The charter of a company, be it a limited liability company (LLC), is an important document that forms the basis of the operation and management of the enterprise.
This document defines the rules and obligations of the owners and management of the company, regulates internal relations, and constitutes a real constitutional contract of the organization.
What is the company charter?
The company’s charter is a legal document that formalizes the basic rules of operation and management of the enterprise. It contains information about the structure of the company, the rights and obligations of shareholders or participants, the procedure for decision-making, the procedures for the sale of ownership shares, and much more.
Why do you need a statute of an LLC?
The statute is required to:
- Structure the company’s activities. The charter defines the hierarchy of internal management, the role of management, and shareholders.
- Ensure legal orderliness. It ensures the legality of the company’s activities and compliance with laws and regulations.
- To protect the interests of shareholders/participants. The charter establishes the rights and obligations of the owners, protects their interests, and helps resolve conflicts.
- Define internal management procedures. The articles of association determine how decisions are made, what are the procedures for changing the company’s structure, etc.
- Attract investors. Investors, particularly institutional investors, often require a clear charter as a guarantee of transparency and protection of their interests.
Is it possible to work without a charter?
Yes, you can, but it is not recommended, especially for larger companies. Without a charter, there is more uncertainty and opportunities for conflict between shareholders or participants.
In addition, the company may become the subject of offenses or face problems with fiscal authorities.
How to competently develop the charter of an LLC
- Consultation with legal experts. Legal professionals will help you design a charter that meets your needs and the requirements of the law.
- Defining the structure of the company. The charter should clearly define the structure, including the rights and obligations of shareholders/participants, management bodies, etc.
- Indication of procedures. The articles of association should contain procedures for decision-making, distribution of profits, sale of shares, etc.
- Compliance with legislation. The charter must comply with the laws and regulations that apply to your type of business.
- Ensuring transparency. It is important that the charter is clear and accessible to all company owners.
The main sections of the statute of the LLC
The charter of a limited liability company (LLC) usually consists of different sections, where each section contains specific provisions and defines different aspects of the company’s operation.
The main sections of the LLC charter may include the following:
- General provisions (Subject and title). In this section, the name of the company, its location, and the object of the LLC’s activity are usually indicated.
- Legal status and basis of activity. The legal status of the company, its founders, as well as the general principles of its activity are described.
- Authorized capital and participants’ shares. This section defines the amount of the authorized capital of the LLC, the size and number of participants’ shares, their rights, and obligations.
- Management and decision-making bodies of the company. The structure and functions of governing bodies are described, such as general meetings of participants, boards, auditors, etc. The procedure for decision-making and voting is also indicated here.
- Distribution of profit and loss. The method of profit distribution and resolution of issues regarding the company’s losses among the participants is determined.
- Procedure for leaving the company. The procedure for the sale or transfer of shares is described, as well as the procedure for the withdrawal of participants from the LLC.
- Transfer of shares and limitation of rights of first redemption. The conditions and procedures for the transfer of shares and restrictions on the rights of first redemption, which may be applied when selling shares, are specified.
- Audit and financial control. The procedure for auditing and financial control in the company is determined.
- The procedure for changes to the charter. Describes the procedure and requirements for making changes to the company’s charter.
- Liquidation of the company. The conditions and procedures for the liquidation of the LLC are indicated, including the distribution of property and the resolution of liabilities.
These sections can be supplemented with other sections or applications depending on the specifics of the business and the needs of the company.
It is important that the charter is written clearly and meets the requirements of the law, as well as reflects the interests and needs of the members of the LLC.
Our legal company will help to make the statute of the LLC quickly and reliably
If you are not sure how to correctly draft the articles of association of your company (LLC), our law firm is ready to provide professional assistance.
We have experience in drafting statutes for various types of business and guarantee the speed and reliability of resolving your issue.
Contact us for consultation and support in all matters related to the creation and development of your company’s charter.
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