Management in LLC
The Civil Code of the Russian Federation directly provides for both the possibility of establishing an LLC by one founder, and the admissibility of the operation of an LLC, initially founded by several persons, later with one participant.
This can happen either as a result of the departure of the remaining founders from the LLC over time, or in the event of one person acquiring 100% of the shares of the LLC (Part 2 of Article 88 of the Civil Code of the Russian Federation). If in business practice the term “founder of an LLC” is usually used, the legislator prefers to use the term “member of an LLC”. From a legal point of view, these terms are almost identical: the founder is the participant who created the LLC. We will not take this minor difference into account below.
Management in an LLC can be:
- Three-level, including:
- general meeting of participants (GMS);
- board of directors (BoD);
- one or more executive management bodies.
- Two-level, without the formation of diabetes. For an LLC with 1 participant, having a board of directors in the management system does not make practical sense; in this case, a two-level management system is used.
Executive power in an LLC can be organized in 3 ways:
- Sole executive body. In practice, this body/position is most often referred to as “general director,” although other names are also found.
- A sole executive body together with a collegial executive body (usually called “board” or “directorate”).
- A management company is another legal entity that performs the functions of an executive body.
If there is a match founder and director of the LLC in one person Usually the 1st option for organizing the executive body is used.
The main management body of the LLC is the General Management Board; it makes decisions on the most important issues of the LLC’s functioning. The competence of the OSU is determined by Art. 33 of the Law “On Limited Liability Companies” dated February 8, 1998 No. 14-FZ (hereinafter referred to as Law No. 14-FZ). A number of issues fall within the exclusive competence of the OSU, i.e. their resolution cannot be transferred to another body of the LLC by the company’s charter. If there is only one participant in the LLC, then he makes decisions on behalf of the OSU individually. Such decisions must be made in writing. In this case, a number of provisions defined by Law No. 14-FZ in relation to OSU do not apply (Article 39 of Law No. 14-FZ).
Can a founder be a director of an LLC?
A direct and positive answer to this question is contained in Part 2 of Art. 88 Civil Code. Note that when the director and founder are one person, the management system in the LLC does not become single-level. Although all decisions at any levels of management in such an LLC are made by the same person, from a legal point of view this is a two-level management system. The issue of delimitation of competence is resolved as follows:
- the powers of the participant are determined by the charter of the LLC;
- all other issues are resolved by the General Director on a residual basis (if there is no board of directors in the management system).
For an LLC with one participant (aka director), the rules of Law No. 14-FZ on interested-party transactions and major transactions do not apply (part 1, paragraph 5, article 45 and part 1, paragraph 9, article 46 of the said law).
In an LLC with a single participant, there is no conflict of interest; it is easy to administer and, from a management point of view, resembles an individual entrepreneur. However, legally there are significant differences between an individual entrepreneur and such an LLC.
Founder and CEO rolled into one: employment contract
One of the main issues that arise in practical life is the issue of an employment contract (EA) with the director. The features of drawing up a TD in this case are discussed in the article “Employment contract with the general director of an LLC (sample).” Chapter 43 of the Labor Code of the Russian Federation (LC) is devoted to issues of employment contracts with the director (as well as members of the board). However, in the event of a coincidence between an LLC participant and its director, its regulation does not apply (Part 2, Article 273 of the Labor Code). At the same time, the director of the LLC is not included in the list of persons who are not subject to the regulation of the Labor Code and with whom an employment contract is not concluded (Part 8 of Article 11 of the Labor Code). There is some legal uncertainty.
An additional complexity is the following: if an LLC enters into a TD with the director, then who signs it on behalf of the employer?
It turns out to be a kind of legal paradox: the TD must be signed by the same individual both on behalf of the employee and on behalf of the employer. Note that in this case, an individual is in a different status: in one case, he acts on his own behalf (employee), and in the other, he is a representative of a legal entity. Note that the prohibition on concluding transactions for a representative in relation to himself as an individual is contained in clause 3 of Art. 182 of the Civil Code. But the regulation of the Civil Code does not apply to labor relations, and there are no such prohibitions in the Labor Code.
Law enforcement practice: TD with a director in an LLC with one participant (aka director)
As a result, different law enforcement officials expressed different views on this subject and formed different law enforcement practices in their activities. Let's consider the points of view expressed.
- Rostrud, in letter No. 177-6-1 dated March 6, 2013, stated that an employment contract with the director in this case is not concluded.
- On the website onlineinspektsiya.rf (information portal of Rostrud) on March 10, 2015, the answer was given that the TD (and no other agreement) in such a situation is not concluded, the director’s salary is not accrued, and contributions to the Pension Fund and Social Insurance Fund are not made. But on March 17, 2016, the opposite answer was given to the same question: the TD is concluded, the salary is accrued.
- The Ministry of Health and Social Development believes that in this case, labor relations arise regardless of whether the TD is concluded or not (order No. 428n dated June 8, 2010). In this case, the director is subject to compulsory social insurance. Let us note that this department does not currently exist, and its legal successor, the Ministry of Labor, has not given an official explanation (there are only the above-mentioned consultations from Rostrud, a service subordinate to the Ministry of Labor and Social Protection).
