Corporate (corporations) are called legal entities engaged in commercial or non-commercial activities. The founders of such an organization own a share of shares, and on the basis of this have the right to participate in the management of the company and the formation of management structures.
Concept and functions of corporate legal entities
Corporate legal entities (abbreviated as corporation) are understood as organizations carrying out activities of a commercial or non-profit nature. This concept were introduced into the civil legislation of our country by the Law “On Amendments to Chapter 4 of the Civil Code of the Russian Federation”.
In accordance with Article 65 of the Civil Code of the Russian Federation, participants in a corporate legal entity have the right to take direct part in the work of the company and carry out activities that allow them to exercise control and management of the company. The company's participants form the highest management body, which deals with all issues of company management.
Corporations can include not only organizations whose purpose is to generate income, but also non-profit structures.
The following may act as corporations:
- Industrial associations and agricultural enterprises;
- Cooperatives of different types;
- Public organizations and charitable structures;
- Associations of real estate owners;
- Communities small peoples and the register of Cossack societies.
Types of corporate legal entities
A corporation, in essence, is a formation of several participants who invest certain material resources in the development of the structure as a whole. Considering the fact that general classification the concept of “corporate legal entity” establishes that this organization can engage in any type of activity, the following types are distinguished: corporate structures:
- Commercial corporations. This is a legal entity whose main task is to provide goods/services or production activities, the final result of which will be the receipt of profit distributed among the founders in accordance with their shares in the authorized capital of the company;
- Non-profit structures. These are associations of citizens based on the formation of organizations with a specific goal of interest. This type The corporation does not set its goal to make a profit, and exists through voluntary contributions from the founders or third parties.
In addition, there are also several other types of corporate legal entities. In particular, with regard to joint-stock associations, the following types of corporations are distinguished: - Public joint-stock companies. These are organizations that freely sell their shares and attract new participants in the production and management processes. Shares and other securities of such companies are publicly available and can be purchased by any person or company;
- Non-public joint-stock companies. These structures do not allow new persons into their activities, and free shares and securities are distributed within the company among its regular participants.
Corporate Membership Rights and Responsibilities
The rights and obligations of corporation participants are specified in Article 65 of the Civil Code of the Russian Federation. In accordance with this regulation, shareholders have the following rights:
- Timely and upon request receive all information about financial condition affairs in the company;
- Participate in the formation of the company’s management structures and influence some production issues;
- Act on behalf of the corporation in matters relating to the recovery of debt obligations and the infliction of losses.
In addition, it is also possible to vest the founders with other rights, which are prescribed in a separate chapter in the charter documentation of the corporation.
As for the responsibilities of shareholders of corporate structures, they have the following types:
- A company participant is obliged to take part in the formation of the organization’s material reserves;
- Prohibition of disclosing information that is intended exclusively for internal use and is considered confidential;
- Prohibition on any action that may place the corporation at a disadvantage or may result in unprofitable activities.
Characteristics of unitary legal entities
Corporate and unitary legal entities have many differences between them general characteristics. However, there are quite a lot of differences between them.
In accordance with the provisions of Article 65.1 of the Civil Code of the Russian Federation, unitary legal entities are understood as companies in which the founders are not participants in their activities and do not acquire membership rights, but at the same time have proprietary rights to the company’s property.
Unitary legal entities include a variety of state funds and structures, institutions controlled by municipal authorities, organizations whose activities are related to religion, various non-profit companies and public law associations.
Types of unitary enterprises have a similar structure with the division of corporate entities. However, when mentioning unitary structures, it is necessary to consider the essence of this concept in order to see the obvious differences between them.
Based on current fundamental standards, unitary enterprises can be divided into:
- State, in which the property belongs government agencies management, and they also appoint someone responsible for conducting the company’s activities;
- Non-state. These structures are formed and managed by ordinary citizens who, for one reason or another, have decided to create an organization that will perform certain functions;
- Commercial. This is a legal entity whose main goal is to make a profit as a result of the provision of certain services, or as a result of production activities;
- Non-profit. This is a voluntary association of founders, each of whom contributes a certain share of property to the general authorized capital that belongs to the company. At the same time, the purpose of the organization is not to make a profit, and most often these structures are united by a certain goal or interests.
