In any business community there is an authorized capital. Its presence in the property of the company is a requirement of the legislation of the Russian Federation. The formation of the corresponding capital has quite a few nuances. When solving this problem, it is necessary to follow the norms of legislation and take into account the specifics of a particular business entity. What is the authorized capital of the company? How is its education and adjustment carried out?
What is authorized capital?
Before talking about how the formation of the authorized capital of the company is carried out, we will study in more detail the essence of this financial element. What are the most popular views of economists regarding its definition?
Under the authorized capital is traditionally understood as the value of fixed assets and current assets owned by the enterprise and reflecting, as a rule, the amount of money invested in the business.
It is worth noting that the civil legislation of the Russian Federation prescribes to distinguish the authorized capital from other similar purpose funds. Such as, for example, joint-stock capital (formed in partnerships), mutual funds (used in cooperatives). Actually, the authorized capital characterizes the activities of business companies - JSC and LLC. Marked types of funds differ in status and purpose. So, the equity capital as a whole is similar to the authorized capital, but they vary significantly according to such a criterion as the responsibility of co-investors on the obligations of the company.
The authorized capital is part of the equity of the company, which may also be represented by borrowed cash receipts. Along with it, in the structure of the company's own funds there are additional, reserve funds, as well as undestributed profits organization. What are the financial elements included with the organization’s own funds considered?
Additional paid-in capital is a combination of:
- cash amounts reflecting the revaluation of fixed assets;
- share premium of a business entity;
- property received by the company free of charge;
- monetary amounts reflecting budget allocations.
Reserve capital is a monetary fund, the purpose of which is the urgent fulfillment of credit and other obligations of the company in the event of a lack of working capital, penalties or a difficult market situation. For some firms, the establishment of a reserve fund is mandatory - for example, for joint-stock companies. Relevant businesses should allocate at least 15% of the authorized capital to the reserve fund.
Retained earnings - this is part of the cash generated after the company receives income and make all necessary payments. This resource can be used to form various corporate funds, investing in business. Retained earnings can be cashed at the request of the owner of the company.
Equity Functions
Another aspect that will be useful to consider before exploring the order of formation of the authorized capital is its function. Experts distinguish their following list.
Firstly, it is an investment function. The authorized capital ensures the circulation of financial resources allocated for the purchase of various resources necessary for the business.
Secondly, it is a backup function. It involves the formation in the structure of the company’s assets of funds, due to which certain payments can be made in case of a shortage of turnover - for example, on loans or preferred shares.
Thirdly, it is a structural distribution function. It involves the distribution of profits of the company between investors based on their share primarily in the authorized capital of the company.
What is included in the authorized capital?
Now we will examine actually how the formation of the authorized capital is carried out.The first question that will interest us: what is included in the appropriate fund of the enterprise, what resources can it consist of? The formation of the authorized capital is possible practically at the expense of any assets characterized by cash value and liquidity. This may be cash, securities, property.
Moreover, the assessment of their value and at the same time the value of the contribution of a particular investor can be carried out both by the results of an agreement between him and partners, and in accordance with the norms established by law. In the second case, the valuation of assets forming the authorized capital can be carried out with the assistance of external experts.
In general, sources of resources through which the main financial fund of an enterprise can be formed can be classified into 2 main categories: own and borrowed. But it should be noted that this classification should be considered separately from the assets and liabilities of the company. That is, outside the distribution of the entire capital of the organization to its own and borrowed. The first is characterized by reserve, accumulation, trust funds, retained earnings, rental income, depreciation compensation. To borrowed funds include credit funds - short-term or long-term. The authorized capital can be formed at the expense of only actually own (owned by the founder or investor) or borrowed (drawn up by the entrepreneur on credit) funds.
Thus, according to formal signs, the authorized capital cannot be borrowed, since the credit funds issued for the organization form its debt obligations. In turn, the authorized capital, as we noted above, is just the same source of debt repayment of the company.
Requirements for the formation of authorized capital
In the legislation of the Russian Federation there are a number of requirements that the formation of the authorized capital of an enterprise must comply with. First of all - financial. So, the minimum amount of authorized capital should correspond to:
- 10 thousand rubles if the firm is an LLC or non-public joint-stock company;
- 100 thousand rubles if the company is a public joint stock company.
