Joint-stock company: Charter capital. Shares.

Charter capital.

The charter capital of a joint-stock company consists of par value of shares obtained by the shareholders and determines a minimum size of the company's property guaranteeing the interests of its creditors. If at the end of the second or any subsequent year, the value of the free assets of the company is less than the charter capital, the company is obliged to declare and register by established procedure a reduction of its charter capital. If the value of these assets becomes less than the minimum amount of charter capital determined by law, the company is subject to liquidation. The minimum amount of charter capital for a closed joint stock company is RUR 10,000 which is equal to about USD300, and for open joint stock company RUR 100,000 which is equal to about USD3,000.

The company shares allotted upon company formation must be fully paid within a year from the company formation, unless a shorter period is required by the founding contract. However, at least half of the shares must be paid within three months from the state registration of the company. A share which has been paid does not necessarily give voting rights to its owner.

Increase of charter capital.

Charter capital may be increased by increasing par value of shares or by issue of new shares.

Decrease of charter capital.

The charter capital may be reduced by means of reduction of par value of shares or by reducing the total quantity of shares. Not later than 30 days from the date of making the decision to reduce its chartered capital, the company must inform its creditors in writing about the decision. The creditors are entitled to expedited execution of the company's obligations and compensation for related losses.

Shares.

A company places ordinary shares, as well as one or more classes of preferred shares. The par value of preferred shares must not exceed 25 per cent of the company's charter capital.

Shareholders, owners of ordinary shares, may take part in the general meeting of shareholders with the voting right for each question in the competence of the meeting. They are entitled to receive dividends, and in the case of liquidation they are entitled to a part of the company property.

Shareholders, owners of preferred shares, as a rule, do not have a voting right at the meeting of shareholders. The exceptions are the questions of reorganisation or liquidation of the company, alteration of the company charter restricting the rights of owners of preferred shares.

The company charter must determine the size of the dividend and/or value to be paid, should the company be liquidated (liquidation value), on each class of preferred shares. The size of dividends and liquidation value must be determined as a monetary amount or a proportion to the par value of preferred shares. The owners of preferred shares, of which the size of dividend has not been determined, have the right to obtain dividends equally with the owners of ordinary shares.

The company charter may allow conversion of a particular class of preferred shares into ordinary shares.

Issue and transfer of shares.

The company charter may determine the number and par value of the shares which the company is entitled to issue in addition to the placed shares. Decisions on changing the charter in relation to the issue of new shares is taken by the meeting of shareholders. Shares may be issued only after registration of an issue and in some cases of a prosp