LLC Digest: List of things to do before the New Corporate Year
LLCs are entitled to choose when they should bring their charter in line with LLC Law within the transition period (until June 17, 2019), but before entering the “New Corporate Year”, it is also necessary to handle any other pending business.
First, it is necessary to recall LLC head and Audit Commission (if appointed). Second, dividends for previous years (up to 2017 inclusive) should be paid to LLC shareholders. Third, what should be done further with the reserve fund (if any) should be determined.
It will then possible to plan for a bright future. It is worth starting with the changes planned for LLC regardless of LLC Law such as, for example, change of shareholders, change of share capital , change of office (location), etc.
We then recommend determining whether the new procedures introduced by LLC Law such as, for example, converting debt into share capital (debt-to-equity swap), establishing a Supervisory board with former members of Audit Commission or other persons will be applicable.
It will then be necessary to determine whether it is worth for a specific LLC to use its “charter discretion” in matters that may be regulated in its charter differently than in LLC Law, decide what these matters will be and how to regulate them differently in the charter. For example, the time period for making an additional contribution should be specified in the charter if it is expected that more time will be required to make this contribution than is provided for in LLC Law, i.e. if more than one year from the date on which the decision for contribution is adopted will be necessary to make the contribution.
And finally, we recommend thinking carefully about optional charter provisions that may be essential for the regular operation of some LLCs such as, for example, additional conditions under which dividends cannot be paid out, additional cases of convening of general meetings, decisions on matters for which more votes than simple majority of all members of Board of directors are required for their adoption, etc.
We are always happy to share our experience and recommendations on resolution of corporate issues.