If we are talking about the formation of the statutory fund of a state-owned enterprise, then its minimum value should be 5 thousand minimum wages. AT municipal enterprises the corresponding capital should be not less than 1 thousand minimum wages. The formation of the authorized capital of the bank involves investing in its composition at least 300 million rubles.
As we noted above, the resources for the formation of the respective funds can be any assets with a monetary value. However, there are a number of nuances that characterize investing in the minimum authorized capital set for business entities. Sources of its formation, when it comes to LLC, can only be presented in the form of cash.
The minimum capital of the LLC is 10 thousand rubles, and it must be paid into the company's current account in rubles. In turn, if you need to increase the authorized capital - sources of formation of its additional volume can be not only monetary, but also represented in the form of other resources - movable or real estate.
It will be useful to study in more detail how their monetary equivalent is determined in the case when it comes to the formation of the authorized capital of LLC - as one of the most common legal forms of business in the Russian Federation.
Estimation of the value of property forming the authorized capital
In accordance with the current legislation of the Russian Federation, regardless of the value of the property, which is supposed to be included in the structure of the authorized capital of the LLC, an external expert should be involved in its assessment.It can be noted that earlier in the Russian legal acts there was a norm according to which an appeal to an appraisal specialist was required only if the value of the property, at the expense of which it is supposed to form the authorized capital of the organization, exceeds 20 thousand rubles.
Now the rule of law has changed. It is worth noting that the founders of the LLC do not have the right to overstate the value of the property, which is supposed to be included in the structure of the authorized capital, relative to the indicator determined by the valuation expert. In practice, the legislative innovation under consideration means that it is more profitable for many firms to increase their authorized capital, as in the case of ensuring its minimum value, at the expense of money - since the services of an appraiser are usually quite expensive.
We also note that the Civil Code defines liability mechanisms in the event that the founders of the LLC and the appraiser agree to unjustifiably overstate the value of the property being valued.
The procedure for the formation of the initial authorized capital
We will study some practical nuances that characterize the procedure for the formation of the authorized capital.
Again, it will be useful to consider them in the context of the establishment of an LLC as one of the most popular legal forms of doing business in Russia. Before an LLC is registered, it is not necessary to form an authorized capital. In principle, it will not be a violation of the law to pay it in advance - but it is better to make sure that the Federal Tax Service will correctly enter the data on the company in its registers, and only after that form the appropriate financial fund. Moreover, when forming the authorized capital, the founder of an LLC may not be in a hurry - he has 4 months from the moment of its registration to deposit the required amount of funds into the organization’s bank account.
In general, the procedures for the formation of the financial fund under consideration are similar in JSCs. The formation of the authorized capital of a joint-stock company is not necessary to carry out before the state registration of the company. But as soon as the Federal Tax Service of the Russian Federation makes information about the company in its registers - within 3 months the founders of the company must deposit 50% of the required amount of funds into the current account to form the authorized capital, the rest - within the next 9 months.
Adjustment of the authorized capital
So, we studied the essence of the authorized capital of firms, discussed how their formation is carried out. Changing share capital is an aspect that may also be of interest to us. Consider it.
A change in the authorized capital through its increase or decrease can be carried out by the founders of the company upon studying the results of business development during the year. In order to adjust the value of the corresponding capital, it is necessary to amend the constituent sources.
An important nuance: in the process of reducing the size of the authorized capital, the interests of creditors should not be affected. So, in accordance with the legislation of the Russian Federation, the founders of a joint-stock company must warn creditors that the authorized capital of the company will be reduced in writing. At the same time, the latter have the right to require the company to repay loans ahead of schedule or to compensate for possible losses in connection with the adjustment of the corresponding funds.
In this connection, the procedure in question may be required? The fact is that the initial formation of the authorized capital of companies does not always reflect the specifics of the segment in which the business is to be developed. In some cases, it may be necessary to attract additional financing due to a lack of working capital. Potential lenders can evaluate the solvency of a business based on its authorized capital. If it turns out to be insufficient, the corresponding funds will have to be increased.In turn, a decrease in the authorized capital is possible if, for example, the volume of net assets of the company is insufficient and is less than, in fact, the size of the financial funds under consideration.
