A significant number of commercial organizations have been established since the JSC Law came into force on 1 January 1996.While the adoption of the LLC Law in 1998 introduced another option for investors seeking to establish a corporate entity, the JSC Law represented one of the most significant pieces of civil legislation of the post-Soviet era, and JSCs remain among the most important commercial corporate forms and structures for doing business in Russia.
A JSC is a legal entity which issues shares in order to raise capital for its activities. A shareholder of a JSC is not generally liable for the obligations of the JSC, and bears the risk of any such loss only in the amount paid by it for the shares. Two types of joint stock companies exist in Russia:
| Open joint stock companies (OJSC) | Closed joint stock companies (CJSC) | |
| Charter capital | Minimum 10 000 RUR | Minimum 100 000 RUR |
| Number of shareholder | Unlimited | Limited number of shareholders, which cannot exceed 50. |
| Shares | Shares may be freely sold to third parties | Shares may not be freely sold. Share transfers are subject to preemptive rights of other shareholders. |
An open JSC may have an unlimited number of shareholders. Shareholders in an open JSC are entitled to freely dispose of their shares. The number of shareholders in a closed JSC may not exceed 50, and the JSC must be transformed into an open JSC within one year should the number of shareholders ever exceed this amount.
As with participants in an LLC, shareholders in a closed JSC have a right of first refusal to acquire shares sold by other shareholders to third parties, at the price offered to the third parties. Shareholders in both open and closed JSCs have a preemptive right to acquire newly issued shares that are to be privately placed, in proportion to their existing shareholdings.
Shareholders in an open JSC also have a preemptive right to acquire newly issued shares that are to be publicly placed, in proportion to their existing shareholdings, but do not have a right of first refusal to acquire shares sold to third parties.
All JSCs are required to maintain a shareholders’ register. The register includes information about each registered shareholder including the number, category, and classes of shares held. A JSC with more than 50 shareholders must delegate the maintenance and keeping of the shareholders’ register to a licensed registrar.
Source: Doing business in Russia by Baker & McKenzie
