Authorized and share capital: definition, features and specifics of calculation

Functions of the authorized capital of the organization

• Formative function. Authorized capital is funds to ensure the start of business: the purchase of goods, inventory, equipment, etc.
• Guarantee function. As a result of unprofitable activities, the authorized capital guarantees the payment of debts in its amount to creditors and investors.
• Reputational. A company with a large authorized capital is more attractive to business partners. The management company creates the image of the company and speaks of the stability of the company.
• Distribution. Secures the right of each founder to a share of profits. That is, if 2 participants invested the same amounts in the business, then the profit will be divided in half. If the share of one founder is greater, for example 80%, and the other 20%, then the profit will be distributed in proportion to these shares.

Capital Formation

The share capital of a general partnership is formed according to the principle of subsidiary liability. That is, the organization is liable with all its property to creditors. These funds cannot be used as a guarantee for the payment of obligations.

The amount of share capital is prescribed in the constituent documents. Participation in its formation is the responsibility of the founders (Article 73 of the Civil Code of the Russian Federation). At the time of registration of the company, each member must make at least 50% of his contribution. The repayment terms of the remaining part are prescribed in the charter. In case of violation, the founder must pay 10% of the debt amount and compensate for the losses caused.

Amount of authorized capital

Business owners themselves decide what size the organization’s authorized capital will be. The law establishes a minimum amount , which depends on the legal form of the enterprise:

• Limited liability company (LLC) - 10 thousand rubles;
• Public joint-stock company (PJSC) - 100 thousand rubles;
• Credit organization (bank) - 300 million rubles;
• Insurance companies - 120 million rubles;
• Alcohol producers - 10 million rubles; vodka producers - 80 million rubles;
• Bookmakers - 100 million rubles;
• Microfinance organizations - 90 million rubles.

There is no maximum amount for the authorized capital. The founders of an organization can register an LLC with any amount of capital, but not less than 10 thousand rubles.

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At the same time, the Law states that 10 thousand rubles must be contributed in money, and the remaining amount can be contributed by any other property, securities or intellectual property rights.

What does the size of the charter capital affect?

Before deciding the amount of the authorized capital, it is necessary to provide for cases that may be affected by its size.

The greater the amount of the authorized capital, the greater the trust in the company. It is easier for a company with a large authorized capital to obtain a bank loan. It looks more attractive to investors and business partners.

Financial resources from the management company are used for the initial development of the company. This is start-up capital for the purchase of equipment, materials, goods and everything necessary.

How to choose the optimal size?

When choosing the size of the authorized capital, it is necessary to focus not only on the minimum amount, but also on the activities of the enterprise and upcoming expenses:

• By choosing a larger amount of authorized capital, you provide your partners, including creditors, with additional guarantees for the fulfillment of obligations. You receive a sufficient number of assets to start the enterprise. But all this leads to significant investments, in addition, when leaving the LLC, problems may arise with obtaining funds that fall to the share of one or another founder.
• With a minimum authorized capital, a minimum of investments is required, but this can also lead to difficulties in finding investors and lenders.

The term and procedure for payment of the management company when creating an LLC

The founders of the organization must contribute the entire amount of the authorized capital no later than 4 months from the date of creation. The LLC formation document usually specifies the exact date by which all members must pay their share. Funds are deposited into the company's bank account or cash register.

If one of the founders does not pay his share on time, he loses it in the business and it goes to the company. Then, within a year, the remaining founders must decide what to do with it:

1. Distribute among other participants;
2. Reduce the authorized capital by this amount.

All transactions with shares must be reported to the tax authority and changes must be made to the Unified State Register of Legal Entities using application P14001.

Procedure for entering the Criminal Code

The question often arises: when and where should funds be sent to the management company? The answer is simple - you don’t need to do this at the time of LLC registration. According to the old rules, capital was formed in advance, even before the creation of society. Now the deadlines for paying in the authorized capital are different. After opening, participants will have 4 months to make their contributions. You need to do this:

• indicate in the charter that the size of the charter capital remains 10,000 rubles (if it is decided to form a minimum authorized capital);
• submit documents to the Federal Tax Service;
• when the company is registered, open a bank account;
• transfer the amount of 10,000 rubles to it - no later than 4 months after registration;
• This money can then be used in business activities.

At the same time, each of the participants is obliged to pay their share in the management company independently. Even if all other owners agree to relieve one of such obligations and invest for him, this cannot be done.

