When registering LLCs and some enterprises, Russian legislation provides for the creation of an authorized capital. In this article we will analyze all the questions about what it is, how it is created correctly and why it is needed in general.
Introduction
Authorized capital- this is the sum of all contributions of the founders to the development of the new company. It is formed not only from Money— it may include real estate, various property, securities, etc. The size of this capital is not constant: it can increase or decrease, the owners can redistribute it, sell and buy it.
The authorized capital consists of property, cash and securities
In Russia and the CIS countries, the Criminal Code has a purely formal meaning - it is usually formed at the minimum acceptable level only in order to fulfill the requirements of the registrar.
On this moment The minimum authorized capital is 10,000 rubles. It is noteworthy that this figure has not changed for more than 15 years - it was simply “denominated” at one time, but never changed. Deputies and ministers are increasingly saying that it is necessary to increase the size of the criminal capital, citing figures of 50-100 thousand rubles, but as of 2016, the size remains the same.
Increasing the authorized capital will complicate the process of registering one-day companies (at least make it less profitable), and will also increase the level of responsibility of other companies.
Operating principle of the management company
Let's look at why the minimum authorized capital is bad and why it needs to be increased to reduce the number of scammers. So, a certain person decides to open his own enterprise. To do this, he goes to the tax office, registers accordingly and organizes an LLC with an authorized capital of 10 thousand rubles. He indicates that he plans to engage in mediation activities, rents an office, buys a desk and a computer for it, spending 15 thousand on it. Then he makes a revaluation, indicating that all his property is valued at 10 thousand rubles (undervaluation is not punishable by law in any way).
The amount of capital is prescribed in the charter and registered with the tax office.
The created LLC works, the entrepreneur searches through the computer and the Internet for suppliers and buyers, that is, he uses it to conduct economic activity. Over time, the computer gets old and is written off in 3-4 years, the table also becomes unusable, but in authorized capital it doesn't show up at all. Then, at one point, the entrepreneur, having earned a reputation, takes the shipment on credit from suppliers, and demands money from buyers in advance. He spends the money on himself, resells the batch and does not return the agreed amount to the supplier, declaring bankruptcy. As a result, he is responsible to his creditors only with an old, useless computer and desk - it is the authorized capital of the enterprise that is a kind of “collateral” and guarantor of responsibility. Taxes are also not paid from it - this fund is created as a kind of “ start-up capital” for the enterprise.
Read also: What is OKOPF of an organization and where to get it
The government is also understandable - it does not raise the minimum threshold of authorized capital, because it does not want to reduce economic development, complicating the already difficult life of entrepreneurs. But the other side of the coin in this process is great amount shell companies through which billions of rubles go into the shadows/laundered.
How is the Criminal Code formed?
Start-up capital for a company can be:
- Money.
- Property.
- Securities.
The amount of capital is specified in the charter of the LLC. When registering an enterprise, the capital must be formed by at least 50% - the remaining amount is paid over the next 12 months.
Note: Many entrepreneurs forget to increase their authorized capital after registration, to which the tax service immediately reacts by imposing a fine. Don't forget to complete it before the end of the year.
How to increase capital
The minimum size of the charter capital imposes certain difficulties on the work of the LLC. First of all, this concerns internal procedures.
The share of each participant in the authorized capital is calculated
Key reasons why it is necessary to increase the authorized capital:
- The process of assignment or sale of the share of one of the participants in favor of the second (or a new legal entity/individual). In this case, the founders can increase the size of the charter capital by increasing production capacity organizations by capitalizing them. It is noteworthy that all participants’ shares are anonymized and are not tied to specific items. If, when organizing an LLC, you contributed property worth 10 thousand (the same computer), then when leaving it you can demand 10 thousand, not property. The management of the company does not have the right to impose payment of property on you - this is done only with your consent. It should also be taken into account that if the value of the contributed property is 20 thousand rubles or more, then the tax inspector may inquire about whether you have an appraisal report. Therefore, do it right away so as not to encounter an unpleasant situation later.
- Attracting credits or loans. A company that is successfully operating in the market may want to enter a new industry or undertake modernization. For this she needs money, but, as always, there is not enough of it. Therefore, the management of an LLC can take out a loan from individuals or legal entities. Money may also be needed for more trivial things - the purchase of raw materials, construction or major repairs of a building, etc. The lender, by allocating serious funds, wants to play it safe, so he demands to be included in the list of founders. This is a completely legitimate and common requirement. In this case, the authorized capital is increased due to the entry of a new participant. The shares of existing owners are recalculated taking into account the new amount. Usually shares are expressed as percentages - this makes it much more convenient to count and keep records.
