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Regular analysis of the charter: is it needed?

 “US Invest” LLC lawyer – Uladzislau Babitski

The charter is the main local document of the participants (founders) of a business company.

The practice of working with the charters of business companies shows that owners and other interested parties, unfortunately, pay insufficient attention to the main document of the company both at the stage of its development and approval, and in the future, when the company carries out its activities.

 About the Charter of the organization remember when there is a corporate conflict.

The Belarusian legislation on business companies contains a sufficient number of peremptory norms that cannot be changed in the charter or other local regulatory document of the company, there are also dispositive rules that give the participants the right to choose.

The Law "On Business Companies" contains an extensive list of information that should be in the charter of the LLC. For example, name and location of company; list of participants and the size of the share of each of them in the authorized capital; size and composition of contributions to the authorized capital; the procedure for leaving the LLC, transferring the participant’s share to another person, and decision-making by the management bodies.

The organization’s charter is also remembered if there is a need to determine whether the charter is in the interests of the founders. Thus, a large number of dispositive norms in the Law make it possible to fix other provisions in the charter that differ from the provisions of the Law. And that means adapting the charter to the requests of founders.

When creating a company, founders do not pay enough attention to some situations, as it is not yet known whether the business will be successful, the risk of corporate conflict is low. However, the problem is that the participants do not revise, do not adjust the original norms of the charters in the future. We are not talking about obligatory changes, we are talking about re-reading of the charter by the participant (shareholder) himself or with the help of a lawyer.

The initial priorities, operating factors and initial agreements with each other may change over time, and the text of your charter will remain the same.

When drafting and adjusting the charter, a company should pay attention to the following groups of norms of the document:

- distribution of votes and decision-making by the General meeting of participants;

- informing participants;

- distribution of profits;

- alienation of the share in the authorized capital;

- power of the executive body (director, manager);

- transfer of shares by inheritance, as well as issues relating to the appointment of the Manager of the shares for the period of consideration of issues of inheritance.

We also recommend paying attention to the procedure for withdrawal. This procedure contains invariable (mandatory) legislation rules, but the order of work of such rules should be known in advance, as well as, if necessary, to prepare in advance a protective mechanism for the participant or the company.

Participants (shareholders) may also support the provisions of the charter with other local acts, for example, shareholders’ agreements, agreements on the realization of the rights of LLC participants, and other partnership agreements.

Taking into account the temporary changes in business approaches, for the reliability of the company, reducing the risks of corporate conflicts, maintaining good relations with business partners (co-founders), it is considered absolutely normal, and sometimes necessary, to analyze the current charter and the local acts attached to it. Moreover, development of a company and the prevailing legal practice should also be considered.

Regular analysis of the charter: who needs it? First of all it is necessary for founders, participants of LLC, ALC, shareholders of CJSC.

We recommend using corporate documents for your benefit, and not just as a mandatory element for company registration.

09.10.2019

"US Invest" law company provides services for opening and maintaining a business in the Republic of Belarus, including services for the preparation of documents and support for the registration of changes and additions to the charters of LLC.

More about the services of "US Invest":

- opening a business in the Republic of Belarus;

- legal support of business activity in the Republic of Belarus.