Are CJSCs obliged to urgently reorganize into LLC? What will happen to the CJSC after September 1: is an urgent reorganization into an LLC obligatory? New rules for keeping registers of shareholders from 01.10.2014

On September 1, 2014, Federal Law No. 99-FZ of 05.05.2014 “On Amendments to Chapter 4 of Part One of the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation) and on invalidating certain provisions of legislative acts of the Russian Federation” came into force (hereinafter referred to as Law No. 99-FZ).

This law reforms the institution of legal entities, including amending the list of organizational and legal forms in which legal entities can be created. Additional liability companies (ALC) and closed joint stock companies (CJSC) will be excluded from the commercial organizations existing at the moment. But if the exclusion of ALCs from this list is not so noticeable for the business community, then the question of how the CJSC will function, after the publication of the text of the law, became relevant among entrepreneurs.

According to clause 9 of Article 3 of Law No. 99-FZ, from the date of entry into force of this Law, the norms of Chapter 4 of the Civil Code of the Russian Federation on Joint Stock Companies (as amended by Law No. 99-FZ) will apply to CJSCs. The provisions of Federal Law No. 208-FZ of December 26, 1995 “On Joint Stock Companies” on CJSCs are applied to such companies until the first change in their charters. An analysis of this provision allows us to conclude that Law No. 99-FZ does not provide for the obligation of a CJSC to transform into an LLC before September 1, moreover, the CJSC does not have an obligation to transform into an LLC after September 1. The provisions of the charters of such organizations will be in effect in the part that does not contradict the amended Civil Code and the Federal Law “On Joint Stock Companies”.

Moreover, the concept of “open” and “closed” joint stock companies as such is excluded by the legislator. After September 1, they will be replaced by a different division of economic societies: public and non-public. And in this case, there is also no need to urgently amend the constituent documents. The legislator has provided that joint-stock companies meeting the criteria of publicity will be considered as such, regardless of the indication of this in their company name. However, not everything is so simple in the life of joint stock companies. According to Federal Law No. 142-FZ of July 2, 2013, joint-stock companies, which as of October 1, 2013 were the holders of the registers of shareholders of these companies, retain the right to maintain these registers for a year after that date. After a year, that is, by October 1, 2014. These joint-stock companies are obliged to transfer the maintenance of the register to a person who has a license provided by law. Failure to comply with these requirements will result in administrative liability for joint-stock companies, and criminal liability if more serious violations are found.

This requirement will turn out for joint-stock companies, first of all, by incurring additional costs not only for paying for the monthly services of the share register holder (registrar), but also for the procedure for transferring the function of keeping the register to him, which will require the preparation of an appropriate package of documents and bringing the company’s documentation in accordance with the requirements of the legislation. Nevertheless, there is an organizational and economic feasibility of reorganizing joint-stock companies into limited liability companies: it becomes expensive and labor-intensive to maintain and maintain “shareholders” from September 1, 2014 (see the article “Joint-stock companies face huge fines” for more details). For example, from September 1, 2014, the legislation established the need for notarization of the shareholders present at the meeting and the voting procedure – that is, ANY DECISION IN A JSC IS EXCLUDED WITHOUT INVOLVING A NOTARY FOR THE SHAREHOLDER MEETING (while in an LLC there are options for bypassing the mandatory notarization).