- If the LLC expands by starting capital construction, then this property can also be included in the Criminal Code. This trick allows you to optimize the tax payment process. Until the property is put into use, it is considered future income, thereby reducing income expenses.
- Another option is for the capital to be forcibly increased by the state regulator. Such situations are quite rare, but they do exist. Basically they arise from the symbiosis of a private and public company. For example, the state transfers property to a company to conduct business, but a company with 10,000 authorized capital cannot manage it, since its real cost is millions of rubles. Therefore, the property is first assessed, and then the regulator raises the capital under certain conditions (the state can become the main owner of the LLC).
Note: any reshuffles of the company’s founders and changes in shares must be registered in the Unified State Register of Legal Entities no later than 30 days after the decision is made and recorded.
Also, when changing shares, tax regulations apply to owners. The buyer or seller of the share is required to declare income/purchase and pay the appropriate interest to the budget. You, of course, can save money and arrange the transfer by gift, but it is better to pay a small tax and sleep peacefully. Otherwise, there are always risks that could lead to criminal liability.
When a participant leaves, the authorized capital decreases
How to reduce capital
Now you know what the authorized capital of an enterprise is and how to increase it. But there are times when, on the contrary, it has to be reduced. These may be the following situations:
- Exit of a founder or participant with the withdrawal of his capital.
- Recalculation of property value through depreciation.
There is an authorized capital. Its presence as part of the company's property is a requirement of the legislation of the Russian Federation. The formation of appropriate capital has quite a lot of nuances. When solving this problem, it is necessary to follow the legislation and take into account the specifics of a particular business entity. Why does a company need authorized capital? How is it formed and corrected?
What is authorized capital?
Before talking about how the authorized capital of a company is formed, let us study in more detail the essence of this financial element. What are the most popular views among economists regarding its definition?
Authorized capital is traditionally understood as the amount of fixed assets and current assets owned by an enterprise and, as a rule, reflects the amount of money invested in the business.
It is worth noting that the civil legislation of the Russian Federation requires that the authorized capital be distinguished from other funds with similar purposes. Such as, for example, share capital(formed in partnerships), mutual fund (used in cooperatives). Actually, the authorized capital characterizes the activities of business companies - JSC and LLC. The noted types of funds differ according to their status and purpose. Thus, share capital is generally similar to authorized capital, but they differ significantly according to such a criterion as the responsibility of co-investors for the company’s obligations.
Authorized capital - part own funds firms, which can also be represented by borrowed cash flows. Along with it, the structure of the company’s own funds includes additional and reserve funds, as well as retained earnings of the organization. What are the financial elements that are included in the composition of the organization’s own funds?
Additional capital is the totality of:
- monetary amounts reflecting the revaluation of fixed assets;
- issue proceeds economic society;
- property received by the company free of charge;
- monetary amounts reflecting budgetary allocations.
Reserve capital is a monetary fund, the purpose of which is the urgent fulfillment of credit and other obligations of the company in case of shortage working capital, the imposition of penalties on it or the emergence of a difficult market situation. For some companies, the formation of a reserve fund is mandatory - for example, for joint-stock companies. Relevant businesses must allocate at least 15% of their authorized capital to the reserve fund.
Retained earnings are the portion of cash generated after the company has received income and made all necessary payments. This resource can be used to form various corporate funds and invest in business. Retained earnings can be cashed out at the request of the company owner.
Functions of authorized capital
Another aspect that will be useful to consider before examining the procedure for forming the authorized capital is its functions. Experts highlight the following list of them.
Firstly, this is an investment function. The authorized capital ensures the circulation of financial resources used for the purchase of various resources necessary for the business.
Secondly, this is a redundant function. It involves the formation of funds in the structure of the company's assets, at the expense of which certain payments can be made in the event of a lack of turnover - for example, on loans or preferred shares.
Thirdly, this is a structural distribution function. It involves the distribution of the company's profits among investors based on their share, primarily in the authorized capital of the company.
What is included in the authorized capital?
Now let’s study the actual way in which the authorized capital is formed. The first question that will interest us is: what is included in the corresponding fund of the enterprise, what resources can it consist of? Formation of the authorized capital is possible practically at the expense of any assets characterized by monetary value and liquidity. This could be cash, securities, property.
At the same time, the assessment of their value and at the same time the amount of the contribution of a particular investor can be carried out both based on the results of an agreement between him and the partners, and in accordance with the norms established by law. In the second case, the assessment of the value of assets forming the authorized capital can be carried out with the involvement of external experts.
