Question 2: What do you mean by a closed company?
According to the way of share transfer, companies can be divided into closed companies and open companies.
Closed company, also known as unlisted company, private company or non-public offering company. A closed company refers to a company whose shares are all held by the shareholders who set up the company according to the articles of association, and the transfer of shares is strictly restricted and cannot be freely transferred in the securities market. Its characteristic is that the company's shares can only be issued to a specific range of shareholders, but not to the public on the stock exchange. Shares or stocks owned by shareholders can be conditionally transferred, but they cannot be publicly listed, traded or circulated on the stock exchange.
A company can be open or closed, which is reflected in its articles of association and name. An open company has the right to issue shares by public subscription, and sell these shares freely according to the federal law and other legal documents of the Russian Federation. The number of shareholders of the open company is not limited. A closed-end company only distributes shares among the promoters of the company or within the scope of other personnel designated in advance, and has no right to publicly subscribe for and sell its own shares, and the number of shareholders shall not exceed 50. If the number of shareholders of a closed company exceeds the limit specified in this paragraph, it shall be transformed into an open company within one year, otherwise it shall be liquidated in accordance with legal procedures.
The difference between closed company and open company
A closed limited company refers to a company whose shares are unlisted and only held by a few people with limited liability, also known as "unlisted company" and "unlisted company". Generally for small and medium-sized enterprises. The basic differences between it and the open limited company are: the members and management of the closed limited company are more convenient than the open limited company; A closed limited company shall not issue bearer shares or bearer securities, nor shall it issue an invitation to the public to subscribe for its shares or bonds; The number of members of a closed limited company is restricted by law, and the transfer of shares is also restricted, so there is no need to publish annual accounts.
Characteristics of closed companies
1. The right of shareholders to transfer shares is restricted.
2. The number of shareholders shall not exceed 50.
3. It is forbidden for companies to invite the public to buy stocks or corporate bonds.
4. It is unnecessary to submit the audited financial report to the Companies Registry every year.