LLC vs Private Joint Stock Co

Posted on Posted in Commercial Law, Incoporating Papers
  1. The members of a private joint stock company must not be less than three but the members of a LLC must not be less than two.
  2. At the time of formation of the private joint stock and LLC company, the share capital of the companies must not be less than one million Rials.
  3. As a pre-requirement for formation of private joint stock companies, the promoters

must deposit at least 35 per cent of the capital of the company in a bank and present a                 declaration proving it and the other 65 per cent must be subscribed by shareholders, but in LLC the whole capital must be given to the managing director and he/she shall confirm its reception and there is no need for a bank declaration.

  1. The selection of inspector or inspectors is mandatory in a private joint stock company while there is not such a necessity in LLC.
  2. Management duration is at most two years in a private joint stock company and it is extendable while there is no limitation for management in LLC and it is possible to determine a time limit in the articles of association for a LLC manager.
  3. Selecting a newspaper with a widespread circulation for publishing all subsequent notices and declarations of a private joint stock company is mandatory while there is not such a necessity for a LLC.
  4. General meetings of a private joint stock company shall be managed by a directorate composed of a chairman, secretary, and two supervisors while such meetings are held in a LLC by the Board of supervisors only when there are at least 12 members in the company.
  5. There are no shares in a LLC and members are liable for the payment of the debts of the company up to their own capital in the company.
  6. The managers of private joint stock companies shall be among the shareholders of the company but the managers of a LLC can be selected from members or non-members.
  7. Profits in a private joint stock company shall be distributed according to the shares of shareholders while in a LLC, profit distribution is based on the amount of capital which is brought by each member. The articles of association of a LLC can determine a different arrangement for profit distribution.
  8. Voting power is based on the number of shares in a private joint stock company while in a LLC is due to the amount of each member`s capital.
  9. Non-cash contributions shall be appraised by the members of a LLC while such an appraisal shall be carried out by the experts of the Ministry of Justice in a private joint stock company.

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