In general, the sources of resources from which the main financial fund of an enterprise can be formed can be classified into 2 main categories: own and borrowed. But it should be noted that this classification should be considered separately from the assets and liabilities of the company. That is, outside the distribution of the entire capital of the organization into its own and borrowed capital. The first is characterized by reserve, accumulative, trust funds, retained earnings, rental revenue, depreciation compensation. Borrowed sources include credit funds - short-term or long-term. The authorized capital can be formed at the expense of only actually own (possessed by the founder or investor) or borrowed (issued on credit by the entrepreneur) funds.
Thus, according to formal criteria, the authorized capital cannot be borrowed, since credit funds issued to the organization form its debt obligations. In turn, the authorized capital, as we noted above, is precisely the source of repayment of the company’s debts.
Requirements for the formation of authorized funds
In the legislation of the Russian Federation there are a number of requirements that must be met by the formation of the authorized capital of an enterprise. First of all - financial. Thus, the minimum amount of authorized capital must correspond to:
- 10 thousand rubles, if the company is an LLC or non-public joint stock company;
- 100 thousand rubles, if the company is a public joint stock company.
If we are talking about the formation of the authorized capital of a state-owned enterprise, then its minimum value should be 5 thousand minimum wages. In municipal enterprises, the corresponding capital must be at least 1 thousand minimum wages. The formation of the bank's authorized capital involves investing at least 300 million rubles in its composition.
As we noted above, the resources for the formation of the corresponding funds can be any assets with a monetary value. However, there are a number of nuances that characterize investing in the minimum authorized capital established for business companies. The sources of its formation, if we are talking about an LLC, can only be presented in the form of cash.
The minimum capital of an LLC is 10 thousand rubles, and it must be deposited into the company's current account in rubles. In turn, if it is necessary to increase the authorized capital, the sources of formation of its additional volume can be not only monetary, but also presented in the form of other resources - movable or immovable property.
It will be useful to study in more detail how their cash equivalent is determined when we are talking about the formation of the authorized capital of an LLC - as one of the most common legal forms business in the Russian Federation.
Valuation of property forming the authorized capital
In accordance with the current norms of the legislation of the Russian Federation, regardless of the value of the property that is supposed to be included in the structure of the authorized capital of the LLC, an external expert must be involved in its assessment. It can be noted that previously there was a rule in Russian legal acts according to which an application to an appraiser was required only if the value of the property from which the authorized capital of the organization is supposed to be formed exceeds 20 thousand rubles.
Now the law has changed. It is worth noting that the founders of an LLC do not have the right to inflate the value of the property that is supposed to be included in the structure of the authorized capital, relative to the indicator determined by the valuation expert. In practice, the legislative innovation under consideration means that it is more profitable for many companies to increase their authorized capital, as in the case of ensuring its minimum value, at the expense of funds - since the services of an appraiser, as a rule, are quite expensive.
We also note that the Civil Code specifies liability mechanisms in the event that the founders of the LLC and the appraiser agree on an unjustified inflation of the value of the property being appraised.
The procedure for forming the initial authorized capital
Let's study some practical nuances that characterize the procedure for forming the authorized capital.
Again, it will be useful to consider them in the context of establishing an LLC as one of the most popular legal forms of doing business in Russia. Before an LLC is registered, it is not necessary to form an authorized capital. In principle, it will not be a violation of the law to pay it in advance - but it is better to make sure that the Federal Tax Service will correctly enter data about the company into its registers, and only after that form an appropriate financial fund. Moreover, when forming the authorized capital, the founder of an LLC may not be in a particular hurry - he has 4 months from the date of its registration to deposit the required amount of funds into the organization’s current account.
In general, the procedures for the formation of the financial fund in question are similar in the joint-stock company. Formation of authorized capital joint stock company does not have to be done before state registration companies. But as soon as the Federal Tax Service of the Russian Federation enters information about the company into its registers, within 3 months the founders of the company must deposit 50% of the required amount of funds into the current account to form the authorized capital, the rest - within the next 9 months.
Adjustment of the amount of authorized capital
So, we have studied the essence of the authorized capital of companies and discussed how they are formed. Changing the authorized capital is an aspect that may also be of interest to us. Let's consider it.
A change in the authorized capital by increasing or decreasing it can be carried out by the founders of the company after studying the results of business development during the year. In order to adjust the amount of the corresponding capital, it is necessary to make changes to the constituent sources.
