How to set up a joint-stock company: procedure, terms and cost of the procedure

Contents:

• Opening a joint-stock company in Russia: types
• Registration of a joint stock company: step-by-step instructions
• Step 1: Preparing for the establishment of a joint-stock company
• Stage No. 2. Determine the location of the JSC
• Step No. 3. Drafting the Articles of Association and registration of the company
• Step No. 4. Register the issue of shares
• Step No. 5: Pay the state duty
• Step No. 6: Collect and submit the necessary documents
• Step No. 7: Receive the documents on the opening of the company
• Term of JSC registration
• How much does it cost to open a JSC?

A joint-stock company is a popular form for doing business. It allows you to combine resources by issuing securities – shares. This helps to receive investments for further development.

Registration of a joint-stock company is a process that requires fulfilment of the legislative requirements of the Russian Federation. In case of their violation, registration may be rejected, which will require repeating the entire process. It is important to recall that since 1 September 2014, it is not possible to open a closed joint stock company (CJSC) in Russia. Non-public joint stock companies (NPJSC s) are in their place. NPJSC  shares cannot be bought freely: they are held by a limited number of individuals from among citizens or other companies. In order to sell your shares, you have to get the permission of the other shareholders.

However, these are not all the nuances you need to know about if you want to register a company of this form. We will tell you more about how to set up a JSC in this article.

Opening a joint-stock company in Russia: types

A joint-stock company in the Russian Federation is a commercial organisation whose authorised capital is divided into a certain number of shares, which certify the obligatory rights of the company’s participants in relation to the company. It is important to understand that shareholders are not liable for the company’s obligations and bear the risk of losses. If the shareholders have not paid for the shares in full, they are jointly and severally liable for the company’s obligations to the extent of the unpaid portion of the value of the shares they own.

Two types of joint stock companies can be opened in Russia.

A public joint-stock company (Open Joint-Stock Company) is characterised by the following features:

• Shareholders can sell or gift shares without the consent of other shareholders.
• There is no pre-emptive right of redemption.
• Shares of JSCs – public or private companies – are openly traded on the stock exchange.
• Can make a private subscription if this is not contrary to the articles of association.
• Can have any number of shareholders.  

A non-public joint stock company (Closed Joint Stock Company) has the following features:

• All shareholders of a NPJSC  have a pre-emptive right to buy back shares. The redemption procedure is stipulated in the charter.
• The shares are distributed exclusively among the founders or other previously determined circle of persons.
• The Company may not publicly subscribe for shares or otherwise offer them for purchase to the general public.
• The maximum number of shareholders is 50. If this number is exceeded, the company must reorganise into a PJSC. If the company is not reorganised or the number of shareholders is not reduced, NPJSC  will be liquidated by court decision.

Note that a joint stock company established by the state or municipality may be public if it is not created in the process of privatisation of state and municipal enterprises.

On the basis of these attributes, the founders decide on the creation of one or another form of joint stock company.

Registration of a joint stock company: step-by-step instructions

Step 1: Preparing for the establishment of a joint-stock company

Before the start of active actions, the founders should understand the following key aspects:

• Understand the management structure. It is necessary to decide how many participants in the joint-stock company and determine who will represent the interests of the company without a power of attorney. This is usually the director.
• Screen future management. Before appointing a director, it is mandatory to check for possible inclusion in the register of persons prohibited from holding managerial positions. This will save from problems during registration.
• Choose a taxation system. It is necessary to determine the appropriate taxation system – general or simplified. If you choose general, additional documents will not be required. If you choose “simplified”, you need to prepare a separate application.
• Select a registrar. The appointment of a registrar must be recorded in a resolution adopted at a general meeting of participants.

Stage No. 2. Determine the location of the JSC

An important moment is the choice of the legal address. Attention should be paid to the following aspects:

• It is necessary to establish the official location of the JSC, which will be indicated in the Unified State Register of Legal Entities.
• Obtain the consent of the owner, if the address will be leased. It is important to obtain a letter of guarantee from the owner of the property where the JSC office will be located. It confirms his consent to the opening of a JSC on his territory.
• Check the address in the mass address database. Before making a final choice of location, it is important to check that the address is not in the mass address database. This will help to avoid problems with registration.
• According to Russian law, it is possible to specify the place of residence of the founder or general director of a JSC as the legal address, provided that the share of shares in the authorised capital is at least 50%.

