Transformation of a Public Joint Stock Company

Apr, 08 2024


Public Joint Stock Companies (PJSCs) are one of the most common forms of corporate ownership. A PJSC provides investors with the opportunity to invest in shares of companies that are traded on public markets. With the changing economic environment and rapid business development, PJSCs sometimes face the need to transform their organisational structure and strategy. How this happens is the subject of this article.

Reasons for transforming a PAO

There are several reasons on the basis of which a PAO may decide to transform:

  • Strategic goals. A company may decide to change its business strategy in response to changes in the market environment or competitive situation.
  • Mergers and acquisitions. A transformation may be triggered by plans to merge or acquire with another company, which often requires a change in share capital structure and corporate statehood.
  • Restructuring. In some cases, a company has to revise its organisational structure and business model to improve efficiency and competitiveness.
  • Change in legal form. A company may decide to change its legal form to comply with changes in legislation or to improve its legal status.
  • Diversification. Transformation may be driven by a company’s desire to expand its operations into new industries or regions.

Stages of PJSC reorganisation

The procedure for reorganisation of a PAO usually includes the following stages:

  1. Decision making. All key points should be decided at the general meeting after it has been convened. In order to reorganise a PAO, a positive decision must be adopted by at least two-thirds of the company’s members. What issues are clarified at the meeting? Usually it is the procedure and terms of reorganisation, as well as the selection of the managing body of the company and its charter.
  2. Notification of the Federal Tax Service at the place of registration. The notice contains data on the start of the reorganisation procedure. This information will then be entered into the Unified State Register of Legal Entities.
  3. Informing counterparties. This must be done within a month from the beginning of the procedure of transition to a new company. It is necessary to repay all obligations to creditors in the order that is prescribed in the legislation.
  4. Disclosure of information publicly through the “Bulletin of State Registration”.
  5. Conducting an inventory of property. The process and its results should be reflected in a special “Inventory Act”.
  6. Holding the final meeting of LLC members. Within the framework of the meeting, it is necessary to record and approve the constituent documents of the LLC, fix candidates for management positions, draw up the transfer act, make changes to the Charter, and accept the accounting documentation.  
  7. Determine the value of shares for their redemption in case of conversion into an LLC.  
  8. Send the necessary information to the FIU. This must be done within one month.
  9. Carry out state registration of the newly established company – LLC or NAPO. Presupposes the presence of a relevant application, minutes of a general meeting, an approved Charter, a transfer deed, a receipt for payment of state duty, a copy of a publication in the mass media and a certificate from the FIU.


The transformation of a public company is a complex and multi-stage process that requires careful planning, risk assessment and strategic decision-making. In a period of dynamic development of business processes, companies need to be flexible and able to adapt to changing conditions. Transformation is one of the tools that will be crucial in achieving these goals.

It is important to note that each reorganisation process is unique and must be adapted to the specific needs and goals of society. The key success factors are the professionalism and competence of the management, as well as the involvement and support of shareholders and other stakeholders.

A properly conducted reorganisation can help a company adapt to changing market conditions, improve its competitiveness and create additional value for shareholders. A poorly conducted reorganisation can lead to undesirable consequences – loss of market share, financial loss or a deterioration of the firm’s reputation. This is why it is important for a company to consider all aspects of reorganisation when making a decision to reorganise and to do so in a way that takes into account the interests of all stakeholders.


Can a PJSC reorganise into a LLC without transferring to an intermediate form of ownership? 

Yes, this can be done. Conversion of a JSC is a form of reorganisation in which the company ceases operations, and its rights and obligations are transferred to a new company of a different legal form. At the same time, the transition itself may take place in several stages.

What does reorganisation through spin-off mean? 

Spin-off is a reorganisation of a joint stock company through the creation of one or more companies with the transfer to them of part of the rights and obligations of the reorganised company without terminating the latter. The procedure for such reorganisation is regulated by the Civil Code and the Federal Law “On Joint Stock Companies”.

What is the difference between reorganisation and renaming of an organisation?

Renaming is not a reorganisation process. In case of renaming, re-registration with the Federal Tax Service and making changes to the Unified State Register of Legal Entities takes place, but these processes are not reorganisation. The fact is that reorganisation is connected with the transfer of the rights to own the company from one person to another with the transfer of all rights and obligations.

Author of the article
Transformation of a Public Joint Stock Company
Valentina Khlavich
Managing Partner
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