An important nuance: in the process of reducing the size of the authorized capital, the interests of creditors should not suffer. Thus, in accordance with the legislation of the Russian Federation, the founders of a joint-stock company must warn creditors that the company’s authorized capital will be reduced in writing. In this case, the latter have the right to demand that the company repay loans ahead of schedule or compensate for possible losses in connection with the adjustment of the value of the corresponding funds.
In connection with what may be necessary to carry out the procedure in question? The fact is that the initial formation of the authorized capital of companies does not always reflect the specifics of the segment in which the business is to be developed. In some cases, it may be necessary to attract additional financing due to a lack of working capital. Potential creditors can assess the solvency of a business based on the size of its authorized capital. If it turns out to be insufficient, the corresponding funds will have to be increased. In turn, a reduction in the authorized capital is possible if, for example, the volume of the company’s net assets is insufficient and is less than, in fact, the size of the financial funds in question.
Specifics of mutual and budgetary authorized funds
Having studied what commercial authorized capital is and its formation, we can consider the specifics of funds of a similar purpose, but characterizing the activities of enterprises with a different status. For example, production cooperatives, as well as state and municipal structures.
As for the first ones, mutual funds are formed in them. The main source of their education is contributions from cooperative members. It may be noted that part of the mutual funds must be formed by the time of state registration of the business entity. The remaining amount of contributions must be paid into the structure of the corresponding cooperative fund within a year after entering information about the cooperative in state registers.
When establishing state and municipal enterprises the formation of the corresponding authorized capital is carried out. Its structure is determined by the owner of the business entity. The authorized capital of a budgetary enterprise is paid before its state registration. If it is unitary, then the corresponding capital of the business entity cannot be distributed among any shares. The size of the authorized capital of a budgetary enterprise is fixed in the organization's charter. As we noted above, its minimum value cannot exceed 5 thousand minimum wages - if a state-owned enterprise is being established, or 1 thousand if we are talking about a municipal structure. 
If there is a need to increase or decrease the size of the authorized capital of an enterprise, this procedure must be agreed upon with the competent authority. Changing the amount of the corresponding capital can be carried out through different sources, for example, by including any new resources in the structure of its property or by using the profit received by the state-owned enterprise.
As in the case of a change in the size of the authorized capital of a business company, creditors of the budgetary structure must be warned about the adjustment in the size of the corresponding fund. It can also be noted that the volume of net assets of a state-owned enterprise should not be inferior to the size of its authorized capital.
Accounting for authorized capital
Another most important aspect, characterizing the company’s use of such a financial resource as authorized capital - accounting for the formation of authorized capital in the organization’s accounting department. It is carried out using the following algorithm.
So, if we need to account for such a procedure as the formation of authorized capital, the accounting department applies entries mainly using accounts 75 and 80. How? Account 80 is used to reflect data on the status and flow of funds related to the authorized capital or its analogues, such as the savings fund. Count 80 is passive. It is assumed that its balance will correspond to the amount of the financial resource in question, established following such a procedure as the initial formation of the authorized capital. Documents recording information about the establishment of a company must contain data on the amount of the corresponding capital.
Entries using account 80 are made not only during the formation of the authorized capital, but also when adjusting it - by increasing or decreasing. At the same time, for a legitimate change in such a resource as the authorized capital, accounting for the formation of the authorized capital and the adjustments made requires a preliminary entry into constituent documents firm the necessary amendments. Only if they are made, the accountant begins work with an account of 80. Information on it can be used by the founders of the company in order to track the dynamics of the formation of the management company.
As we noted above, payment for the authorized capital of a company is carried out upon the state registration of the latter. As soon as this procedure is carried out, and also provided that the constituent documents are in order, the accountant needs to apply entries to the credit of account 80 and the debit of account 75 (when using subaccount 75-1). The fact that the founders’ contributions came to the disposal of the company is also recorded on the credit of account 75 and the debits of those accounts that are related to the accounting of values.
These are the main nuances that characterize the accounting for the formation of authorized capital. It must be carried out correctly, since it involves recording data on the most important financial transactions from the point of view of acceptance management decisions management of the enterprise.
Summary
Authorized capital is one of the key financial indicators of a company. It is included in the structure of the organization's own funds. But it is actually formed earlier than the rest - by investing the founders’ funds into the capital structure of the company after state registration, and in cases provided for by law - before it in established amounts.
