The Federal Law No. 339-FZ dated 3 July 2016 'On the Introduction to the Federal Law 'On Joint Stock Companies' (the Law No. 339-FZ) granted to shareholders the right to make contributions into the assets of joint stock companies (JSC) similar to the right of participants of limited liability companies (LLC).
According to article 32.2 introduced to the Federal Law No. 208-FZ dated 26 December 1995 'On Joint Stock Companies' (the JSC Law), shareholders shall be entitle, under a contract entered into with the JSC, in order to finance and maintain the JSC's activity, to make any time gratuitous contributions into the company's assets in cash or in another form, which do not increase the charter capital of the company and do not change the par value of the shares.
A contribution to the JSC assets can only be made by the property the types of which are specified in Article 66.1.1 of the Civil Code of the Russian Federation: monetary funds, things, interests (shares) in the charter (share) capital of other economic partnerships and companies, state and municipal bonds, exclusive and other intellectual property rights that are subject to monetary evaluation as well as rights under license agreements, unless otherwise is provided for by law.
The main difference between the contributions into JSC assets and LLC assets is that there are two legal grounds for making contributions to the assets of JSC are provided for:
- an agreement between the company and its shareholders, which is not a contract of donation and must be pre-approved by the decision of the Board of Directors (Supervisory Board) of the company;
- if it is established by the charter of a non-public JSC - the decision of the general meeting of shareholders to impose the duty to contribute to the company's assets on the shareholders.
Charter of a non-public JSC may provide:
- the maximum amount of contributions into the company's assets that may be made by all or certain of its shareholders, as well as other limitations in connection with contributions to the assets of the company (these provisions are similar to those that may be contained in the charter of an LLC);
- that under the decision of the general meeting of shareholders, the duty to make contributions to the company's assets may be imposed only on the shareholders holding shares of a certain category (type); such a decision shall be taken by a majority of 3/4 of votes of the shareholders participating in the general meeting of shareholders, provided that all shareholders holding shares of each category (type), which are obliged to contribute to the company's assets unanimously voted for the decision.
Like in an LLC, contributions into the assets of a non-public JSC on the basis of the decision of the general meeting of shareholders shall be made in proportion to the share in the charter capital of the company, unless another procedure for determining the amount of contributions to the company's assets is set by the company's charter.
Thereat, it is expressly provided that the duty to make contributions to the assets of a non-public JSC can be only imposed on the persons who are shareholders on the date of taking the decision on imposing such a duty.
In addition, the law provides for a mechanism for enforcement of the performance by the shareholders of the duty to make contribution to the assets of a non-public JSC: in the event any shareholder fails to perform such a duty, the non-public JSC itself or another shareholder may file a claim for performance of the duty with the court.
The amendments to the JSC Law became effective since 15 July 2016.
Contributions to the assets of JSCs allow, if necessary, to reallocate financial resources from interested shareholders to the company to improve its financial condition (in particular, to avoid bankruptcy) without recourse to the mechanism of increasing the charter capital by additional contributions or to loans involving a decrease in the net assets of the company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.