PJSC - what is this form of organization

Before discussing whether it is advisable to open a public joint stock company, it is worth finding out what it is. A public joint stock company (PJSC) is a company whose shares are publicly placed on the securities market and are available for purchase to anyone. At the same time, a non-public joint-stock company (JSC) is not obliged to place shares on the securities market, and the redistribution of shares is carried out mainly with the consent of existing investors.

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What is PJSC

These legal forms received their modern names as a result of amendments to the Civil Code of the Russian Federation, which entered into force on September 1, 2014; until that moment, PJSC was called OJSC, and JSC was called CJSC. The changes also affected additional liability companies (ALS) - now all companies that had this status automatically became PJSC, and a separate legal form was abolished. People who did not closely follow changes in legislation, seeing the abbreviation PJSC, were interested in what kind of form of organization it was, but now the new terms have already become familiar.

Information regarding the legal form of the company can be gleaned from the name, which begins with the abbreviation PJSC or JSC. Data on the publicity or non-publicity of a legal entity is indicated in its charter and contained in the Unified State Register of Legal Entities.

Note: In addition to simplifying the classification of companies, an additional function of the amendments to the Civil Code of the Russian Federation is to strengthen control over all types of joint stock companies - enterprises will be required to undergo an annual audit, this will help increase the transparency of their activities.

The state also undertakes to verify compliance with obligations regarding the disclosure of reports and other types of data. This applies not only to public companies, but also to non-public companies. All enterprises that voluntarily disclosed information about their financial activities before September 1, 2014 are required to do so in the future, regardless of legal form. To relieve yourself of these obligations, you must submit a written application, after which the legality of such requirements will be verified, in particular, in accordance with Art. No. 30 of the Law on the Securities Market, non-public companies may also be required to disclose reports.

There is an unlimited influx of shareholders in PJSC

Differences between PJSC and JSC

To understand what PAO is, knowing just how this abbreviation stands is definitely not enough. The lack of publicity of a joint stock company complicates the sale of shares and imposes significant limits on the number of shareholders - no more than 50, and all of them must be the founders of the company. A PJSC does not have such restrictions - any person or company can be a shareholder, regardless of citizenship or place of registration, and the total number of owners and their shares are not limited in any way or are limited only by the company’s charter. The mechanism for selling securities also differs.

The charter of a joint stock company may contain a clause limiting the free sale of shares, most often this requires the consent of the remaining shareholders, whereas in a PJSC transactions are carried out completely freely and prohibitions are not allowed. The charter of public companies cannot provide for priority rights to the acquisition of securities by existing shareholders, however, an exception is allowed for additional issue of shares, in turn, a joint stock company is allowed to include such conditions in the charter.

Note: The degree of state control also distinguishes an OJSC from a PJSC, and the difference is significant: a non-public company is not obliged to publish reports or open lists of shareholders, and closed enterprises are not required to publish information about their activities in the media.

At the same time, supervision over PJSCs has only increased with the adoption of new rules - now such companies are required not only to publish data on shareholders, but also to transfer them to special organizations that have a state license to compile a register of shareholders. Restrictions are also imposed on the procedure for confirming the minutes of a meeting of shareholders: for a PJSC, only the registrar has the right to do this, while a JSC is allowed to use the services of a notary.

Any form of joint stock company has the right to accept payment for securities in banknotes, things, including equipment or securities, intellectual and copyright rights, as well as ownership shares in other companies, however, for a joint-stock company the minimum contribution is 100 minimum wages, and for PJSC it is 10 times higher - 1000 minimum wage. Additionally, you need to take into account that the maximum limits of non-monetary contributions to the authorized capital are determined by the Central Bank of the Russian Federation.

Comparative analysis

In the case of JSC and PJSC, the decoding of the abbreviation does not provide enough information, this necessitates a detailed comparison of these legal forms. Publicity of a joint stock company has advantages, in particular, it allows you to attract additional capital through investments from private investors rather than lending, which simplifies the expansion or modernization of the business.

Also, the presence of public trading makes the company more attractive for cooperation, since prospective partners can verify the solvency of the enterprise by assessing the value of its shares on the securities market and familiarizing themselves with public reporting. However, there is also a drawback to providing public reporting - some shareholders may not want their share in the authorized capital and the availability of company shares to be publicly available. This may prevent you from investing in the company or changing the form of joint stock company.

At the same time, the PJSC form can become an obstacle to attracting start-up capital and finding partners, since such companies do not allow existing investors to gain a competitive advantage over third parties. This means that investing money in a business will be more risky due to a possible change in the company’s policy in connection with the purchase of a controlling stake by another legal entity or individual.

Note: There is a direct legislative restriction on the minimum amount of capital: no less than 100 minimum wages for a JSC, and no less than 1000 minimum wages for a PJSC, which blocks the path for small investors.

Public sales of shares make a company more attractive to shareholders

The disadvantages of the PJSC form of ownership include the high cost of maintaining documentation, which must comply with all state standards. While a joint-stock company is not obliged to publish reports on its activities, it is therefore sufficient that most documents, for example, information on procurement, meet only the internal standards of the company. For this reason, many young companies prefer to start a business in the form of a joint-stock company, and only later, when the business has become profitable and needs development, to become a PJSC.

The law allows the creation of a joint stock company with one investor, and such a company can be public or closed. However, there is little practical sense in the second option; if the founder of the enterprise wants to solely own it, then there is no need to issue shares; it is better to choose the form of a limited liability company.

JSC is an ideal option for a small business, for example, a family enterprise that does not produce high-tech products and does not plan to expand in the near future. PJSC is the most acceptable option for dynamic companies operating in the high-tech sector, the market price of which can fluctuate significantly. The choice of legal form should be approached responsibly, having weighed all the pros and cons of PJSC and JSC, since such a decision can affect the success of running your own business. However, in the future the legal form of the company can be changed with the consent of investors.