In addition, unitary organizations can be public, that is, open to access by new members, and closed, in which the emergence of new members is not allowed.
The difference between corporate legal entities and unitary ones
Analyzing the classification and legal status corporations and unitary structures, we can conclude that between them there is great amount differences.
Among them are the following:
- The property of the founders forms authorized capital companies, but at the same time, in corporations it belongs to the founders by right of ownership, and in unitary structures - to the company;
- The founders of a corporation have the right to take an active part in the management of the structure, but participants in unitary companies cannot carry out management activities;
- The founders of corporations have the right to carry out certain actions on behalf of the organization, but participants in unitary structures cannot use this function;
- The corporation's property is formed through contributions from the founders, and it belongs only to them, and in unitary structures, the participants will have certain property rights, but the management of property assets will be carried out by the company itself.
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Corporate organizations are legal entities in respect of which their participants have corporate rights, that is, they have the right to participate in them and form them supreme body.
Corporate legal entities (corporations) are business partnerships and society (society with limited liability and joint stock companies), peasant (farm) enterprises, economic partnerships and others.
Unitary legal entities (funds, institutions, autonomous non-profit organizations and others) are the opposite of corporate organizations, the founders of which do not acquire membership rights.
The most interesting for us are commercial corporate organizations, which are business entities that are divided into public and non-public companies. A public company is a joint stock company whose shares are placed by open subscription (publicly) or are publicly traded. A limited liability company (LLC) and a closed joint-stock company (CJSC) are non-public companies.
You can use standard statutes (if the Government has time to develop them). Before this, the concept of “model charter” was not contained in civil legislation. If previously there was the concept of “name” and “location of a legal entity”, then under the new legislation “name”, “location” and “address of a legal entity” appear. The location of a legal entity is indicated in the constituent document (Charter), but now the location is only the name of the locality (municipal entity) in which the state registration organizations. And the address of the legal entity itself is indicated in the Unified State Register of Legal Entities. Moreover, now, in order to select a legal address for registering an LLC, it is necessary to take into account certain requirements: a legal entity bears the risk of not receiving legally significant documents at the address specified in the Unified State Register of Legal Entities, and all messages are considered delivered to specified address, even if the company is not located there. All commercial organizations must have a corporate name.
A limited liability company may consist of one person. The requirement that an LLC cannot have another company consisting of one person as its sole participant has passed into Article 66 of the Civil Code of the Russian Federation (Article on business societies), therefore, the exclusion of the condition from Article 88 of the Civil Code of the Russian Federation, which is dedicated to LLCs, does not change anything. Thus, the sole participant of an LLC cannot be a legal entity consisting of one participant.
Appeared in the Civil Code new article 53.1, which introduces the responsibility of the authorized person to speak on behalf of the organization, members of collegial bodies and persons determining the actions of the company. Such a person is obliged to compensate for losses caused by his fault to a legal entity if it is proven that he acted in bad faith or unreasonably. Responsibility lies with members of collegial bodies (except for those who voted against or did not take part in the vote in good faith), as well as persons who determine the actions of a legal entity. Moreover, an agreement to eliminate or limit the liability of such persons is void.
Please note that due to significant changes in civil legislation, some clauses of the Charter of LLCs and CJSCs will not comply with the norms of current legislation. First of all, this concerns brand names legal entities that must comply with the Civil Code of the Russian Federation (section 7). In addition, the procedure for making decisions by company participants is changing. For example, the adoption of a decision by the LLC participants and the composition of participants present at the vote is confirmed by notarization (unless another method is provided by the Charter) or by a decision adopted by all participants unanimously. For a closed joint-stock company (non-public joint-stock company), decisions are made and the composition of participants is confirmed by notarization or certification by the person maintaining the register of shareholders and performing the functions of the counting commission.
According to the method of management, the law divides legal entities into corporate and unitary. Different management models are also used in commercial companies. From the article you will learn about the features of these models.
In this article:
Corporate organizations differ from unitary organizations in the amount of management powers that the founders receive. Legal entity refers to:
- corporate, if the founders and participants of the company have the right to membership in it and are included in the supreme body;
- unitary if the founders do not have the right to participate.