The authorized capital may be important from the point of view of assessing the solvency of the company by the creditor, the prospects of investing in the business by the investor, and establishing partnerships between the management of the company and other market participants. The rules for its formation depend on the specific type of business entity. The formation of the authorized capital of a bank may differ significantly from the corresponding procedure, which characterizes the formation of the corresponding fund of an LLC, partnership, cooperative, state or municipal enterprise.
For different types Firms have established special requirements for the size of the authorized capital and the time of its desired payment. It is important to carry out correct accounting of the movement of funds in accounts reflecting transactions with the authorized capital. The formation and change of relevant funds must be accompanied by timely entry of the necessary information into the company’s constituent documents. In cases specified by law, adjustments to the amount of the authorized capital must be carried out taking into account the interests of the company's creditors.
An economic entity can register a business either as an entrepreneur or by creating legal entity. IN the latter case must be observed established by law procedure for creating an organization. An important place in this process is given to the formation of the initial funds of the new company, which are called the authorized capital of the LLC.
The authorized capital of an LLC represents the organization’s own property formed through contributions based on the parts recorded in the company’s constituent documents.
The obligation of the company owners to create this capital is enshrined in the provisions of regulations and without it it is impossible to register the company with the Federal Tax Service.
Thus, the authorized capital of an LLC is part of the company’s funds that are its property, using which the enterprise will carry out its activities in the future. A company can also attract borrowed funds, but the law requires a mandatory share of contributed capital.
For the owners of an organization, the authorized capital also shows the declared funds, what they risk when making business decisions, as well as this is the maximum value of their liability for debts during the operation of the company.
The size of the authorized capital must be reflected in the charter of the business entity, as well as, while the company exists, in the financial statements of the enterprise. The amount of property and cash in capital must be expressed only in rubles.
At the same time, it also requires registration of the company’s charter. Based on this, if a change occurs in this source of the company’s funds, it must be accompanied by the necessary changes in the information of the entity in the Unified State Register of Legal Entities and constituent documents.
The creation of capital is carried out by the participants of the company; the source can be:
- Property objects.
- Intangible assets (IMA),
- Cash, etc.
Under certain conditions established by law, the authorized capital of an LLC should be created only in monetary amounts that the owners need to contribute either to the cash desk or to opened by the company checking account. Having arrived at the company's accounts, these funds may not be there.
Attention! After registration, the management of the company can dispose of these funds, since they cease to belong to the owners, but are already the property of the enterprise.
Property used as a contribution to capital is not income of the created company, and therefore should not be subject to income tax.
When are funds deposited?
Previously, the period during which company owners must use funds as contributions to the authorized capital was not fixed at the legislative level. This period was reflected in the constituent documents along with its full amount.
Currently, regulations establish a period during which owners must transfer their shares. It is four months from the date of registration of the company in tax authorities.
In this case, the formation of such capital can be carried out in stages, that is, all four months in arbitrary parts. The legislation only requires that four months after receiving the OGRN extract, the founders have no debt to the company to create the authorized capital.
If the owners of the company are several persons, and by the deadline established by law one of them has not contributed his share, the other founders receive the right to sell his share of the contribution to other persons.
Also, do not forget that if, 4 months after the registration of the company, the owners still have debts on contributions to the formation of capital, then according to the Civil Code of the Russian Federation it is necessary to liquidate the company.
The size of the authorized capital of the LLC
When created new company, the founders determine the amount of its capital independently. There is one limitation that must be strictly observed - the minimum amount of authorized capital. The minimum amount of the authorized capital of an LLC has not changed since 2017.
It is fixed at 10,000 rubles. This size is determined for simple business entities. If the future company plans to conduct insurance, bookmaking activities, etc., they may have their own minimum amounts of capital.
When choosing the amount of capital, owners must keep in mind that the profit for the year must not be less than the established amount of capital. This rule is valid for two years after the organization of the company.
A comparison of net assets with capital must then be made. Moreover, the former cannot be less than the latter. If this provision is violated, the Federal Tax Service may unilaterally decide to carry out liquidation.
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Important! In the case where one of the owners has a share of more than 50%, then additions from him will not be considered income of the company, and they will not need to be taxed. So, for example, with two participants, the shares can be distributed as 49 and 51%.
Application procedure
Any property can be used to create authorized capital. Which one should be specified in the organization’s statutory documents. The Civil Code establishes one limitation on the process of creating authorized capital. So, if it is formed in a minimum amount of 10,000 rubles, then its deposit must be made only in money. It does not matter whether they will be paid in cash or by bank transfer.
