How to draw up the charter of LLC
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The charter is the main document in the establishment of a limited liability company (LLC). Based on this document, the company will carry out its activities, therefore, the preparation of the charter should take full responsibility. According to the new requirements of the law, when preparing the charter of an LLC, a significant number of changes must be taken into account.
You will need
Civil Code, standard form of the LLC charter
Instruction manual
1
Decide how many founders the limited liability company will have. The charter of a company with one founder will differ from a document with two or more founders.
2
If you have chosen a company created by one founder, then keep in mind that the founder makes decisions on issues within the competence of the general meeting personally and draws up in writing. There is no need to hold a general meeting and follow the formal procedures associated with it.
3
When preparing a charter with a sole founder, consider the address of the company. Often when creating an enterprise there is a need to register a company at a home address. This should be the address of the sole executive body, i.e. CEO, not the founder.
4
Specify the term of office of the leader. You will avoid procrastination and unnecessary bureaucracy if you specify the term of office of 5 years in the charter or indefinitely.
5
When specifying the sole founder in the charter, you can enter both an individual and a legal entity, including with several participants. At the same time, another company with one participant cannot completely own the company.
6
If the charter provides for two founders, indicate in the document the provisions regarding the interaction between the participants. According to existing standards, in particular, the possibility of a free exit of a participant from the company should be expressly provided for in the charter.
7
Indicate in the charter the protective mechanisms that do not allow a situation in which the partner’s share may go “to the side”. The opposite strategy involves creating a charter that is as open as possible to investors.
8
Provide in the charter for the possibility of alienating the share of the participant without involving a notary. This will help reduce the costs of notarizing a transaction.
9
Register in the charter the possibility of exercising the pre-emptive right, that is, the participant’s right to redeem the partner’s share as a matter of priority. Provide a criterion for the price of alienation of shares in the exercise of pre-emptive rights: at face value or at the value of net assets. Separately indicate the possibility of transferring the share to third parties by inheritance, by donation, etc. Be sure to write down in the document the terms and procedure for paying the participant the value of the alienated share.
10
Other provisions of the charter do not depend on the number of founders. Take the main sections and provisions from the standard model charter provided for a limited liability company, creatively reworking them for your situation.
