The authorized share capital of business partnerships and companies is only one of the types of capital of any legal entity. Other types of capital that are formed at the enterprise, depending on the legal form, include:
- spare;
- additional;
- unit trust;
- undestributed profits.
It is capital that is the property basis of commercial activity, which allows to determine the minimum amount of available funds and begin economic activity.
The Civil Code interprets the share capital as the minimum amount, which guarantees, in the event of property claims of creditors, their repayment.
Features
The main requirement of the law is the obligation of any commercial enterprise, when it is opened, to form capital. Regulatory acts also settled the question regarding the size and procedure for increasing or decreasing the capital of a company.
At the legislative level, there are different concepts, namely:
- share capital should form partnerships;
- authorized capital - all companies;
- authorized capital is formed at enterprises belonging to municipal and state property.
Owners of monetary or material assets, after making them in the authorized capital, in return receive rights to a registered legal entity. The profit received in the future should be distributed evenly among all owners of the enterprise.
Guarantee role
The main role of the authorized and joint-stock capital is guaranteeing, that is, protecting the interests of third parties, in the event of financial difficulties for a legal entity. Therefore, at the level of legislation, the minimum size for different enterprises is established, depending on the legal form.
Funds contributed to the authorized capital are not subject to storage on a separate account in a banking institution, but are in free circulation. The guarantee is provided in the following way: in the event that the value of the company's net assets decreases to a size less than the share capital, the legal entity is obliged to increase the size of the assets, or to reduce the size of the fund. This requirement is mandatory for the implementation of JSC and LLC. If the size of the fund falls below the mark set at the level of legislation, the legal entity is subject to liquidation.
The size
For each enterprise, depending on the legal form, the minimum amount of capital is set:
- For LLC, it cannot be less than 10 thousand rubles.
- For JSCs it is calculated from the minimum wage, and should exceed it 100 times, at the time of registration of the enterprise.
- For a closed joint-stock company, the amount of capital should not be less than 100 times the minimum wage, at the time of registration.
- A threshold of 500 minimum wages has been set for state enterprises.
- For municipal at 1000 minimum wage.
Formation Rules
The capital of organizations is collateral and charter capital is an initial contribution, which is designed to ensure the functioning of the legal entity, and its presence confirms the right to carry out business activities.
A variety of things can act as contributions:
- money;
- property;
- intangible assets.
In fact, the authorized capital of a company and the joint-stock capital of a partnership are a combination of tangible and intangible assets that have a monetary value.
Business Companies
All business companies are characterized by one feature - all founders bear the risk of losses only in the framework of contributions due to them. If one or several participants at the time of settlement with creditors did not fully pay their share, then he still bears subsidiary responsibility within the entire share, even for the unpaid part.
Increased requirements are placed on AOs due to the prevalence of this form of ownership. AO fund consists of the nominal value of shares, which determine the measure of responsibility of each participant and the amount of profit received. Reducing the amount of capital of JSC is possible only with the consent of creditors.
A business company is subject to liquidation if the share capital has become less than the amount established at the level of legislation.
AO is not entitled to pay dividends until such time as the authorized capital is fully paid. LLC will not be able to issue bonds for the same reason. The nominal value of issued bonds may not exceed the size of the authorized capital of a legal entity.
Production cooperative
All cooperatives are created in order to carry out joint production activities. A cooperative implies the personal participation of each participant and the contribution of shares. In this case, the equity capital is called a unit or indivisible fund. At the time of registration of the legal entity, the mutual fund must be paid at least 10%. The rest is introduced by the participants in the order and terms that they determined independently when drawing up the charter documents.
At the level of legislation, the minimum size of the fund for the cooperative has not been established. The dividend and indivisible part is formed in the fund. As a rule, the indivisible part consists of production capacities and in the event one or several participants exit, their part is compensated in cash.
Municipal and state enterprises
Unitary enterprises owned by the state or municipal authorities form the authorized capital, like the joint-stock capital of a partnership or the authorized capital of a company.
The authorized capital displays the minimum size of the organization’s property. These funds are also a guarantee for lenders.
The owner of the unitary enterprise is given only 3 months to form and pay the authorized capital from the moment of registration of the legal entity.
The fund can be formed at the expense of funds that are transferred to a specific bank account or at the expense of property, which is transferred to the enterprise on the basis of economic management.
For municipal and state formations, a rule has also been established regarding the reduction in the value of assets in relation to the authorized capital.
Individual entrepreneur
IP is the simplest form of organization that allows for entrepreneurial activity. Registration is carried out in a matter of days, for a minimum amount of 800 rubles. An individual entrepreneur does not need to prepare and register statutory documents. IP does not imply the formation and payment of charter or share capital. However, it should be understood that such a person bears all responsibility to creditors with his personal property.
Partnerships
The main difference between a business company and a business partnership is the degree of responsibility of the founders. If we are talking about society, then the owners are liable for debt obligations only within the framework of their shares in the authorized capital. The founders of a business partnership have an additional responsibility - with all their property. Therefore, in this case, capital to a greater extent plays the role of starting, not guarantee.
The minimum amount of the partnership’s share capital is not established at the level of legislative acts.There is no requirement to amend the title documents or liquidate a partnership while reducing the amount of capital. Partnerships are not entitled to issue shares, let alone put up for public auction.
A contribution to a partnership may be property or money, non-property rights, that is, everything that has a monetary value.
As in a business company, the owners of the partnership have a preemptive right to repurchase a share in the enterprise. Only after the other participants refuse to acquire the alienated share, the seller is entitled to sell it to a third party.
In the event of the liquidation of a legal entity, the depositors of a limited partnership shall have a preemptive right to receive their deposits over full partners.
There is also a special requirement: the partnership’s share capital in faith must be paid in half before the registration of the legal entity. The remaining part is paid on the terms and conditions agreed upon by the constituent documents. Failure to comply with this rule requires the full partner, in addition to the share, to pay 10% per annum of the unpaid part. And if it is provided for by the memorandum of association, then to compensate the damage caused, which was the result of the failure to fulfill its obligations by a full partner.
Additional liability company
This form of ownership is extremely rare in our country, as it is considered completely disadvantageous for the founders of the company. In addition to the fact that the participants will have to form, pay the authorized capital, they still bear responsibility not only in the amount of their shares, but also additional. That is, if the property of the ODO is not enough for settlements with creditors, then the owners will have to pay with their personal property as well.
Peasant (farm) economy
This form of entrepreneurial activity can be carried out in two forms:
- with the creation of a legal entity;
- without the formation of a legal entity, when the head of the household becomes an individual entrepreneur
Clear business, if the second form of doing business is chosen, then it is not necessary to form pooled capital. If a legal entity is created, then the authorized capital is necessarily formed in the amount provided for the LLC.