, you can conduct any permitted commercial activity.

12.10.2018