If funds are deposited non-cash, this requires the preliminary opening of a current account in one of the banks. This can be done immediately upon registration (in this case, a temporary account is opened first, and a permanent one is opened after registration). Or, after the procedure, you can personally contact the chosen institution at any time.
The transfer of funds in this case will be carried out by transferring from the bank account of an individual or legal entity, which acts as the owner, to the account number of the created organization. IN payment order in the purpose of payment it is written that this is a contribution of funds to the authorized capital.
A citizen can also contact the bank where the company has an account and deposit cash directly into the current account using an advertisement for cash deposits. In this case, this will also be considered a non-cash deposit.
If funds are deposited into the company’s cash desk, then it must be remembered that the cash limit rule applies immediately from the date of creation of the organization. Therefore, if the limit order was not immediately accepted, then the money must be immediately transferred to the current account, otherwise this will constitute a violation of cash transactions.
When depositing cash, it is drawn up, where the contribution to the authorized capital is indicated in the basis column.
Attention! If a company is organized by several persons, then the total amount of capital must be divided between them according to shares, which may be fractional. Based on the size of the shares, the owners receive votes to manage the organization.
If the LLC includes several participants, then it will be more convenient to set the amount of the authorized capital in proportion to the number of owners. For example, three individuals create an LLC with a capital of 30,000 rubles. When dividing it by 3, it turns out that everyone must contribute a share of 10,000 rubles.
Change of authorized capital
Order of increase
In the course of activity, the founders of the company may decide to increase the authorized capital.
This can be done in one of the following situations:
- A new owner wants to join the organization, and he contributes his share of the capital;
- The company wants to engage in a new line of activity, and for this it is necessary to increase the authorized capital;
- The amount of capital must comply with legal requirements;
- One founder wants to have larger size its share in the capital;
- Partners (investors, creditors) require an increase in capital.
The authorized capital can be increased by adding additional funds, or by using the property available in the organization.
An increase is permitted only when the authorized capital is formed and equal to that stated in the statutory documents, and the share of each owner is equal to the indicated one.
Entering a participant is allowed only when the company’s constituent documents do not include a direct prohibition on adding third parties to the company’s founders. If this is not the case, then any person has the right to file an application addressed to the director.
The document must contain a request to accept him as an owner, as well as the size of the share he wants to form, the method of depositing funds, and the timing of this event.
If it is decided to increase the amount of capital by adding additional funds, this can be done either by each owner or by just one person. In the first case, everyone must add the same amounts so that the final ratio of shares in the capital does not change. In order to make such a decision, it is necessary to convene a general meeting of founders.
If the only participant wants to make a larger share, he makes a request addressed to the manager, indicating the size of the final share and the method of adding new funds.
Attention! If it is decided to increase capital by adding funds or property of the company, this must be done in the same volumes so that the percentage of shares of all owners does not change. Property for increase is withdrawn from the organization’s net assets only after the financial statements for the past year have been adopted at the annual meeting.
Decrease order
Reducing the total amount of the authorized capital is allowed only if the share of each participant is reduced in equal proportions. This means that the overall ratio of shares should not change after this. The part that will be withdrawn from the capital after the reduction must be transferred back to the founders.
It is impossible to reduce the authorized capital of an LLC in order to avoid covering the organization’s debts. Before starting the procedure, participants must provide information that each creditor of the company has been notified of the reduction. In this case, any of them can demand that the company repay the debt.
An organization can reduce its authorized capital by issuing cash or by withdrawing part of its property. Moreover, in any of the chosen ways, personal income tax will need to be calculated and paid on the received share of property or funds. The Ministry of Finance takes this side in its recommendations. However, numerous arbitrage practice, when during the proceedings the court took both one side and the other.
The law stipulates several cases in the event of which an organization is obliged to carry out a reduction procedure, these include:
- The size of the company's net assets fell below the size of the authorized capital;
- Within a year from the moment one of the participants left, the remaining founders were unable to divide or pay off his share.
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Important! The decision to reduce capital must be made at a general meeting of participants with at least 2/3 of the votes. The only participant in society makes this decision independently.
Faces the problem of creating the company's authorized capital. It is one of the most important financial indicators of the organization. Let's try to figure out together what authorized capital is, how it is formed and what functions it has.
Basic Concepts
Before considering the stages of forming the authorized capital of any company, we suggest you understand what this fund is.
Authorized capital - this is the minimum amount of money that must be in a special bank account of an organization for its normal functioning.
The financial indicator can be viewed from several angles, or rather, from legal and economic angles.
From a legal point of view, the authorized capital - This is a certain amount of money that is used to repay loans. Its value reflects the solvency of the company.
