Simplified Joint-Stock Company

• What is a Simplified Joint Stock Company?

A Simplified Joint Stock Company is a modern form of joint stock companies, introduced by the legislator to provide a more flexible legal framework suitable for entrepreneurs, investors, startups, as well as private or family partnerships that do not require the complexities of management and operation found in traditional joint stock companies.

This type of company aims to simplify procedures while maintaining the protection of shareholder rights and organizing their relationships, giving them broad freedom in managing the company, handling shares, and making decisions.

• In-kind Contributions and Their Valuation:

- If the value of in-kind contributions does not exceed half of the capital, an evaluation by a certified appraiser is not required unless agreed upon by the founders.

- If it exceeds half, a certified appraiser must be appointed to determine the fair value.

- The founders are personally liable if in-kind contributions are not properly evaluated in accordance with the law.

• Management of the Simplified Joint Stock Company:

- It can be managed by a president, a manager, a board of directors, or any other structure defined in the bylaws.

- The manager, president, or board has broad powers and represents the company before courts and third parties.

- Management responsibilities are the same as in traditional joint stock companies and include the duty of honesty, care, and acting in the company's best interest.

• Organizing Shareholder Relationships:

The bylaws specify matters that must be presented to shareholders, including:

- Capital modification.

- Transformation, merger, division, dissolution.

- Profit distribution, appointment of auditors, financial statements.

- Meeting invitations are issued by the president, manager, or board, and must be sent to shareholders at least 5 days in advance.

- Shareholder decisions may be issued by circulation without holding a meeting, and minutes can be documented using digital means.

- If the company has a single shareholder, decisions are recorded in a special register, and the owner is considered the representative of all shareholder powers.

• Restrictions on Share Disposal:

Restrictions may include:

- Prohibition on disposal for up to 10 years.

- Requirement of company or shareholder approval before sale or transfer.

- A shareholder may be obligated to transfer their shares under fair conditions defined by the bylaws.

• Dispute Resolution and Arbitration:

The bylaws may provide for arbitration or alternative dispute resolution methods, whether between shareholders or between them and management.

• Special Clauses Requiring Unanimous Approval:

Unanimous shareholder approval is required to include the following in the bylaws:

- Restrictions on share disposal.

- Mandatory share transfer.

- Arbitration and dispute resolution.

• Advantages of the Simplified Joint Stock Company:

- Flexibility in management structure and shareholder relations.

- High level of customization in the bylaws.

- Facilitates the establishment of professional family or individual companies.

- Suitable for startups and medium-sized investment projects.

• Points to Pay Attention To:

Despite the flexibility, legal obligations still apply, including:

- Preparing annual financial statements.

- Disclosure of losses if they reach half of the capital.

- Compliance with governance and transparency toward shareholders and regulatory authorities.

• Conclusion:

The legislator has created a legal environment through the simplified joint stock company that suits modern business needs, combining simplified procedures, clear rights, and flexible management.

However, there remains a strong need for a clear and precise set of bylaws that ensure balance among shareholders, protect their rights, and regulate decision-making mechanisms — something that requires specialized legal support.

• Thinking of establishing a Simplified Joint Stock Company?

At our law firm, we assist you in drafting the bylaws, evaluating shares, and formulating special provisions that help achieve your company’s goals with full legal compliance.