Contract law. Articles of Association (most important)

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Contract law. Articles of Association (most important)

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67. FOUNDING AGREEMENT

Memorandum of association - an agreement of the parties on the creation and operation of a legal entity, expressing the will of all the parties concluding it.

Signs of a memorandum of association:

1) the memorandum of association is aimed at creating collective entities - legal entities;

2) the constituent agreement establishes from the moment of registration of a legal entity a legal relationship not only between those who signed it, but also each of them with the created entity itself;

3) the contributions of the participants (founders) are defined in the memorandum of association.

Parties to the memorandum of association - founders and (or) participants. Founder - a person who participates in the activities of his property and is directly involved in the management of a legal entity. Participant - a person participating in the activity only with his property. The founder and participant may or may not be the same (for example, associate members of an agricultural cooperative).

Subject of the memorandum of association - relations on the creation of a legal entity.

Essential terms of the contract:

1) determination of the procedure for joint activities to create a legal entity;

2) the conditions for the transfer to the legal entity by the founders of their property and participation in its activities;

3) conditions and procedure for the distribution of profits and losses among the participants, management of the activities of a legal entity, withdrawal of founders (participants) from its composition;

4) conditions on the size and composition of the partners’ share capital, the size and procedure for changing the shares of each of the participants in the share capital, the amount, composition, terms and procedure for making contributions by participants, on the responsibility of participants for violation of the obligation to make contributions.

Form of contract - written, with obligatory state registration.

Rights of the parties to the memorandum of association:

a) the right to participate in the management of the affairs of the relevant legal entity;

b) the right to receive information about its activities and get acquainted with the accounting books and other documentation in the manner prescribed by the constituent documents;

c) the right to participate in the distribution of profits, to receive, in the event of liquidation of a business partnership or company, part of the property remaining after settlements with creditors, or its value.

Responsibilities of the parties to the founding agreement:

a) making contributions in the manner, amount, methods and within the time limits stipulated by the constituent documents;

b) non-disclosure of confidential information related to the activities of a legal entity.

Author: Rezepova V.E.

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