Step No. 3. Drafting the Articles of Association and registration of the company

The Articles of Association of a joint stock company is the founding document for any company. The charter consists of two parts. The first serves for the normal operation of the company in the legal field, the second – defines the rules of activity, which should not contradict the first. The charter plays a key role. Must include important information:

• Name – full and abbreviated name of the JSC.
• Legal address.
• The size of the authorised capital.
• Detailed information about the shares, including their type, number and other.
• Description of shareholders’ rights, duties and responsibilities.
• Description of the management structure, including the competence of the participants and the decision-making procedure.
• Procedure for preparing and holding general meetings of shareholders.

It is obligatory to make a decision on the establishment of the organisation, which must be unanimous and executed in the form of minutes at the shareholders’ meeting. It may be:

• Unanimous resolution.
• A qualified resolution when at least 3/4 of votes are in favour of establishing the company.

Step No. 4. Register the issue of shares

Before registering a joint-stock company, it is necessary to formalise the documents on the issue of shares. This can be done through the Central Bank of Russia or a registrar approved by the founders. The latter may also keep a register of shareholders. In this case, registration with the registrar exempts from paying the state duty for the issue of shares. After registration of the share issue, the documents can be submitted to the tax service for registration of the JSC.

Step No. 5: Pay the state duty

The amount of the state duty for opening a JSC is 4 thousand roubles. However, if you submit the documents electronically using an enhanced qualified electronic signature, you do not need to pay the state duty.

The requisites for payment of the state duty can be obtained from the registering authority or on its official website. It is important to record the data correctly, as the refund takes about a month of days.

Step No. 6: Collect and submit the necessary documents  

The documents for registration of a JSC are as follows:

• Application in the form P11001
• Resolution on the establishment of a joint-stock company, drawn up in accordance with all the rules
• Articles of Association
• Confirmation of registration of share issue
• Cheque on payment of the state duty
• Lease or ownership agreement for the premises under which the company will be registered
• Extract from the register of foreign legal entities, if the founder is a foreigner
• Original passport of the applicant
• Power of attorney, if the documents are submitted by third parties.

This list is complete, i.e. the tax authorities cannot require additional documents. Paperwork can be submitted in person, via MFC, electronically or via a notary. The registrar who registered the issue of shares may also submit documents to the FTS. The tax office will make a decision within three days.

Step No. 7: Receive the documents on the opening of the company  

If the FTS has taken a favourable decision on the opening of the company, the data on the new company appear in the Unified State Register of Legal Entities. After that, the following documents can be received by email:

• Entry in the Unified State Register of Legal Entities in the form R50007
• Articles of Association indicating the registration
• Confirmation of registration with the Federal Tax Service

Receipt of these documents means successful completion of the process of registration of a joint stock company.

Also, after registration, you can receive in your hands:

• Decision or protocol on the establishment of the JSC
• Order on assuming the position of the General Director
• Company seals

Term of JSC registration

The approximate term for the registration of a JSC is no more than 10 working days from the date of signing the agreement with the registrar. During this time, the company’s representatives must collect the entire package of documents and send them for state registration. The Federal Tax Service will register the company within 3 days provided that the package of documents is complete and there are no errors in the documents submitted.

Next is the issue of the remaining shares, opening a bank account and, if necessary, obtaining licences.

Opening a bank account takes no more than a week. Depending on the chosen bank, the account can be opened remotely or by visiting the office in person.

How much does it cost to open a JSC?

Registration of any joint stock company involves the following costs:

• Payment of state duty – 4,000 roubles
• Lease of a legal address/rent of premises/purchase of premises in the absence of such an address
• Payment for the services of a notary or intermediaries, if necessary
• Formation of the authorised capital (for NPJSC  – 10,000 rubles, for PJSC – 100,000 rubles).

It is important to know that the authorised capital of a joint stock company is allocated to a certain number of shares. To form it, it is necessary to issue securities. This process is registered with the Central Bank of the Russian Federation. As a rule, shares need to be paid in money. If the authorised capital is paid in the form of property, it must be valued.

Documents for the initial issue are submitted to the CBR within one month from the date of registration of the company with the tax office. If the deadlines are not met, the company will receive a fine of 10 to 700 thousand roubles.

Within three months after registration, the founders must pay a minimum of 50% of the pre-determined authorised capital. It is important to ensure that the register of shareholders is maintained after the company is registered.

Questions and answers