- The Ministry of Finance believes that in this situation the TD is not concluded (letters dated 02/19/2015 No. 03-11-06/2/7790, dated 10/17/2014 No. 03-11-11/52558). At the same time, accrued wages cannot be included in expenses that reduce the tax base. The first of these letters is applicable to organizations that are on the simplified taxation system (simplified taxation system), the second - for enterprises paying the Unified Tax System (Unified Tax System) (agricultural tax).
- The judicial authorities are of the opinion that in such a situation, labor relations arise (resolution of the FAS ZSO dated November 9, 2010 in case No. A45-6721/2010 and a number of other precedents). The important ruling of the Supreme Court of the Russian Federation dated February 28, 2014 No. 41-KG13-37 concluded that such labor relations are regulated by the general provisions of the Labor Code (remember that Chapter 43 of the Labor Code does not regulate them). This point of view is confirmed in paragraph 1 of the Supreme Arbitration Court Resolution No. 21 dated June 2, 2015). A number of court decisions concluded that labor decisions arise on the basis of the decision of a single participant, and registration of a TD is not required (Determination of the Supreme Arbitration Court of June 5, 2009 No. VAS-6362/09).
Founder and director are one person: risks
What should an entrepreneur do in such a situation? There is no clear answer. But we believe that the risk of adverse consequences is much higher in the absence of a TD with the director. Rostrud, which is a control body in the labor sphere and is authorized to conduct inspections and impose administrative penalties, as mentioned above, often changes its point of view on this issue.
The only founder is the general director in 2 companies
The legislation does not contain prohibitions on the sole LLC participant holding the position of director in 2 or more such LLCs. But only one AP in this case is the main one. In other LLCs, the director must draw up a TD on part-time work. All part-time contracts are subject to the rules of Chapter. 44 of the Labor Code, including the norm on the duration of the working day not exceeding 4 hours (Article 284 of the Labor Code) and the norm on the calculation of wages in proportion to the established working hours (Article 285 of the Labor Code).
IMPORTANT! The rule on the need for permission to work part-time from the higher management body of the LLC, contained in Art. 276 of the Labor Code does not apply to the founding director, since it is in Ch. 43 of the Labor Code, and this chapter does not apply to this situation.
Please note that a large number of simultaneously held director positions is a reason for inspection by the tax inspectorate. Thus, one of the criteria for the possible unreliability of information included in the Unified State Register of Legal Entities is the combination of more than 5 such positions in different organizations by an individual holding a director position (letter of the Federal Tax Service dated August 3, 2016 No. GD-4-14/14126@).
An LLC with one participant (aka director) is a very common and convenient practical instrument of entrepreneurship in business life. To avoid problems with government regulatory authorities, we recommend (for now) concluding an employment contract with the director of such an LLC. Before creating a TD with the director, you need to formalize a written decision of the sole participant of the LLC on his appointment.
Question from Clerk.Ru reader Evgenia (Vladivostok)
Tell me, if the individual entrepreneur (UTII) and LLC (USNO) have the same founder, and in the LLC he is also the director, can the LLC sell goods to the individual entrepreneur? In this case, can the tax authorities classify them as interdependent persons and recognize the transactions as invalid?
First of all, I note that only a court can declare a transaction invalid. Tax authorities are not vested with such powers.
By virtue of the provisions of Art. 168 of the Civil Code of the Russian Federation, a transaction that does not comply with the requirements of the law or other legal acts is void unless the law establishes that such a transaction is contestable or does not provide for other consequences of the violation.
According to paragraph 3 of Art. 182 of the Civil Code of the Russian Federation, a representative cannot make transactions on behalf of the represented person in relation to himself personally. Unambiguously answer the question whether the norm of paragraph 3 of Art. is subject to application in the case under consideration. 182 of the Civil Code of the Russian Federation, unfortunately, is not possible. The reason is that arbitration practice in this regard is very contradictory.
Thus, the FAS of the East Siberian District in Resolution No. A78-5281/06-F02-3598/08, A78-5281/06-F02-3779/08 dated August 13, 2008 declared the lease agreement void on the grounds that on behalf of the lessor and On behalf of the tenant, the agreement was signed by the same person, who was the director of the lessor organization and the individual entrepreneur - the tenant. According to the court, such a situation violates the provisions of paragraph 3 of Art. 182 of the Civil Code of the Russian Federation, which prohibits a representative from making transactions on behalf of the represented person in relation to himself personally.
However, there is another position. The Federal Antimonopoly Service of the Moscow District, in Resolution No. KA-A40/7291-09 dated August 6, 2009, rejected the tax authority’s argument about the nullity of the supply agreement due to the fact that the agreement was signed on behalf of both parties by the same individual, with reference to clause 1 of Art. 53 of the Civil Code of the Russian Federation, by virtue of which the bodies of a legal entity cannot be considered as independent subjects of civil legal relations and, therefore, act as representatives of a legal entity in civil legal relations.
