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Differences between Limited liability and Joint stock company

Differences between Limited liability and Joint stock company

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JSC and LLC are the two most common company types nowadays. There are some significant differences between these two forms of legal entities.

JSC issue stocks and bonds per procuration of the shares which may be offered to public unlike LLC that does not issue stocks or bonds. Within the frames of JSC share transfer may be executed upon the agreement of both parties, when it comes to LLC, they may be transferred upon an agreement certified by a notary provided that such agreement is executed within the approval of 75% of the shareholders that represent 75% of the capital. When it comes to LLC, the capital is not divided equally, however for JSC the capital is equally divided.

Companies’ fields of activity also may vary. LLC does not operate in such business fields as banking and insurance and in other fields that are determined by specific laws unlike JSC which may operate in every field. For this reason financial institutions find the structure of a JSC more credible and influential. One more formal difference between JSC and LLC is that the first one may be incorporated for an indefinite period unlike the second one which shall only be incorporated for a period of 99 years. As for JSC, the minimum shareholder number is 5 and there is no determination related to maximum shareholder number. To the contrary, the minimum shareholder number for LLC is 2 and maximum is considered to be 50.

However, these two types of companies have something in common. There are a few similarities between JSC and LLC. Both can be incorporated by filing articles of association with the State Registry. Both may be foreign-owned, having shareholders from abroad. In both cases shareholders’ liability is limited to their contributions. Both require at least one investor appearing as a natural person or a legal entity. The investor can be a resident or non-resident as well. The annual accounts which consist of the balance sheet, profit loss accounts and the annual report must be approved by the shareholders within the 6 month period after the closing of the financial year.
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