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Company registration in Russia

Company registration in Russia

<img src="Russia-company.jpg" alt="Company registration in Russia"/>
Company registration in Russia

In Russia, the civil code is parenting the Company laws of 1988 as well as 1995. The process of foreign company registration in Russia is required to adhere to the rules and provisions of these laws in order to have their businesses registered. The corporate bodies here are divided into entities as follows;

  1. Limited Liability Company LLC [Obshchestvo s Ogranichennoy Otvetstvennost’yu, OOO]
  2. Joint Stock Company JSC
  1. Private or Closed Joint Stock Company  CJSC [Закрытое акционерное общество, ZAO]
  2.   Public or Open Joint Stock Company  OJSC [Открытое акционерное общество, ОАО]

Limited Liability Company LLC [Obshchestvo s Ogranichennoy Otvetstvennost’yu, OOO]

A Limited Liability Company registration in Russia [Obshchestvo s Ogranichennoy Otvetstvennost’yu or OOO in Russian] required 10,000 Rubles as minimum Share capital to form and register. And, before proceeding with the registration of the company 50 percent of this should be deposited as a paid up capital in a bank account, which may be of temporary nature. Well, once the registration of the limited liability company [LLC] is done, this capital fund can be transferred to any suitable company account with any bank. A limited liability company or OOO in Russia is required to have minimum one shareholder and fifty as maximum of any nationality or residency to registering with the authority. The day to day management of the registered limited liability company here in Russia is restricted to the board of directors and the executive body as agreed upon at the annual general meeting [AGM] of the shareholders. The AGM of the companies required to be organized at least once in a year. The board of directors or the executive body do have the discretionary power to take any action or decision not outlined by the AGM, but judged important for the very betterment of the company.

  1. Private or Closed Joint Stock Company The CJSC [Закрытое акционерное общество, ZAO]

The Private or closed Joint Stock (CJSC) Company registration in Russia required to have, as is in the case of an LLC, minimum one and maximum fifty share holders for legal formation. If the maximum number of share holders goes beyond the limit, the company may turn into a Public or Open Joint Stock Company, the OJSC. The liability of the share holders of the CJSC is limited to the value of the individual investments in the entity. Minimum 10,000 RUB is required for the formation of CJSC as authorized capital. At the time of registration of the company half of the authorized capital has to be paid up, and the other half after registration and within the first year of operation. The capital amount shall be denominated in shares for subscriptions and registration with the authority. Anyway, these shares are not meant for public listings or subscriptions, the subscriptions to shares only restricted to the share holders of the Russian company register. The CJSC in Russian not obligated to form Board of Directors as applicable in other forms.

  1. Public or Open Joint Stock Company OJSC [Открытое акционерное общество, ОАО]

There exists no bar on the maximum number of share holders, an OJSC can have as many as share holders it requires. To set up an OJSC minimum 100,000 RUB is required as authorized capital and is divided into denominations of shares and opens to public subscriptions. At the time of company registration in Russia half of the authorized capital has to be paid up, and the other half after registration and within the first year of operation. The formation of board of directors is mandatory for OJSC in Russia. The board of directors has to consist of minimum share holder members. Shares of the OJSC can either be offered through open public subscription or through stock exchange.

All CJSC and OJSC are required to maintaining a register of share holders to note down the holdings each and every shareholder. Both the branches of JSC in Russia are required to hold Annual General Meeting, the AGM at least once in a year to adopting major managerial and financial decisions of the corporate body. Generally decisions are made by a simple majority in the AGM, a supermajority of 75% votes of participating share holders are required to deciding a major issue. To run the day to day operations of the JSCs an Executive body is required to form with one or more persons. All financial accounts must be kept in Russian Ruble and must be audited regularly by either an independent individual or an auditing firm as decided by the share holders in the AGM.

The JSCs in Russia are subject to the submission of tax reports to the respective local offices on a quarterly basis. The JSCs here have to register with three statutory funds as follows:

  • the Pension Fund,
  • the Medical Security Fund and
  • the Social Security Fund

Foreign employment permits or work visas mandatory for JSCs in case of employing foreign nationals.

A foreign company registration in Russia can be permitted in any one of the above forms. The popular and common form is the Limited Liability Company LLC [Obshchestvo s Ogranichennoy Otvetstvennost’yu, OOO]. The foreign companies’ registration processes concerning LLC or JSCs are almost same. The laws that regulate the JSCs in Russia are, the Federal Law No. 208-FZ of December 26, 1995 and the Federal Law No. 39-FZ of April 22, 1996. Moreover, The JSCs are required to register with the Central bank of Russia for the public subscription shares.