Let's say that by the end of the 4th month one of the participants has not contributed to the management company, what then? In this case, his share passes to the Company. There is no other liability for failure to make a contribution. The remaining founders must decide what they will do - distribute the freed share among themselves in proportion to their contributions or sell it to third parties. In any case, this must be done within a year.

Free consultation on LLC registration

Where is the authorized capital kept?

Based on the original essence of the concept of a management company, there is no need to store the authorized capital in any special way.

If these are funds, then they are deposited into the cash register or into a current account and stored there until they are spent.

If the authorized capital is contributed by property, then the organization must ensure its safety, like all other material assets.

Capital assets in the form of intangible assets, namely intellectual property rights, are used for the further activities of the enterprise and to derive profit from them.

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Is it possible to spend the authorized capital

Many novice entrepreneurs think that authorized capital is an emergency reserve that should always be in a bank account. This is wrong. Money should work, and not lie dead weight.

After the owners have deposited the capital into the cash register or into the current account, it can be spent. Authorized capital is an initial investment in business development. This money can be used for any needs of the organization. For example:

• Purchase of materials, equipment, goods;
• Payment for rent of premises;
• Salaries of hired employees;
• Payment for services of third parties;
• Other expenses associated with the activities of the company.

Basic Concepts

Before considering the stages of forming the authorized capital of any company, we suggest you understand what this fund is.

Authorized capital is the minimum amount of money that must be in a special bank account of an organization for its normal functioning.

This financial indicator can be viewed from several angles, or rather, from legal and economic angles.

From a legal point of view, authorized capital is a certain amount of money that is used to repay loans. Its value reflects the solvency of the company.

From an economic point of view , this is the minimum amount of funds required to start the operation of an enterprise.

It should be remembered that the authorized capital can be used in the following cases:

• Payment of current expenses. These include costs associated with the purchase of materials for production at the beginning of the enterprise’s working life;
• Payment of expenses for registering an enterprise;
• Rent for industrial and office premises;
• Material remuneration for company employees;
• Payment of company loans.

Depending on the type of organization, the authorized capital may have different names.

How does the actual value of a share differ from the nominal value?

When initially investing funds in the authorized capital, the nominal value of the share . For example, the authorized capital of an LLC is 10 thousand rubles. The two founders invested their funds in equal shares. The cost of each participant's nominal share is 5 thousand rubles.

As a result of commercial activities, the company receives profit, which is not distributed among the founders, but is invested in development. This money is used to purchase goods and materials. All this data is reflected in the company's balance sheet.

The actual value of the share will be equal to the net asset value on the balance sheet.

If the company is profitable, the actual value of the share will be greater than the nominal value.

In unprofitable operations, the actual value of the share may be negative. In this case, a participant who wishes to leave the founders of the organization will not receive even the nominal amount of his investments.

Results

The authorized capital can be formed from the money of the founders, their property or accounts receivable.
Its accounting is kept on account 80. Tax accounting is significantly simplified due to the fact that the management company generally does not generate taxable income and is not subject to VAT. Until the management company is formed, business owners do not have the right to distribute profits. The size of the charter capital should not exceed the value of the company's net assets. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

Changes to the Authorized Capital

As the business and activities of the company develop, situations arise when it is necessary to increase or decrease the size of the authorized capital. In this case, the shares of the owners may remain in the same proportion.

If only one of the participants contributes additional funds to increase the authorized capital, then his share becomes larger, and the shares of the other founders decrease.

Increase in capital

Cases when it is necessary to increase the authorized capital of an organization:

• The arrival of a new investor in the company who is ready to invest additional funds in an existing company;
• The organization has decided to engage in another type of activity for which the law requires a larger authorized capital;
• To create a positive image of the company. The size of the capital is an important indicator of the stability and size of the business. An authorized capital of 10 thousand rubles can scare away serious partners or cause a refusal of credit financing.

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Decrease in capital

Cases when it is necessary to reduce the authorized capital:

• If at the end of the year the company incurred a loss. The organization's net assets according to the balance sheet turned out to be less than the authorized capital.
• When one founder leaves the company. The company is obliged to pay the actual value of its share. In this case, net assets will become less than the authorized capital.

If the company (LLC) does not make changes to the tax inspectorate to reduce the authorized capital within 2 years, then it will be liquidated (Law No. 14-FZ of 02/08/1998, Article 30, paragraph 4).

