Legal analysis of incorporation documents

Jan, 16 2020


According to art. 52 of the Civil Code of the Russian Federation, legal entities act on the basis of the articles of association (AoA), which shall be approved by their members. The AoA of commercial corporations (JSC or LLC) is the main document regulating their activities. Also, the AoA contains basic information about the company making possible its identification. Company members can also draw up a memorandum of association (MOA) governing the establishment of an enterprise.

Some types of organizations may act on the basis of other incorporation documents. For example, MOA is binding for business partnerships. A state corporation does not require any of such documents – it operates on the basis of federal law adopted in relation to a particular state corporation.

Incorporation documents of commercial organizations

The main incorporation document of commercial legal entities is the AoA. Without it its activity is impossible. Legal entities can act on the basis of a model AoA (there are 36 possible options), approved by an authorized state body. At the same time, information that a person acts on the basis of a model AoA must be indicated in the unified state register of legal entities (USRLE). The members of a company can also independently develop their own AoA.

If required by law (or if members wish), for example, members of business partnerships can also draw up a MOA (for LLC, an establishment agreement). In the establishment agreement, the members undertake to create a legal entity, determine the procedure for joint activities in order to create it, the conditions for the transfer of property to it and participation in its activities.

The agreement also determines the conditions and procedure for the distribution of profit and loss between participants, management of the legal entity, the withdrawal of members.

Founding documents of non-profit organizations

For non-profit organizations, incorporation documents are as follows:

  • AoA- for a public organization, foundation, non-profit partnership, autonomous non-profit organization, private and budgetary institution;
  • a statement approved by the relevant body performing the functions and powers of the member – for state institutions;
  • a MOA concluded by members of a union or association and AoA approved by them.

Also, depending on the type of non-profit organization, the law determines the individual requirements for the content of AoA. For example, AoA of the fund, in addition to basic information, should contain information about the bodies of the fund, including the board of trustees, and the procedure for their formation.

It is recommended to carry out this procedure even before submitting registration documents to tax and other authorities. At the stage of registration of a legal entity or joint-stock company, the reason for the refusal can be any mistake made or even grammatical inaccuracies.

Also, legal analysis of incorporation documents will help to identify serious shortcomings in the documents of already registered enterprises. Errors and inconsistencies in the documents may lead to the fact that a legal entity, LLC or JSC will not be able to obtain a loan, participate in tenders or even sign contracts and make settlements with partners.

In addition, inaccuracies can cause disagreements between members of the enterprise and lead to litigation and other undesirable consequences. For these reasons, the incorporation documentation should be drawn up by competent specialists.

Our services

VALEN has many years of experience in corporate law. Our lawyers specialize in the drafting and legal analysis of incorporation documents. We will consult on all issues related to incorporation documents drafting, conduct a thorough analysis and identify errors in the documents, prepare written recommendations for their improvement or prepare incorporation documents on the turnkey basis.

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Author of the article
Legal analysis of incorporation documents
Valentina Khlavich
Managing Partner
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