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Publication date: 17.05.2024
I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.
A private joint-stock company (PrJSC) is a legal form of a commercial organization, which is characterized by the presence of share capital and a limited possibility of selling shares. In turn, a public joint-stock company (PJSC) is a legal entity in the form of a commercial organization, in which the shares of the company are placed on the open market and can be freely bought and sold through the stock exchange.
The main differences between PrJSC and PJSC:
The difference between a Private Joint Stock Company (PrJSC) and a Public Joint Stock Company (PJSC) lies in the main aspects of their organization, functioning and mode of activity:
Publicity of shares:
PrJSC: The company's shares are in a limited circle of shareholders and are not placed on the open market. Shares are traded within this limited circle of investors.
PJSC: The company's shares are placed on the open market and can be freely bought and sold on the stock exchange.
Reporting and publicity requirements:
PrJSC: Have less stringent reporting and publicity requirements compared to PJSC, as they do not publicly raise capital.
PJSC: Subject to strict financial reporting and publicity requirements as their shares are listed on the open market.
Placement of shares:
PrJSC: Shares can be placed among acquaintances or a limited circle of investors.
PJSC: Shares are placed on the open market and may be available to any investor who wishes to buy them.
Regulation and supervision:
PrJSC: Have less strict regulation and supervision compared to PJSC, as they do not publicly raise capital.
PJSC: Subject to a higher level of regulation and supervision by financial regulators and exchanges due to public status.
Number of shareholders:
PrJSC: Can have a limited number of shareholders, which are usually a limited number of individuals.
PJSC: Have the ability to have a wide distribution of share capital, which may include a large number of small shareholders.
Listing procedure:
PrJSC: Private companies do not need to implement a sufficiently complex and multi-stage procedure for placing shares on the stock exchange.
PJSC: The listing of shares on the stock exchange in PJSC is the procedure of placing shares of this company on the open market. This means that the shares become available for trading publicly, meaning that any investor can buy and sell them on the open market of the exchange where they are listed.
So, the main difference between PrJSC and PJSC is the listing status of their shares on the open market, the level of publicity and reporting and regulatory requirements.
Common features of private and public companies:
Public and private joint-stock companies have several features in common, but also differ in some aspects. Here are some common signs:
Shareholding form: Both public and private joint-stock companies have the status of a legal entity with share capital.
Limited liability: In both cases, participants (shareholders) are not personally liable for the company's obligations, but are limited by their contribution to the authorized capital.
Rights of shareholders: Shareholders of both types of companies have certain rights, such as the right to participate in general meetings, vote at shareholders' meetings and receive dividends.
Management of the company: The management of a joint-stock company is usually carried out through corporate governance bodies such as the general meeting of shareholders, the board and the supervisory board.
Obligation to create a charter: Both public and private joint-stock companies must have a charter that defines the basic rules of the company's activities and the rights and obligations of shareholders.
Organizational form: In both cases, the company can be organized as a private or public joint-stock company, depending on the needs and goals of the owners.
Lawyer for business when creating a joint-stock company:
Unlike other economic companies, a joint-stock company is distinguished by its features and multi-stage creation. It is extremely important to provide legal services for business at this stage, which will help to avoid problems with the conclusion of the founding agreement, the subscription of shares and the formation of the company's charter. A business lawyer will monitor compliance with legal norms during all the above-described stages and will provide advice in case of urgent problems. A legal protection of business will protect its interests not only at the stage of creation, but also during economic activity.
