Reorganization of a CJSC is expensive

According to the report of the FTS (as of October 1^st), there are approximately 120 thousand closed joint-stock companies (CJSC) in Russia, 460 thousand of those – in Moscow. The amendments to the Civil Code that prohibit establishing new CJSCs entered into force on September 1^st. The companies that were registered earlier may carry on their operations as CJSCs until the first change to their documents of association – and then they will have to come to the tax service to change the form of ownership.

But it is not profitable for the companies to wait until the formal bases for compulsory reorganization arise. The period, during which the joint-stock companies could keep the registers of the shareholders themselves, expired on October 1^st – now they must submit those to the register holder. So says the Law No. 142-FZ dated July of 2013. All documents that concern the keeping of the register are to be transferred to the registrar, and if the company doesn’t have them due to poor keeping of the register, they will have to be remade.

Operational servicing of the register will cost approximately 120 thousand roubles per year.

Alexander Bolomatov, Partner of the Law Firm "YUST", says that the redoing of the documents for transfer to the register holder may cost another 200-300 thousand roubles.

The FTS representative told RBC that there is no statistics of refusals of re-registration of CJSCs in September and October. The secretary of the FTS Inspectorate No. 46 redirected the inquiry to the Moscow Department of the FTS, whose representative was unable to give a prompt commentary on Friday. The representative of the FTS says that the tax authorities, including the Inspectorate No. 46, comply with the requirements for rendering public services, including the time limits for servicing clients and official registration periods, and those have been observed in September of 2014 as well.

The FTS says that tax authorities may refuse registration, if the company fails to submit all required documents (including if the territorial divisions of the Pension Fund do not confirm their receipt) or if the submitted documents contain false information.

If the companies are unable to re-register and if they do not transfer their registers to the register holder, they may be fined for 700 thousand to 1 million roubles for illegal register keeping (clause 2 of Article 15.22 of the APCRF: “Breach of the rules of keeping the register of security holders”). The Central Bank refers to this provision in its letter dated July 31 of 2014. The letter says: “In the case of failure to perform the obligation to transfer the register to the registrar, the companies will bear the legal risk of being brought to administrative liability for illegal register keeping”.

Alexander Bolomatov believes that there are other risks as well: the companies may have serious problems with the sale of the share capital; there is a risk of dissolution of the company upon a claim by the tax authority.