In Russia, the State Registration Chamber [SRC] under the Ministry of Justice is the authority to provide the intending promoters with the registration services of their companies.

Following are the foreign company registration processes in general in Russia:

  1. Notarization & submission of Application along with Memorandum & articles of the company [Charge RUB 200]
  2. Deposition of Company paid up capital [50% of the authorized capital] in the bank
  3. Payment of the Company registration [fee RUB 4,000]
  4. Registration of the proposed company with the Federal Tax Service for Tax Payers Identification no, INN [fee Rub 4,000]
  5. Making of an official seal of the [ costs around RUB 1,000]
  6. Notarization of the Signature Card of the Bank [ Charge RUB 1,200]
  7. Opening of the company bank account
  8. Intimation to Federal Tax Service of the bank account number
  9. Registration with the Moscow Center of Quotation of Work Places

Apart from the above foreign company registration processes in Russia, there are two more options to operate businesses of the foreign companies ;

  • A Branch Office, BO or
  • A Representative Office, RO

Civil code of the Russia do not regard the Branch or Representative office as an independent or separate legal entity, rather treat these as the extension of the parent company. To this effect, these establishments of the foreign companies do not able to conclude any business or sign any contract in their names legally. Whatever they do here must be in the name of the companies they are originating from.

Foreign company registration process in Russia

The foreign company registration process in Russia, a Branch or a Representative office:

The formation of a representative office or a branch is requiring first the Accreditation and then Registrations with some government authorities. The Accreditation permit is issued by the State Registration Chamber or SRC initially for a period of years ranging from 1 to 3, as the case may be. The validity of the accreditation permit can be extended further repeating more or less the same procedures. In about 2 to 3 weeks the accreditation permit is normally issued by SRC if all submissions are in order and as required.

Accreditation Process of BO and RO

Foreign company interested to open a Branch or a Representative office in Russia is required to submit following documents for the Accreditation with the State Registration Chamber SRC

  • Application to SRC in company letterhead with notarization
  • Certificate of registration of the parent company with notarization
  • Memorandum and the Articles of Association (MoA) of the parent company with notarisation
  • Documents describing the jobs of the BO or RO with notarization
  • Particulars of the head of the BO or RO with notarization
  • Resolution of the parent company’s board deciding on the BO or RO with notarisation
  • Letter from the bank citing the account details with notarization
  • Power of attorney empowering the head of BO or RO to operate with notarization
  • Copy of the Tax Identification number of parent company with notarisation
  • Copy of passports of the head of BO or RO with notarisation
  • Documents relating to business contacts with Russian entrepreneurs with notarization

All above documents required to be translated in Russian language too with notarization. Four copies of each document required to be furnished with notarization..

Registration Process of BO and RO

The branch or representative office of a foreign company is required to register with some government authorities to start operation once the Accreditation permit is in hand. Following are the authorities the BO or RO is required to be registered with as law and process of company registration in Russia ;

State Tax Authority

In about five working days the registration with the State Tax Authority will be done. A certificate confirming the Tax Identification # or INN of the Branch office or the Representative office will be issued by the authority.

State Committee for Statistics

In about five working days the registration with the State committee for Statistics will be done. A certificate confirming the statistics code # of the Branch office or the Representative office will be issued by the authority.

Pension Fund

One working day is required to perform the registration formalities with the Pension Fund. A certificate confirming registration will be issued to the applicant BO or RO.

Medical Insurance Fund

One working day is required to perform the registration formalities with the Pension Fund. A certificate confirming registration will be issued to the applicant BO or RO.

Social Insurance Fund

One working day is required to perform the registration formalities with the Pension Fund. A certificate confirming registration will be issued to the applicant BO or RO.

Opening of bank account

Upon producing the certificate of Accreditation and all the relevant certificates of Registrations a bank account of the BO or RO can be opened. The time depends on the relationship in between the bank and client.

Translation of documents

In Russia, it’s a common practice to have all documents translated in the Russian tongue before submitting to any government authority. The translator of the Russian translation has to certify and sign the document in the presence of a notary public. While submitting the translated copy the original copy of the same must also be submitted with notarization.

The process of foreign company registration in Russia, addition to the above options can be extended to the appointment of a distributor or a franchisee in Russia. As opposed to establishing a corporate presence these appointments or engagements too used extensively to operate businesses in Russia. The Russian licensing authority relates the franchise engagements with intellectual property rights. As such, registration of this business is within the jurisdiction of Federal service of intellectual property and it normally takes as maximum as two months to authorize. Summary of company registration guide line for the non resident.

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