The method of management does not affect the goals of the organization. Thus, many corporations do not exist to generate income. For example, these are associations social movements etc. However, companies that open for business are classified as corporate.
Legal entities opened for commercial purposes are classified as the corporate type
The law expanded on the concept and listed the types of legal entities with corporate governance. Such organizations include:
- Economic societies. These are LLC and JSC.
- Economic partnerships.
- Business partnerships.
- Peasant or farms.
- Real estate owners' associations.
- Production cooperatives.
- Consumer cooperatives.
- Public organizations and social movements.
- Associations and unions.
- Notary chambers.
- Cossack societies.
- Communities of small peoples of the Russian Federation.
The capabilities of members of a corporation depend on its characteristics. But the law spelled out rights and obligations common to all. Participants can:
- manage the organization;
- receive information about the state of affairs, including information about finances;
- object to decisions of governing bodies and appeal them;
- challenge transactions that caused damage to the company and demand compensation for losses, etc. (Part 1 of Article 65.2 of the Civil Code of the Russian Federation).
The participants of the corporation can manage it on the basis of an internal agreement. Read how to protect their rights in this case in the Corporate Lawyer magazine.
At the same time, participants are obliged to form the organization’s property, act in its interests, etc. (Part 4 of Article 65.2 of the Civil Code of the Russian Federation).
The meeting and director are the governing bodies of corporate-type legal entities
How the management of a corporation should be organized is stated in Article 65.3 of the Civil Code of the Russian Federation. Takes on the main function of managing the company general meeting participants. The same function is performed by a congress or other representative meeting if:
- is a production cooperative or corporate legal entity of a non-profit nature,
- There are more than 100 members in the organization.
The nature and powers of such a body are determined in more detail in the charter in accordance with the law.
There are actions that fall within the exclusive competence of this management body. For example, only a meeting (congress, conference, etc.) has the right:
- Select the most important areas of activity for the organization, determine the principles of formation and use of property.
- Approve and amend the charter.
- Make decisions on the reorganization or liquidation of the company, etc. (Part 2 of Article 65.3 of the Civil Code of the Russian Federation).
Also, a sole executive body acts on behalf of a corporate legal entity - this is CEO, chairman, president, etc. In this case, the company has the right:
- grant these powers to several persons who will act jointly;
- to form several such bodies that will work independently of each other (paragraph 3, part 1, article 53 of the Civil Code of the Russian Federation).
Both a person and an organization can act as such a body.
In addition to these bodies, the company may have a board of directors, a board of directors, a supervisory board or another collegial body (Part 4 of Article 65.3 of the Civil Code of the Russian Federation). Their functions and powers depend on the instructions of the charter and the provisions of the law.
Commercial state-owned enterprises are unitary legal entities
If the founders of an organization do not receive membership rights after its creation and cannot manage its work, such an organization is a unitary legal entity. According to the law, legal entities of this type include:
- state and municipal unitary enterprises,
- funds,
- institutions,
- autonomous non-profit organizations,
- religious organizations,
- state corporations,
How such organizations conduct their activities is described in Chapter 4 of the Civil Code of the Russian Federation. For commercial and non-commercial legal entities of the unitary type, the rules are different; in addition, for some there is special legal regulation. Thus, public law companies operate taking into account the requirements. And each state corporation has its own law.
Property management of such organizations depends on their type. For example, state unitary enterprises and municipal unitary enterprises do not have ownership rights to property. All assets of such a company belong to the Russian Federation, a constituent entity of the Russian Federation or municipality, which is the founder of the organization. State unitary enterprises or municipal unitary enterprises dispose of entrusted property on the basis of the right of economic management or operational management. It applies to such organizations. These are commercial organizations, unlike other unitary legal entities.
When creating a state unitary enterprise or municipal unitary enterprise, its authorized capital is formed in accordance with the provisions of law No. 161-FZ. An enterprise is created on behalf of a public legal entity (Article 125 of the Civil Code of the Russian Federation). Constituent document is a charter that is developed and approved by the authorized municipal or state body. The direct management of such an organization is carried out by a director appointed by the owner. Formalize with the director employment contract(Clause 7 Part 1 Article 20 of Law No. 161-FZ). The director acts on behalf of the organization and is accountable to its founder.
