The Articles of Association serve as the foundational document governing a Limited Liability Company (LLC). It's crucial to incorporate provisions that fully leverage legal opportunities rather than impose limitations. A viable and current sample of Articles of Association can often be found online—if you're lucky enough to find one that isn’t outdated.
The law requires the Articles of Association for every LLC to include certain key provisions:
- The LLC’s name, both in full and its abbreviation, if it exists.
- Detailed information about the company's management structures, outlining their responsibilities and decision-making processes.
- The procedures for admittance to and withdrawal from the LLC.
- The registration of the LLC’s shares in the shares accounting system maintained by the Central Securities Depository (hereafter – the share accounting system).
Regarding the last point, it should be noted that we haven't yet encountered anyone who has actually registered something, but such a provision must be included in the Articles of Association. At first glance, the four points mentioned might seem simple, but this is misleading. Detailed delineation of competencies, decision-making processes, and the procedures for entry and exit, all while ensuring nothing contradicts the law, is not as straightforward as it might appear.
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What to keep in mind when preparing LLC Articles of Association that the law might not advise?
It's not necessary to list the members or the address in the LLC’s Articles of Association. Thus, if the LLC’s address changes, there is no need to amend the articles. The same applies to the members; however, if members change, the Articles must be updated since they are signed by the members. While not legally required, discrepancies in member information can cause practical issues in banks and other institutions. It’s more efficient to synchronize all information at once and not revisit the issue.
In the Articles of Association, it is not necessary to specify the charter capital amount or the distribution of shares. This allows for the articles not to be amended when there are changes in the capital. However, the protocol or decision about the formation must include this information, and if the capital is not formed in cash but in assets, it should be specified immediately. Although this isn't mandatory since there is a six-month grace period from the company's registration to form the capital.
Is it mandatory for the Articles of Association of an LLC to be notarized, and who and when should notarize it? Yes, currently it is required. Legislation has changed frequently over time. There was a period when articles were not notarized at initial registration, only when changes were made. Now, the articles are notarized both at the creation of the LLC and when amendments are made. The notary public certifies the signatures on the articles, but there is no point in bringing an already signed document. All signatures must be made in the presence of the notary. If any member cannot be present at the notary, they must provide a notarized power of attorney for an authorized person who will sign the Articles of Association on their behalf (and when making changes, sign many other documents as well).
Is there a cost saving by using a model set of Articles of Association? No, there isn't. When creating an LLC, if the articles are notarized, the protocol or decision is not. However, if the articles are standard, then the protocol or decision must be notarized. The only potential saving is on paper.
If you are looking to establish an LLC or need to make changes in the existing company registration in the State Register, consider working with us. With us, the process is truly quick!
