16/09/2021

Limited Liability Company vs Joint-Stock Company

Consideration	Limited Liability Company (LLC) (with two or more shareholders)	Joint-Stock Company (JSC)
Number of shareholders	From 2 to 50.	At least 3 with no cap.
Corporate governance structure	Only one governance structure which consists of Members’ Council, Chairperson of Members’ Council, Director or General Director, Control Board (for a company with 11 members or more).	Two options for corporate governance structures: General Shareholders’ Meeting, Management Board, Oversight Board, Director or General Director. Control Board is not required if the company has less than 11 shareholders and the institutional shareholders hold less than 50% of the shares. General Shareholders’ Meeting, Management Board, Director or General Director. At least 20% of members of Management Board must be independent members and there must be an Internal Audit Committee under the Management Board.
Capital raising	Not permitted to issue shares. Shares are denoted as a percentage of the paid-up capital. Shareholders must contribute their shares as committed when they apply for company incorporation and within 90 following the date of issuance of the Certificate of Enterprise of Registration (“CER”) by the licensing authority. If the shares are not paid-up in time, the company must adjust its charter capital according to the paid-up capital.	Permitted to issue shares. The capital is divided equally to share units. Founding shareholders must contribute at least 20% of ordinary shares, which must be paid up within 90 days following the date of issuance of the CER by the licensing authority. If the shares are paid-up in time, then: The defaulting shareholders are not recognised and not allowed to transfer to any other party. The defaulting shareholders will only enjoy the voting right, dividends, and other rights according to the shares that have been paid-up and may not transfer the unpaid shares to any other party. The unpaid shares are deemed to be unissued shares and the Board of Management has the right to re-issue those shares. The company must adjust its charter capital to the value of shares that have been paid-up and change the shareholders within 30 days following the date that the shares should have been paid.
Transfer of shares	If a shareholder wishes to transfer all or part of their shares, the shares must be offered to other existing shareholders first. A shareholder may transfer their shares to other parties only if other exiting shareholders do not buy the shares within 30 days following the date of offer.	Shareholders may freely transfer their shares, except that within the first 3 years a founding shareholder may transfer their shares only if the transfer is approved in a Shareholders’ General Meeting.The transfer may be carried out by way of an ordinary share transfer agreement or according to the procedure set by the stock market (for listed companies).
Shareholders’ responsibilities	Shareholders will be responsible for debts or financial consequences according to their shareholding ratio. A shareholder who fails to pay up their shares in time will be responsible for the financial consequences (if any) that arise prior to the date of registration of change of the company’s charter capital and shareholding ratio.	A shareholder who fails to pay-up their shares in time will be responsible for the financial consequences (if any) to the value of shares that they registered to buy.

Based on 2014 Enterprise Law.

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