Since September 1, 2014, legal entities (both commercial and non-profit) have been divided into corporations and unitary legal entities (Article 65.1 of the Civil Code of the Russian Federation).
Corporations are legal entities based on the membership of their participants (Clause 1, Article 65.1 of the Civil Code of the Russian Federation).
The participants of the corporation form the highest body of the legal entity - the general meeting (Clause 1, Article 65.3 of the Civil Code of the Russian Federation).
In connection with participation in a corporate organization, its participants acquire corporate (membership) rights and obligations in relation to the legal entity they created (clause 2 of Article 65.1 of the Civil Code of the Russian Federation).
Both commercial and non-profit enterprises can be created in the form of corporations.
Corporations include all commercial legal entities (with the exception of unitary enterprises), as well as a number of non-profit ones:
- consumer cooperatives;
- public organizations;
- associations (unions);
- real estate owners' associations;
- Cossack societies included in the relevant state register;
- communities of indigenous peoples.
The founders of which do not become participants and do not acquire membership rights in them are unitary organizations.
A unitary enterprise is not vested with the right of ownership of property assigned to it by the owner.
Property unitary enterprise is indivisible. It cannot be distributed among deposits (shares, shares), including between employees of the enterprise.
Unitary organizations include (which are commercial organizations), as well as the following non-profit organizations:
- public, charitable and other foundations;
- state institutions (including state academies of sciences), municipal and private (including public) institutions;
- autonomous non-profit organizations;
- religious organizations;
- public companies.
The provisions relating to corporations (including non-profit ones) establish uniform rights of participants and management rules (Articles 65.2 and 65.3 of the Civil Code of the Russian Federation).
Classification of legal entities. Commercial organizations: Video
Current version of Art. 65.1 of the Civil Code of the Russian Federation with comments and additions for 2018
1. Legal entities, the founders (participants) of which have the right to participate (membership) in them and form their supreme body in accordance with paragraph 1 of Article 65.3 of this Code, are corporate legal entities (corporations). These include business partnerships and societies, peasant (farm) households, economic partnerships, production and consumer cooperatives, public organizations, social movements, associations (unions), partnerships of real estate owners, Cossack societies included in the state register of Cossack societies in Russian Federation, as well as communities of indigenous peoples of the Russian Federation.
Legal entities whose founders do not become participants and do not acquire membership rights in them are unitary legal entities. These include state and municipal unitary enterprises, foundations, institutions, autonomous non-profit organizations, religious organizations, public law companies.
2. In connection with participation in a corporate organization, its participants acquire corporate (membership) rights and obligations in relation to the legal entity they created, with the exception of cases provided for by this Code.
(The article was additionally included from September 1, 2014 by Federal Law of May 5, 2014 N 99-FZ)
Commentary on Article 65.1 of the Civil Code of the Russian Federation
1. The provisions of this article are a novelty in civil legislation and are intended to radically change the existing structure of subjects of civil turnover. Therefore, we will consider these provisions in somewhat more detail, making a short historical and legal excursion to the origins of the formation of the foundations that consolidated the classification of legal entities reflected in the commented article.
While maintaining the traditional division of legal entities into commercial and non-profit organizations, from September 1, 2014, legal entities are also classified according to membership and degree of participation in the formation and activities of the legal entity into:
1) corporate. Legal entities whose founders (participants, members) have the right to participate in the management of their activities (membership rights) are corporate organizations(corporations);
2) unitary. Legal entities whose founders do not become participants and do not acquire membership rights in them are unitary organizations.
