How to open a Public Joint Stock Company (PJSC) in Russia?

Contents:

• Registration of a PJSC: peculiarities of legislative regulation
• Distinguishing a PJSC from other types of corporations
• Advantages of PJSCs
• How to open a PJSC: stages
• Documents for registration of JSC (“PJSC”)
• What authorities should I apply to in order to register a PJSC?
• Who can open a Public Joint Stock Company?

Registration of a PJSC (formerly OJSC) is the process of opening a company from scratch, including registration with a state body. In addition to preparing constituent documents, it is required to provide information on the founders of the organization, the location of the JSC, the person acting without a power of attorney on behalf of the company and the registrar. The process consists of preparing and submitting properly executed documents in accordance with the requirements of the legislation of the Russian Federation.

Registration of a PJSC: peculiarities of legislative regulation

Since September 1, 2014, the Russian legislation abolished the concept of JSC and introduced the term Public Joint Stock Company (PJSC). In order for a non-public joint-stock company to acquire public status, the organization needs to operate for at least two years and then apply to the registration authority for a change of form. This usually happens at the last stage.

In general, the process of creating a PAO begins with the registration of a JSC. The procedure involves several stages, each of which requires compliance with the regulations established by the legislation of the Russian Federation. If these requirements are violated, the registration of a PAO may be rejected, which will require the process to be repeated.

Distinguishing a PJSC from other types of corporations

Public offering of stocks. One of the key features of a PJSC is the possibility of public offering of stocks on financial markets. This means that the company’s stocks can be purchased by a wide range of investors, including individuals, institutional investors and other companies. Such openness provides PJSCs with access to additional capital to finance their development.

Greater opportunities for growth and development. Due to access to capital through public offerings on the securities market, PJSC has great opportunities to expand its operations, acquire other companies, invest in new projects and develop new lines of business. This allows PJSC to compete effectively in the market and increase its stocks in various industries.

Transparency and mandatory reporting. Public joint stock companies are required to provide transparent and timely information about their operations, financial condition, development strategy and other important aspects of their business. This can be done through the publication of annual and quarterly reports, as well as information on key events and decisions made at the general meeting of stockholders.

Democratic governance. PJSC is managed in accordance with the principles of democracy, where each stockholder has the right to vote in proportion to the number of stocks he or she holds. The General Meeting of Stockholders acts as the supreme governing body that makes key decisions on the company’s operations, including the selection of the board of directors and approval of financial reports.

Strict regulation and supervision. PJSCs are subject to strict regulation and supervision by government and independent bodies – financial regulators and stock exchange commissions. This is aimed at protecting the interests of stockholders, ensuring compliance with the law and preventing fraud and abuse.

Advantages of PJSCs

Access to capital. PJSC has the ability to raise large amounts of capital through public offerings on financial markets. This provides additional resources for realization of ambitious development and investment strategies.

Opportunities for growth and development. Thanks to a wide range of investors and access to capital, PJSC has great opportunities to expand its operations, acquire other companies, develop new business lines and raise its status.

Transparency. Public joint stock companies are obliged to provide transparent information about their activities and financial condition, as well as to implement democratic principles of governance. This increases investor and public confidence.

Liquidity of stocks. Securities of PJSCs are easier to sell on the open market compared to stocks of closed companies, which provides stockholders with an opportunity to quickly dispose of their investments.

How to open a PJSC: stages

Stage 1: Determine the organizational structure

The founder should competently approach the issue of selecting the management team. It is important to check the candidates in the list of disqualified persons or persons with restrictions on participation in legal entities. Otherwise, registration may be refused.

If the list is formed, it is important to choose a registrar. The decision is approved when the JSC is created. The issuer must sign an agreement with the registering authority.

Stage 2: Selection of the taxation system

It is chosen by the founder independently. The choice is between simplified (“STS”) and general (” GST”). The general system of taxation is imposed automatically, for simplified it is necessary to separately submit an application for application of the simplified taxation system. Further it is necessary to establish the location of the JSC.  

Stage 3: Selection of the legal address

The address is specified in the decision and the charter of the JSC. However, documents on the lease or purchase of premises are necessary, as they will help to avoid the risk of refusal to register the JSC in connection with the mass of the address. The documents can be a letter of guarantee, a copy of the ownership document.

