The limited liability company (LLC)

An LLC is a legal entity formed by one or several natural or legal persons (including foreign citizens and organisations) whose charter fund is divided into shares set in the founding documents. Its most important feature: members answer for the company’s obligations not with their own property but only within the value of their contribution. The minimum charter fund is set by law (the textbook gave 40 times the minimum wage in 2018; check the current requirement in the law) and the number of members is also limited by law (50 in the textbook); if it is exceeded, a change to another form may be required. The day-to-day work is managed by a director elected or appointed by the members, and members need not work in the business personally. Profit is distributed among participants in proportion to their shares, and a declared dividend is taxed at the rate set in the Tax Code. The advantages are limited liability and the ability to raise more money by pooling shares; the disadvantages are the limit on the number of members, the need to follow the law and the charter when passing a share to another person, and the fact that important decisions require agreement, which can slow the process.