The division of legal entities into corporate and unitary forms (based on the nature of the connection between participants) corresponds to the historically established majority doctrine Western countries and the Russian legal order, which was reflected in the works of the German civilists Heise, F. Savigny, O. Gierke, Bernatsik. This is how the Russian scientist G.F. Shershenevich distinguished between “associations of persons” and institutions: “... the concept of a legal entity plays, as it were, the role of “brackets” in which homogeneous interests are contained famous group persons for a more simplified definition of the relationship of this collective personality to others. These connections can be of a public nature, such as a noble society, or of a private nature, such as a joint-stock partnership." After analyzing the opinions of Russian legal scholars, S.D. Mogilevsky concludes that in the Russian doctrine of the 19th century the term "corporation" like German concepts, it was used as a generic concept for a group of legal entities, within which two types of corporations were distinguished: public and private. Back in 1861, S. Pachman, speaking on the issue of joint-stock reform, proposed dividing joint-stock companies into two types: state-economic (. public) and private economic (private). Distinctive feature companies included in the first group was the need for them to solve social problems, for example, construction railways, organization of shipping, etc. Joint-stock companies belonging to the second group did not set themselves the goal of achieving socially useful goals. Private corporations in Russian law were called trading partnerships. At the same time, G.F. Shershenevich wrote that the terminology of our legislation in relation to joint-stock partnerships is completely inconsistent. She calls them partnerships, societies, companies with the addition of expressions: “on shares”, “by participants”, “on shares”.
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Quoted from the book: Corporate Law. Textbook for university students / ed. I.S. Shitkina. M.: Wolters Kluwer, 2008, chapter I, paragraph 1 “The concept of corporate law” (Corporations in pre-revolutionary Russia) / URL: http://eknigi.org/uploads/posts/2010-03/1267746607.1252691339_korporativnoe_pravo.jpg
Right there.
In modern scientific doctrine, a corporation is traditionally understood as an organization based on the principles of participation (membership), which is created to realize the interests of its participants (members) by organizing its management through a special system of bodies. A corporation organized on the basis of membership, as a rule, is contrasted with unitary organizations or institutions that do not have membership and are created, as a rule, in the interests of an unlimited number of people for the implementation of socially useful goals.
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See Serova O.A. Theoretical, methodological and practical problems of classification of legal entities of modern civil law Russia: Monograph. M.: Publishing house "Jurist", 2011 / URL: http://window.edu.ru/resource/904/74904/files/Serova_Problemy_klassifikatsii_yuridicheskikh_lits.pdf
It should be noted that in Russian and foreign legal systems the word “corporation” is not clearly understood. This situation is explained by two circumstances. Firstly, in most countries this concept is not legally enshrined, but is present only at the doctrinal level. Secondly, the term "corporation" has a different interpretation in the Anglo-Saxon and continental systems of law. In this regard, as I.S. Shitkina quite rightly noted, the legislative reinforcement of the division of organizations into corporate and unitary, introduced into the Civil Code of the Russian Federation, is an advanced idea.
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See Shitkina I.S. Issues of corporate law in the draft Federal Law "On Amendments to the Civil Code of the Russian Federation" // Economy and Law, N 6, 2012 / URL: http://shitkina-law.ru/publikatsii/voprosy-korp-prava.html
The introduced changes will require the unification of legal regulation various types legal entities. It is obvious that further specification of the rights and obligations, for example, of a shareholder or participant in a limited liability company, must be reflected in the appropriate federal law. This approach to the system of presenting legal norms is typical not only for establishing the rights and obligations of participants in a corporation, but also for other legislative institutions. Thus, the legal regulation of management in a corporation is carried out by Art. 65.3 Civil Code of the Russian Federation; in Art. 66.3 of the Civil Code of the Russian Federation provides for management features in public and non-public companies; Art. 67.1 of the Civil Code of the Russian Federation regulates the features of management in business partnerships and companies, and in Art. 97 of the Civil Code of the Russian Federation provides for special requirements for the management of a public joint-stock company. At the same time, these articles of the Civil Code of the Russian Federation contain numerous mutual references that complicate the application of the relevant norms. When asked whether this approach is convenient for practical application, there is no clear answer. According to I.S. Shitkina, it is unlikely that for purposes other than scientific classification, which could be carried out at the level of doctrine, someone will need, for example, to identify the rights and obligations inherent at the same time in public joint stock company, and a garage cooperative.
________________
Right there.