From an economic point of view – this is the minimum amount of funds required to start the operation of the enterprise.
It should be remembered that the authorized capital can be used in the following cases:
- Payment of current expenses. These include costs associated with the purchase of materials for production at the beginning labor activity enterprises;
- Payment of expenses for registering an enterprise;
- Rent for industrial and office premises;
- Material remuneration for company employees;
- Payment of company loans.
Depending on the type of organization, the authorized capital may have different names.
Functions of authorized capital
Like any other company fund, the authorized capital has a number of functions:
- Investment – funds from the authorized capital are used to purchase materials and raw materials necessary for production;
- Reserving – due to the formation of assets, certain payments can be made (payment of loans) if there is a lack of working capital;
- Structural distribution – allows you to distribute profits among investors, depending on their shares in the authorized capital.
Sources of formation of authorized capital
This fund increases if production expands, brings additional profit, or changes its legal form.
If the company suffers losses, then it is rational to reduce the amount of the authorized capital. The main thing is that it is not lower than the minimum state norm.
In order to change this value, the company analyzes its work for the year. Depending on the data received, a decision is made to change the authorized capital. This process is documented and the new value is included in the charter.
If the company has credit obligations, then it must inform the lender about this before making changes. However, the authorized capital cannot be created from loan funds, because It is he who is the source of repayment of the company's debts. Only an investor can take out a cash loan, after which he deposits the received amount as part of the authorized capital, and repays the loan himself.
Conclusion
Authorized capital is a combination of fixed assets of an enterprise and its current assets. That is, this is the amount of business investment.
This financial fund is formed even before official registration companies. There are several ways to form authorized capital. Depending on the organizational and legal form, it may consist of cash, material assets of investors, the nominal price of shares or the authorized capital of the enterprise.
The size of the authorized capital directly affects the solvency of the company. Therefore, business managers are interested in increasing this indicator, especially when they plan to take out loans.
Why is the authorized capital of an LLC needed, how is it formed, where is it stored and can it be spent? In this article we will answer these and other most common questions about the authorized capital of an LLC.
Concept and functions of authorized capital
There is no definition of authorized capital (hereinafter - MC) in the legislation. But based on the meaning of the existing rules on the management company, we can say that this is a monetary value that reflects the minimum amount of the organization’s property, through which the interests of its creditors are ensured.
Answering the question about why authorized capital is needed in an LLC, we can say that the management company performs 3 functions at once:
- Starting At the stage of creating an LLC, capital is the material base, which must be sufficient for the legal capacity of the organization to arise. Every company has a management company; without it, an LLC cannot be registered. Information about the size of the capital company must be included in the charter (Article 12 of the Law “On LLC” dated 02/08/1998 No. 14-FZ).
- Security. The management company acts as a guarantor of the interests of creditors (clause 1, article 14 of law 14-FZ). Therefore, the law established the minimum size of the charter capital, as well as the rule that it is impossible to release founders from the obligation to pay for their share in the capital.
- Certifying. With the help of the Criminal Code, the size of the share (participation) in the company is established. The size of the shares, in turn, predetermines the voting structure when making decisions on general meetings participants (hereinafter referred to as the GSU), and also affect the distribution of profits.
LLC authorized capital structure
The capital of the LLC is divided into shares that determine the degree of participation in the company. The entire capital is 100%, and the share of each participant is determined as a proportion to the total size. The size of the share can be indicated in the documents of the company and the Unified State Register of Legal Entities both as a percentage and as a simple fraction.
The ratio of shares when creating an LLC can be any (for example, 1 of 2 participants may have a 99% share, the other - 1%). A single participant may own 100% of the capital, but this does not happen in all cases when there is participant 1. It is possible, albeit temporarily, for a situation where the share belongs to the company itself.
The number and size of shares of LLC participants may change during the economic life of the latter: both the entire share and part of it can be sold/donated to other participants, and, subject to certain conditions, to third parties. In addition, the share or part thereof may be transferred by way of singular or universal succession.
IMPORTANT! The law does not prohibit limiting the maximum size of the share owned by 1 participant in the charter, as well as establishing a ban on changing the ratio of shares. But these restrictions must apply to all participants.
Nominal and actual value of shares in the authorized capital
Since the size of the charter capital is calculated in rubles, the shares of the participants also have a monetary value - the so-called nominal value. The nominal share is a stable indicator that remains unchanged despite changing economic and other conditions. It ensures the stability of the position of LLC participants.
The nominal share is determined as the ratio of the amount of the authorized capital to the size of the share.
