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Establishing
a business in Russia: How to set up and register a company
in Russia, company formations
Most
of the information below has been provided by the Russian
law firm VISTA Foreign Business Support (www.vfbs.ru).
The form of legal presence in Russia influences all aspects of
activity including possibility for making deals and tax consequences
of the deals, financial and tax accounting and reporting, possibilities
under customs, currency control legislation, ability to employ
foreign nationals, repatriation of income, application of international
treaties and many others. Therefore, particular attention must
be paid to Russian business modeling to be made PRIOR setting
up legal presence in Russia.
There are several forms for a foreign investor to start business
in the Russian Federation. Foreign investor may set up (or register)
a Russian legal entity in the form of limited liability company,
joint-stock company (which can be private or public) or partnership.
The other way is to register a representative or branch office
of a foreign company in Russia.
In order to get more information on the different types of entities
that you can establish in Russia see the Comparison Table below:
Table 1: Starting Up a Business in Russia - Legal Entities
| Limited liability company (LLC) |
Private joint stock company (PJSC) |
Representative office (RO) |
Branch |
| Legal Status |
LLC and PJSC are Russian legal entities. They
may conduct any form of commercial activity, provided it
is not prohibited by the Russian legislation. For conducting
any licensed type of activity it is necessary to obtain license.
The number of shareholders/participants in PJSC/LLC can not
exceed 50. Any Russian and foreign companies and persons
may be founders and shareholder in any number of Russian
companies. The company may be established by a single founder,
as long as the founder is not a company owned by a single
legal entity or individual. Some peculiarities exist for
the companies with single founder. For more detailed information
please see Sole ownership . |
RO and Branch of a foreign legal entity are
not considered as a separate legal entity. RO and Branch
are subdivisions of a foreign company. They are considered
as Russian non-resident entities for currency control purposes
| RO is a subdivision of a foreign legal entity that
represents the company’s interests in Russia. ROs
officially are not allowed to undertake commercial activity,
in Russia. |
Branch is a subdivision of a foreign legal entity that
may conduct commercial activity. |
|
| Registration and Accreditation |
Registration is done by the Tax authorities,
which keep the United State Register.
Company also shall be registered with State Committee for
Statistics and three non-budgetary funds (Pension fund,
Obligatory Medical Security fund and Social Security fund)*.
Please
also see Registration process and list of documents
|
ROs and Branches may be accredited at several
state bodies, such as State Registration Chamber (GRP), Chamber
of Trade and Commerce and various Ministries of the Russian
Government, although the Consolidated State Register of ROs
and Branches is kept by GRP. ROs and Branches also shall
be registered with the Tax authorities, State Committee for
Statistics and three non-budgetary funds (Pension fund, Obligatory
Medical Insurance fund and Social Security fund). Please
also see Registration process and list of documents |
| Registration and Accreditation duties and charges |
Registration duty is 2000 rubles (~70 USD).
There are also charges for registration of company’s
seal, registration at State Committee for Statistics, which
amount in general to no more than ~80 USD. |
Accreditation charges of the GRP depend on the term for which a RO
is set up
1 year – 1000 USD
2 year – 2000 USD
3 year – 2500 USD |
Accreditation charge of the GRP for 1, 2, 3 and 5 years
accreditation is 60,000 rubles (~2150 USD).
There is also a state duty which is also 60,000 rubles (~2150
USD). |
| Authorized capital |
Minimum authorized capital for LLC and PJSC
is 10,000 rubles (~370 USD)
| At least 50 per cent of the authorized capital shall
be paid-up prior to the company’s registration. |
50 per cent of the authorized capital shall be paid-up
within 3 month upon the registration. |
|
There is no requirement for the authorized capital. |
Under the Federal law there is a requirement to form assets,
but the amount is not stipulated. |
| Management structure |
LLC and PJSC have a three-tier management structure
consisting of (1) the general meeting, (2) the board of directors,
and (3) the executive body**.
General meeting is the highest management body and it must
meet at least once a year.
Board of Directors effects general supervision of the company’s
business activities which are not referred to the competition
of the General meeting
Executive body of a company may be represented by both an
individual and collegial body. The executive body acts pursuant
to the Charter document and doesn’t need a POA. |
For both the RO and B ranch an executive body
(Head of RO or Branch) should be appointed by the foreign
legal entity. Such executive body acts pursuant to the Power
of Attorney issued by the foreign legal entity. |
| Shares/Units |
| Authorized capital is divided into shares/units
which represent rights and obligations of a shareholder/participant
in accordance with their participations in the authorized
capital. |
Non applicable |
A unit is not a security.