2. Summarizing numerous studies, dedicated to analysis legal nature and identifying the essence of the corporation, I.S. Shitkina identifies the following features inherent in the corporation:
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See Corporate Law. Textbook for university students / ed. I.S. Shitkina. M.: "Walters Kluwer", 2008, Chapter I, paragraph 1 "The Concept of Corporate Law" (Corporations in modern Russian law) / URL: http://eknigi.org/uploads/posts/2010-03/1267746607.1252691339_korporativnoe_pravo. jpg
1) the corporation is recognized as a legal entity;
2) a corporation is a union of individuals and (or) legal entities that are subjects of law and acquire the status of participant (member) of the corporation;
3) a corporation is a “strong-willed organization.” The will of the corporation is determined by the general interests of its constituent members; the will of the corporation is different from the individual wills of its members;
4) the corporation as a legal entity remains unchanged regardless of changes in the composition of its participants;
5) a corporation is an association of not only participants, but also their property - contributions to the authorized capital, shares, contributions;
6) property contributed by participants to the corporation belongs to it by right of ownership;
7) participants of the corporation, as subjects of corporate relations, are bearers of rights and obligations in relation to both the corporation itself and each other;
8) a corporation is an organizational unity, expressed, among other things, in the presence of governing bodies, the highest of which is the general meeting of shareholders (participants).
The main distinguishing feature of a corporation, as shown above, is participation or membership. The terms “participation” and “membership” characterize the legal relationship that mediates the relationship between the subject and the internal structure of the organization. Participation (membership) is manifested in the implementation of the goals of participants (members) united in one legal entity through their participation in the management of this legal entity.
Corporations, in accordance with the commented article, include both commercial and non-profit legal entities:
- business partnerships and societies;
- peasant (farm) farms;
- economic partnerships;
- production and consumer cooperatives;
- public organizations;
- associations (unions);
- real estate owners' associations;
- Cossack societies included in the state register of Cossack societies;
- communities of indigenous peoples.
3. The second category of legal entities consists of unitary legal entities, which include:
- state and municipal unitary enterprises;
- funds;
- institutions;
- autonomous non-profit organizations;
- religious organizations;
- public companies.
These entities are organized by combining the contributions of these entities, which are subsequently transferred to the legal entity. If previously the status of a unitary enterprise or institution indicated the inextricable connection of a legal entity with the state, now the integrity and indivisibility of such an entity is decisive. The withdrawal of a person from the founders does not entail a redistribution of shares; such organizations, as a rule, do not have an authorized capital; the property is formed from contributions.
4. Applicable law:
- Law of the Russian Federation dated June 19, 1992 N 3085-I “On consumer cooperation (consumer societies, their unions) in the Russian Federation”;
- Federal Law of May 19, 1995 N 82-FZ “On Public Associations”;
- Federal Law dated August 11, 1995 N 135-FZ “On charitable activities and charitable organizations”;
- Federal Law dated December 8, 1995 N 193-FZ “On Agricultural Cooperation”;
- Federal Law dated December 26, 1995 N 208-FZ “On Joint-Stock Companies”;
- Federal Law No. 7-FZ dated January 12, 1996 “On Non-Profit Organizations”;
- Federal Law dated 05/08/96 N 41-FZ “On Production Cooperatives”;
- Federal Law dated June 15, 1996 N 72-FZ “On Homeowners’ Associations”.
Federal Law of September 26, 1997 N 125-FZ “On freedom of conscience and religious associations”;
- Federal Law dated 02/08/98 N 14-FZ “On Limited Liability Companies”;
- Federal Law of April 15, 1998 N 66-FZ “On horticultural, market gardening and dacha non-profit associations of citizens”;
- Federal Law dated July 20, 2000 N 104-FZ “On general principles organizations of communities of indigenous peoples of the North, Siberia and Far East Russian Federation";
- Federal Law of November 14, 2002 N 161-FZ “On State and Municipal Unitary Enterprises”;
- Federal Law dated June 11, 2003 N 74-FZ “On peasant (farm) farming”;
- Federal Law dated December 5, 2005 N 154-FZ "On public service Russian Cossacks";
- Federal Law of November 3, 2006 N 174-FZ “On Autonomous Institutions”;
- Federal Law dated November 29, 2007 N 286-FZ “On Mutual Insurance”;
- Federal Law dated July 18, 2009 N 190-FZ “On Credit Cooperation”;
- Federal Law dated December 3, 2011 N 380-FZ “On Business Partnerships”.
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