IMPORTANT! The amount of the charter capital must be indicated in the charter. But since 2009, the size of shares and the corresponding nominal value have not been required to be included in the charter.
Along with nominal value, there is also real value. This is exactly what the amount paid to the withdrawing member of the company corresponds to. This value is determined as a part of the net assets, proportional to the size of the share. Net assets are calculated according to accounting data in accordance with the Procedure approved by the Ministry of Finance of the Russian Federation in Order No. 84n dated August 28, 2016.
Thus, the actual value can be much higher than the nominal value and vary depending on the exchange rate, the value of the property taking into account depreciation, etc. The sale value of the share can be even higher than the actual value (if the seller wishes) and is predetermined by such factors as the organization’s position on market, its prestige, etc.
Terms and methods of payment for shares in the capital of the company
Payment of the Criminal Code is regulated by Art. 15-16 of Law 14-FZ. At the time of LLC registration, the authorized capital may not yet be paid. The constituent agreement (or the decision on establishment, if the LLC was created by 1 founder) may provide for a period for payment of the management company, not exceeding 4 months from the date of state registration.
If, after this period, the participant still does not pay for his share, then it (or its unpaid part) goes to the LLC and must be sold within a year in accordance with Art. 24 of Law 14-FZ. A participant who has not fully paid for the share votes on the General Assembly only within the limits of the paid part of the share.
Payment for the share can be:
- funds in any currency;
- securities;
- things not withdrawn from circulation and not limited in circulation;
- property rights and other rights that can be subject to monetary valuation.
If the contribution is made in property and not in money, then its monetary value must be approved unanimously at the General Assembly. But when the share or part thereof paid for by property has a nominal value of more than 20,0000 rubles, it is imperative to involve an independent appraiser.
IMPORTANT! The share is paid for at a price not lower than its face value. It is not prohibited to pay for a share with property the value of which is higher than the nominal value of the share. In this case, the LLC has the right to return the difference.
A situation is allowed where the share will be considered paid as a result of offsetting the claim against the LLC. This is possible only with an increase in the capital (i.e., when making an additional contribution), if the general meeting unanimously decided to agree to such an offset (clause 4 of article 19 of law 14-FZ).
The size of the authorized capital: limits, can it be changed?
The authorized capital can be formed in any amount, but not less than minimum size, established by paragraph 1 of Art. 14 of Law 14-FZ. Since 2008, it has been 10,000 rubles, which should be recognized as a rather small amount (which is unlikely to guarantee the interests of the company’s creditors).
The amount of the authorized capital may vary. The decision on this is always made by the OSU. Thus, at any time, at the request of the organization’s participants, the capital can be increased without restrictions on amounts.
As for the reduction of the Criminal Code (Article 20 of Law 14-FZ), it can be mandatory or voluntary. So, for example, it is necessary to reduce the capital by the nominal value of the share that was transferred to the company and was not sold within the period established for this (the so-called redemption of the share).
A voluntary reduction of the capital is possible if 3 conditions are met:
- The authorized capital will not become less than the minimum size;
- the registration authority has been notified of the procedure;
- creditors are notified of the reduction by at least two publications in the State Registration Bulletin.
A reduction in the charter capital is subject to state registration, and the charter is adopted in a new edition or amendments are made to it.
Where is the authorized capital of an LLC stored and can it be spent?
The question of where the authorized capital is stored is not entirely correct due to the fact that the authorized capital is a conditional value, and not a specific amount and/or property mass, which remains unchanged.
The payment of shares in the management company in itself with money or property is necessarily reflected in accounting. Property is entered on the balance sheet as inventory or fixed assets. In this case, all accounting entries are made only after the LLC is registered.
The money may actually be in the cash register or in the LLC's current account, while the property will be on the balance sheet. At the same time, it is not prohibited to spend the authorized capital for any needs of the company, or to use and dispose of property contributed as a contribution to it. The organization's account may contain an amount less than the authorized capital.
The only important thing is financial condition of the company at the end of the second (or any subsequent) financial year. If at this moment the value of net assets is less than the amount of the capital, then in accordance with clause 4 of Art. 30 of Law 14-FZ, within 6 months the company must choose 1 of the options:
- Reduce capital.
- Carry out liquidation.
The authorized capital is a conditional value that has a monetary value and is made up of the contributions of the company's participants. Its structure and size may change during the operation of the LLC. The contributed capital can be spent, but it must not be allowed that at the end of the 2nd and subsequent fiscal years net assets were below its value.