The specifics of unit and budget authorized funds
Having studied what constitutes a commercial authorized capital and its formation, we can consider the specifics of funds of a similar purpose, but characterizing the activities of enterprises with a different status. For example, production cooperatives, as well as state and municipal structures.
As for the first, mutual funds are formed in them. The main source of their education is the contributions of the cooperative members. It can be noted that part of the mutual funds should be formed by the time of state registration of the business entity. The remaining amount of contributions must be made to the structure of the corresponding cooperative fund within a year after the information on the cooperative is entered in state registers.
When establishing state and municipal enterprises, the formation of the corresponding authorized capital is carried out. Its structure is determined by the owner of the business entity. The authorized capital of a budgetary enterprise is paid before its state registration. If it is unitary, then the corresponding capital of an economic entity cannot be distributed over any shares. Authorized size budget fund enterprise is fixed in the charter of the organization. As we noted above, its minimum value cannot exceed 5 thousand minimum wages - if a state-owned enterprise is established, or 1 thousand if it is a municipal structure.
If there is a need to increase or decrease the size of the authorized capital of the enterprise, this procedure should be agreed with the competent authority. Changing the size of the corresponding capital can be carried out at the expense of various sources, for example, by including any new resources in the structure of its property or by using the profit received by the state-owned enterprise.
As in the case of a change in the amount of the authorized capital of a business company, creditors of the budget structure should be warned about adjusting the size of the corresponding fund. It can also be noted that the volume of net assets of a state enterprise should not be inferior to the size of its authorized capital.
Accounting for authorized capital
Another major aspect that characterizes the use by a firm of such a financial resource as authorized capital is accounting for the formation of authorized capital in the accounting department of an organization. It is carried out by the following algorithm.
So, if we need to carry out the accounting of such a procedure as the formation of the authorized capital, the accounting entries are applied mainly using accounts 75 and 80. How? Account 80 is used to reflect data on the status and cash flows related to the share capital or its analogues, such as a stock fund. Score 80 is passive. It is assumed that its balance will correspond to the size of the financial resource under consideration, established upon the fact of such a procedure as the initial formation of the authorized capital. Documents in which information on the establishment of the company is recorded should contain data on the value of the corresponding capital.
Entries using account 80 are made not only in the process of formation of the authorized capital, but also in the implementation of its adjustment - by increasing or decreasing. At the same time, for a legitimate change of such a resource as authorized capital, accounting for the formation of authorized capital and the adjustments made requires the preliminary amendments to the constituent documents of the company. Only on condition that they are produced, the accountant begins work with a score of 80.Information on it can be used by the founders of the company in order to track the dynamics of the formation of the Criminal Code.
As we noted above, the payment of the authorized capital of the company is carried out upon state registration of the latter. As soon as this procedure is carried out, and also provided that the constituent documents are in order, the accountant needs to apply postings on the credit of account 80 and the debit of account 75 (when using sub-account 75-1). The fact that the contributions of the founders came at the disposal of the company is also recorded on the credit of account 75 and the debit of those accounts that are relevant to the accounting of values.
These are the main nuances that characterize the accounting for the formation of authorized capital. It should be carried out correctly, since it involves the recording of data on the most important financial transactions from the point of view of managerial decision-making by the enterprise management.
Summary
Share capital is one of the key financial indicators of the company. It is part of the organization’s own funds structure. But it is formed practically earlier than the others - by investing the founders' funds in the capital structure of the company after state registration, and in the cases provided for by law - before it in established volumes.
The authorized capital may matter in terms of assessing the solvency of the company by the lender, the prospects of investing in a business investor, establishing partnerships between the management of the company and other market participants. The rules of its formation depend on the specific type of business entity. The formation of the authorized capital of a bank may differ significantly from the corresponding procedure, which characterizes the formation of the corresponding fund of an LLC, partnership, cooperative, state or municipal enterprise.
For different types of firms, special requirements are established for the size of the authorized capital, the time of its desired payment. It is important to carry out the correct accounting of the movement of funds on accounts reflecting operations with the authorized capital. The formation and change of the respective funds should be accompanied by the timely entry of the necessary information into the constituent documents of the company. In cases specified by law, the adjustment of the amount of the authorized capital should be carried out taking into account the interests of the creditors of the company.