Similar conclusions are also contained in the Resolutions of the FAS of the Volga District dated 07/04/2006 in case N A55-31646/05-34, the Ninth Arbitration Court of Appeal dated 02/22/2008 N 09AP-1139/2008-GK, the FAS North-Western District dated 03/26/2007 in case No. A13-5001/2006-24.
Thus, most courts still agree that a person performing the functions of the sole executive body in an organization cannot be considered as a representative of this legal entity, and, accordingly, paragraph 3 of Art. 182 of the Civil Code of the Russian Federation cannot be applied to controversial transactions. At the same time, you should keep in mind the possibility of disputes with the tax inspectorate, which can only be resolved in court.
In addition, you need to take into account the possibility of a dispute with tax authorities regarding the compliance of the contract price with the level of market prices. The fact is that tax authorities can check the correctness of the application of prices for transactions between related parties (clause 1, clause 2, article 40 of the Tax Code of the Russian Federation). If the prices of goods applied by the parties to the transaction deviate upward or downward by more than 20 percent from the market price of identical (similar) goods, the tax authority has the right to make a reasoned decision on the additional assessment of tax and penalties calculated in this way, as if the results of this transaction were assessed based on the application of market prices for the relevant goods, works or services (clause 3 of Article 40 of the Tax Code of the Russian Federation).
Interdependent persons for tax purposes are individuals and (or) organizations, the relationships between which may influence the conditions or economic results of their activities or the activities of the persons they represent (paragraph 1, clause 1, article 20 of the Tax Code of the Russian Federation).
Clause 1 of Art. 20 of the Tax Code of the Russian Federation provides a list of grounds for recognizing organizations and (or) individuals as interdependent by force of law.
In addition, persons may be recognized as interdependent by a court decision on other grounds, if the relationship between these persons may affect the results of transactions for the sale of goods, works, services (clause 2 of Article 20 of the Code).
Establishing the fact of interdependence of persons due to circumstances other than those listed in paragraph 1 of Art. 20 of the Code (as in this situation), is carried out by the court with the participation of the tax authority and the taxpayer during the consideration of the case concerning the validity of the decision to assess additional taxes and penalties (clause 1 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated March 17, 2003 N 71) .
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The founder of both organizations is the same person. He is also the CEO of both organizations. The place of registration of organizations and the place of residence of the founder is the Russian Federation.
Organizations other than the simplified tax system do not apply other special tax regimes. It is planned to conclude loan agreements between organizations, or a loan agreement will be concluded between organization 1 and the founder (borrower), and then with the founder (lender) and organization 2.
Loans are planned to be issued in the amount of 4-5 million rubles.
Based on what rate is income (expense) under loan agreements recognized in the tax accounting of organizations? What minimum loan interest rate should be established in contracts so that organizations do not have tax risks?
What tax consequences and risks do an individual face under loan agreements (including interest-free loan agreements)?
Tax risks for interest-free loans from organizations are not considered within the scope of the issue.
Having considered the issue, we came to the following conclusion:
If an interest-bearing loan agreement does not meet the characteristics of a controlled transaction, income (expense) in the form of interest under such an agreement is recognized by organizations applying the simplified tax system based on the actual interest rate, in other words, from the rate provided for by the agreement, without any restrictions. In this case, the rate does not affect the tax obligations of the parties to the loan agreement.
Income in the form of interest on a loan received by an individual (in your situation - the founder of an organization) from a Russian organization - the borrower is subject to personal income tax at a rate of 13%. In this case, the borrowing organization is recognized as a tax agent for personal income tax and is obliged to calculate, withhold from the individual and pay the calculated amount of tax to the budget.
In the case of issuing an interest-free loan, the founder - an individual does not have an obligation to pay personal income tax.
When a founder receives a loan from an organization, he may receive income in the form of material benefits, taxable to personal income tax at a rate of 35%, in the event that interest on the loan is not provided for in the agreement, or the loan agreement establishes a rate lower than two-thirds of the key rate of the Bank of Russia (current at date of actual receipt of income by the taxpayer).
Rationale for the conclusion:
Under a loan agreement, one party (the lender) transfers into the ownership of the other party (borrower) money or other things determined by generic characteristics, and the borrower undertakes to return to the lender the same amount of money (loan amount) or an equal number of other things received by him of the same kind and quality (Civil Code of the Russian Federation).
The rate under the loan agreement can be set by the parties to the loan agreement in any amount (Civil Code of the Russian Federation).
When providing an interest-free loan, the loan agreement must necessarily stipulate that no fee will be charged for the use of the funds provided (Civil Code of the Russian Federation).
Lender and borrower - organizations applying the simplified tax system
Controllability of transactions
Income and expenses in the form of interest on the loan
Individual - lender
Prepared answer:
Expert of the Legal Consulting Service GARANT
auditor Ovchinnikova Svetlana
Response quality control:
Reviewer of the Legal Consulting Service GARANT
auditor, member of RSA Gornostaev Vyacheslav
The material was prepared on the basis of individual written consultation provided as part of the Legal Consulting service.