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The essence of a Limited Liability Company

By confidussolutions at 2021-11-04 • 0 collector • 150 pageviews

Limited Liability Companies (LLC) are called companies with corporate structures whose members (shareholders) cannot be held personally liable for any debts or liabilities of the company, which means that only the assets of the company itself are at risk. For this reason, this type of company is considered “limited liability” while the combination of the characteristics of a corporation and partnership as a limited liability is similar to that of a corporation and the availability of flow-through taxation to members is a characteristic of partnerships . LLC as a viable option when the person wants to start a trading company or small business locally or internationally within certain limits.

The essence of a public company In the case of a public limited company (JSC), the shareholders of these companies have unlimited liability for the debts of their companies. This means that shareholders of the public company have limited liability or limited liability by guarantee or shares. Usually, the shares of a JSC are transferable and can be traded on a legal exchange between private parties (private JSC) or publicly (public JSC). A corporation can raise a large amount of capital by issuing its shares. It is common for one or more individuals to set up public companies for the purpose of doing large-scale business. It is represented by a board of directors consisting of at least one person and can also be represented by an authorized representative.

Differences Between LLC and JSC JSC and LLC are the two most common types of businesses today. There are some key differences between these two legal forms.

JSC issues stocks and bonds per procurement of the stocks that can be offered to the public, unlike LLC which does not issue stocks or bonds. As part of the JSC share transfer, the transfer can be done with the consent of both parties; in the case of LLC, they can be transferred by a notarized agreement, provided that this agreement is executed with the consent of 75% of the shareholders, who make up 75% of the capital. In the case of LLC, the capital is not evenly divided, whereas in JSC the capital is evenly 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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