A company whose capital is minimal, that is, 10 thousand rubles, cannot reduce it.

How to formalize a change in authorized capital

1. A protocol is drawn up with a decision to change the authorized capital at the general meeting of founders;
2. An application is filled out in form P13001;
3. A new draft of the Charter is being drawn up;
4. Documents are certified by a notary;
5. A state duty of 800 rubles is paid;
6. Documents are submitted to the tax office.

Share in the authorized capital and its distribution

When forming a management company, one of the main concepts is the share - the amount of the founder’s contribution.
Depending on it, the influence of one or another founder on decision-making regarding the work and development of the enterprise is determined. Essentially, the size of the stake influences who has control over the firm's operations. For example, if Ivanov I.I. contributed 8,000 rubles to the Criminal Code, and Petrov S.S. – 2,000, then Ivanov I.I. has more rights to dispose of property, and his share will be greater than Petrova’s.

If the founders contribute equal amounts, it is desirable that the size of the authorized capital be a multiple of their number. This will help avoid shares in the form of an irrational number and simplify calculations for contributing funds to the authorized capital.

For example, the capital of a company is 10,000, and there are 3 founders and they all have equal shares, which are equal to 1/3, which equals 3.333...(3). In some cases this can lead to calculation problems. It is better if, if there are three founders, the amount of the authorized capital will be 12,000 rubles.

This circumstance may be useful in the event of alienation of a share and calculations of its cash equivalent.

Authorized capital upon liquidation of the company

Liquidation of an LLC is a complex process that occurs in several stages.

Before liquidation, the company must pay off all debts and obligations to:

• hired employees;
• tax inspectorate and extra-budgetary funds for taxes and contributions;
• banks for loans, loans;
• partners, creditors, and other organizations.

Only after all debt payments are made, the authorized capital is distributed among the founders in proportion to their shares. That is, each owner will receive the actual value of the share, which is not equal to the initial contribution to the authorized capital.

Peculiarities

The main requirement of the law is the obligation of any commercial enterprise, when opening it, to form capital. Regulatory acts also regulate the issue regarding the size and procedure for increasing or decreasing the capital of the company.

At the legislative level there are different concepts, namely:

• share capital should be formed by partnerships;
• authorized capital - all companies;
• The authorized capital is formed at enterprises belonging to municipal and state ownership.

Owners of monetary or material assets, after contributing them to the authorized capital, in return receive rights to a registered legal entity. The profit received in the future should be distributed evenly among all owners of the enterprise.

Answers on questions

How to find out the size of the authorized capital of any organization?

The authorized capital of the LLC and the distribution of its shares between the owners of the organization can be seen:

1. in the Unified State Register of Legal Entities;
2. in open sources, for example on the website www.rusprofile.ru

You must indicate the TIN, OGRN or name of the organization. You will be provided with information about the management company and a lot of other useful information.

Does an individual entrepreneur have an authorized capital?

No, only organizations have authorized capital, since it is a guarantor of payment of obligations to counterparties and partners.

An individual entrepreneur is liable for obligations with all his personal property. Therefore, it does not have a Criminal Code as such.

Concept and functions

Authorized capital
is the amount of LLC assets used when opening a company. It must be recorded in the charter, which is certified by a notary. Capital is formed from money, as well as from movable and immovable property. According to the law, after the third year of financial activity, the sum of all funds, both monetary and material, that form the LLC’s management company must exceed or be equal to the sum of all assets of the enterprise. If the amount of gross assets is less, then the size of the authorized capital must be reduced.

If this value is lower than the minimum prescribed by law for a given type of enterprise, then the organization is obliged to declare its liquidation altogether.

There is an opinion that the authorized capital cannot be used for any purposes and is an untouchable cash reserve. In reality, this is not the case at all. As already noted, authorized capital is the basis for starting an enterprise and its activities. Thus, you can spend your authorized capital on:

• rental of premises or their construction;
• salary payments;
• purchase of equipment;
• purchase of materials.

The authorized capital of the LLC performs the following functions:

1. It is a source of formation of fixed assets for the further activities of the enterprise. With its help, basic equipment is purchased, premises are rented, and all materials necessary for production are purchased.
2. It is a guarantee of observance of the rights of creditors under the debt obligations of the LLC. That is, in case of non-compliance with debt obligations, the creditor may demand repayment of the loan from the authorized capital of the organization.