Contract for the creation of a corporation

Mar, 04 2021

Contents:

A contract is a legal document that contains all the important information about making transactions and concluding long-term cooperation between the parties to it. If someone wants to set up a corporation, founders of which will be several legal entities, the conclusion of a special model contract is practiced. When setting up a new organization, this process is divided into two stages:

  • Foundation;
  • State registration.

In order for a legal entity to acquire legal capacity, it is necessary to pass a state registration. This is necessary in order to confirm the creation of the company and the fact of its existence. The stage of foundation means that the founder has made a decision and intends to draw up a contract for the creation of a corporation.

Types of constituent documents

The main constituent documents of a legal entity may be:

  • Charter;
  • Articles of Association.

When creating a new corporation, the text of the charter may be drawn up, containing all the detailed information about the enterprises that are part of the corporation. A constituent agreement on the creation of a corporation may also be concluded. It is concluded by drawing up a written document, certified by the signatures of all parties. The agreement on the establishment of the corporation includes clauses describing the procedure for the implementation of the activities of all the founders. Their joint work is stipulated at the initial stage, so the document reflects the following aspects:

  • The exact amount of the authorized capital;
  • Payment procedure;
  • Payment terms for the share account;
  • The nominal value of each founder’s shares.

The contract specifies the size and types of shares to be placed among the existing founders. All issues related to the drafting of the agreement are resolved by the founders orally at the meeting. The approved information is recorded in the minutes of the meeting, which may be attended by representatives acting in accordance with power of attorney.

Purpose of the contract for the creation of a corporation

The main purpose of the contract is to create a new entity. In business, this type of association is common and effective. The creation of a business company allows you to increase the strength of the subjects and extend their existence in the market. The agreement on the creation of a corporation continues to be valid throughout the entire period of the created company’s existence.

In business practice, it is possible to conclude a corporate contract. After all, when drafting an agreement on the creation of a corporation, the main goal is to settle relations on the creation and establishment of a legal entity. These two different documents oblige participants to comply with the prescribed rights and obligations.

This type of contract as a corporate one is concluded in accordance with the norms of civil law between the existing participants of business activity. They have the right to conclude this contract in order to exercise their rights and refrain from possible risks.

Each founder is obliged to pay a fee for the share in the authorized capital within the period specified in the documents. The payment period expires 4 months after the state registration. 

What does the corporate contract regulate

The regulation of the corporate agreement may be carried out by the participants by voting at the general meeting. The further operation of the corporate agreement is strongly influenced by the sale of a share in the authorized capital at a certain price. Regulation may occur if the participants have other rights to manage the company and its activities.

The purpose of the contract is implementation of property rights, protection of third parties’ interests (for example, investors). Also, one of the main goals is to establish internal rules among the participants and their clear interaction with each other. The regulation of conflicts and their prevention can be provided for when the document is signed by the founders.

Author of the article
Contract for the creation of a corporation
Valentina Khlavich
Managing Partner
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