Stage 4: Development of the JSC charter and approval of the decision on its establishment

According to the current legislation, the charter must include the following information:  

• Full name of the JSC
• Location of the company
• Form of the company
• Number and total value of stocks that the company plans to place
• Rights and obligations of stockholders
• Data on the amount of the authorized capital (for JSC – 100,000 rubles or more)
• Competencies of each management body

It is important to have a resolution or protocol on the establishment of a joint stock company. The type of document depends on the number of founders. If there is only one founder, a resolution is drawn up, if there are several – it is adopted by voting and drawn up in the form of a protocol.

Stage 5: Registration

The application must be made on form P11001. The template should include several sections for entering key information. It is also necessary to pay the state duty for registration – 4,000 rubles. This can be omitted if the documents are submitted electronically using a highly qualified electronic signature.

Stage 6: Changing the structure of the organization, if necessary

A non-public joint-stock company can be transformed into an opened joint-stock company. For this purpose, the company must operate with profit for 2 years. To carry out the reorganization, it is necessary to specify in the company’s charter information about the transition to the public mode, to introduce additional clauses that will help to take into account all the legislative nuances relevant to public companies.

The next steps are a well-considered interaction with the stock exchange and the conclusion of a contract on the provision of the opportunity to trade stocks on their platform. Then it is necessary to register the stocks prospectus. This document emphasizes the importance of each security, describes in detail the features of the company and its economics.

After each of these stages, information on the company’s transition to the public company regime must be officially recorded in the Unified State Register of Legal Entities.

Documents for registration of JSC (“PJSC”)

• Articles of Association in two copies
• Resolution or Minutes on the establishment of the company
• If the simplified taxation system is chosen, an application for transition to the simplified taxation system.  
• Application for registration in the form P11001
• Fee payment receipt
• Documents on the right to use the legal address
• Original passport  
• Notarized power of attorney, if the documents are submitted by third parties.
• All the above documents must be submitted to the tax office, filled out without errors.

What authorities should I apply to in order to register a PJSC?

When registering a PJSC, entrepreneurs must apply to several government agencies to obtain the necessary permits and documents to start the company’s operations. It is important to understand which authorities are responsible for various aspects of registration and how to interact with them. In general, this list includes:

The Federal Tax Service (FTS) of Russia. The FTS is the first body to contact for state registration of a PJSC. Entrepreneurs must submit an application and provide all necessary documents, including the charter of the PJSC and the minutes of the first meeting of the founders. The Federal Tax Service also issues a certificate of state registration, confirming the legality and existence of the company.

The Central Bank of Russia is the authorized body for regulating financial markets. For a PJSC planning to place stocks on the securities market, it is necessary to apply to the authorized body for regulation of financial markets. This authority registers the issue of stocks and controls the activities of a PJSC on the financial markets, ensuring compliance with the legislation and regulatory requirements.

Depending on the specific jurisdiction and the specifics of its activities, the founders of a PJSC may apply to other authorities and institutions. For example, PJSCs that want to operate in certain areas must obtain permits and licenses from specialized regulatory bodies.

Who can open a Public Joint Stock Company?

A public joint stock company (PJSC) attracts the attention of entrepreneurs for various reasons. Firstly, opening a PJSC provides an opportunity to attract large investments through public offering of stocks on financial markets, which provides additional resources for business development. Secondly, a PJSC has great potential for growth and development due to access to capital and a wide range of investors.

There are no strict restrictions on founding persons for opening a PJSC. PJSCs can be founded by individuals or legal entities, including foreign entrepreneurs. This makes PJSCs accessible to a wide range of individuals, which promotes investor diversity and business development.

Many entrepreneurs seeking global expansion of their business choose to open a PJSC as the optimal form of organization. This is explained by the possibility of attracting international investors and creating a base for international business. For foreign entrepreneurs, a PJSC is a promising tool for entering new markets and expanding the geography of their business.

Individuals, along with companies, may initiate the creation of a PJSC, especially if they have ambitious plans for business development and are interested in using public offerings to raise capital. Thus, a PJSC can be created by both young entrepreneurs and experienced businessmen.

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