The units can be sold to anyone, but there can be stipulated
right of priority for the unit purchase. |
A share is a security.
Open subscription is prohibited
The shares allotment shall be registered with the relevant
state body. |
|
|
| Accounting and Tax Compliance |
| Companies shall file accounting and tax reports
with the tax authorities on a quarterly basis. Reports on
VAT shall be filed every month. For more information please
see Reporting compliance table |
There is almost no distinction between a Branch
(or taxable RO) and Russian legal entity in terms of tax
compliance. RO which carry out auxiliary and marketing activity
also should submit reports on their activities and possible
income and all reports related to payroll and social taxes.
Reporting is generally done every quarter with exception
for VAT (monthly) to the special Tax inspectorate, which
deals only with RepOffices and Branches. For more information
please see Reporting compliance table |
| Foreign Staff |
| In order to employ foreign citizens a company
shall obtain Employment permit. Afterwards every foreign
employee shall obtain personal work permit. A work visa is
also required. For more detailed information please see Employment
of foreign citizens |
RepOffices and Branches of foreign companies
have to obtain Employment permit. Every foreign employee
also has to obtain personal work permit. A foreign employee
visa (subtype of work visa) is required. For more detailed
information please see Employment of foreign citizens |
* Effective 1 January 2004, the registration
procedure for Russian legal entities is simplified by the
introduction of a “one window” approach to the
process and Tax authorities are responsible for the registration
procedures.
** If there is one founder in the company the
management structure differs from the structure owned by
several founders. See the information on Sole Ownership |
Sole ownership.
As it was mentioned before Limited Liability Company or Private
Joint Stock Company can be founded by an individual (Russian
or foreign) or by a legal entity.
The founding document at Sole ownership company is a Charter.
Such company doesn’t have some management bodies such as
General Meeting of the Founders. There is no Board of Directors.
All the decisions are taken by the sole founder. Accordingly
legislative requirements on calling of the general meetings,
and other procedural requirements do not apply to such company.
The management of the company is done by issue of written decisions
of the fonder. If the fonder is also a General Director in the
company the decisions are made by issuance of orders.
At the same time such company is a separate legal entity, its
assets are legally isolated from the assets of the founder.
Formation of a Russian legal entity. General information.
1. Registration at the Tax authority 5-7 working days
2. Registration at the State Committee for Statistics. 2-5 working
days
3. Making of the seal of the Company. 2-5 working days
4. Registration at non-budgetary funds (Pension Fund, Social
Security Fund, Obligatory Medical Security Fund) is done by tax
inspectorate
5. Opening of the bank account depends on the bank
6. Registration of the shares issue with the Federal Services
for Financial Markets* 24-30 working days
*Is applicable only to Private and Public Joint Stock Companies.
1. Certificate of Incorporation or extract from the Trade Register
of the country of origin.
2. Memorandum and Articles of Association.
3. Resolution of the Company’s executive (managing) body
upon the appointing of the Head of the new company or Power of
Attorney to the person authorized by the Company.
Documents mentioned above require Consulate legalization or apostille with notarized
translation to the Russian language.
1. Passport
2. Russian visa (if any)
Representative and Branch office accreditation. General
information.
1. Accreditation with the accreditation authority 14-21 working days
2. Producing the seal 2-5 working days
3. Registration at the State Committee for Statistics 2-5 working days
4. Registration at the State Tax Inspectorate 5-7working days
5. Registration at non-budgetary funds is done by tax inspectorate
6. Opening of a bank account depends on the bank
1. Memorandum and Articles of association of a foreign legal entity (charter,
bylaw).
2. Certificate of Incorporation of a foreign legal entity or Extract from the
Trade Register.
3. Letter of introduction provided by a Bank that serves for a foreign legal
entity in the country of incorporation that proves its solvency.
4. Resolution of a foreign legal entity about opening of the Representative or
Branch Office and appointing of the Head.
5. Power of Attorney given to the Head of the Representative or Branch Office.
6. Certificate of registration with Tax authorities with Tax Code of a foreign
company (or its analogue in the country of its establishment).
Documents mentioned above require Consulate legalization or apostille with notarized
translation to the Russian language.
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