Russian Company Formation
SET UP BUSINESS IN RUSSIA
Introduction To Russian Company Incorporation
Russia has been an attractive business partner in the eyes of many entrepreneurs for the last few years. Investment opportunities have been coming up in great numbers and are attracting many foreign companies that are seeking access to potential new markets.
There are many advantages of setting up your business in Russia and these are just a few of them:
- Vast consumer market
- Educated labor force
- Continuous improvements for investments
- Easy access to the markets of other CIS countries
- Russia is one of the world’s richest countries in natural resources
What are the main types of Russian company?
- Limited Liability Company (OOO)
- Closed Joint Stock Company, privately held (ZAO)
- Open Joint Stock Company, publicly held (OAO)
- Branch of a foreign company
- Representative Office of a foreign company
- Individual private entrepreneur
What are the main features of Russian LLC (OOO) and PLC (AO)?
- The minimum share capital for an LLC is 10,000 Roubles (375 USD)
- The minimum share capital for a PLC is 100,000 Roubles (3750 USD)
- LLC and PLC are the most popular forms of legal entities. Licenses are required for licensed types of activities
- The number of shareholders cannot exceed 50 but there are no restrictions on Russian or foreign shareholding. There must be at least one individual shareholder and one director.
- Newly formed companies are required to register with the Tax authorities, State Committee for Statistics and three non-budgetary funds (Pension fund, Obligatory Medical Security fund and Social Security fund)
- At least 50% of the authorized capital must be paid up
- 50% of the authorized capital for a PLC must be paid-up within 3 months of registration
Both LLC and PLC companies have a three-level management structure consisting of the following:
- General Meeting – this is the highest management body and must be held at least once a year.
- Board of Directors – who undertake general supervision of the company activities that are not referred to at the General Meeting.
- Executive Body – acts according to the Charter document and may be represented by both an individual and collegial body.
Please note Russian companies should provide monthly VAT reports and quarterly tax reports.
If a company plans to employ foreign citizens it must apply for a special permit. All foreign employees of a company must apply for their respective individual Working Permits and a separate work visa is also required.
What are the main features and requirements of a Representative Office or a Branch?
- ROs and Branches of a foreign legal entity are not considered as separate legal entities. ROs and Branches are subdivisions of a foreign company that are classified as Russian non-resident entities for currency control purposes.
- ROs are not officially allowed to undertake commercial activity in Russia.
- As a subdivision of a foreign legal entity a Branch may conduct commercial activity.
- ROs and Branches shall be registered with the State Registration Chamber (GRP), Chamber of Trade and Commerce, various Ministries of the Russian Government, Tax authorities, State Committee for Statistics and three non-budgetary funds (Pension fund, Obligatory Medical Insurance fund and Social Security fund).
- There is no requirement for the authorized capital.
- The Head of the RO or Branch should be appointed by the foreign legal entity. Such executive body acts according to the POA should be issued by the foreign legal entity.
- Reporting for Branches or taxable ROs is almost similar to any other Russian legal entity; monthly VAT reports and quarterly tax reports are made to the special Tax inspectorate, which deals only with ROs and Branches.
- If a RO or Branch plan to employ foreign citizens it must apply for an Employment permit. All foreign employees of a company must apply for their respective individual Working Permits and a separate work visa would also be required.
How easy it is to recruit staff in Russia?
Foreign companies will have no difficulty in recruiting educated, well trained and skilled local staff in Russia.
What is the regulatory environment like?
Reporting and regulations are quite strict and require detailed professional guidance which Russian accountants and lawyers are very capable of doing.
Are there financial incentives available and what are the banking facilities like?
There are really no incentives for new start ups or specific business activities.
Although Russia is not regarded as a stable banking center worldwide, it has managed to attract a large volume of capital to its capital markets. Currently, there are several strong banks developed in Russia that are strictly regulated by the government. The structure of the banking sector adopted the German-type model of universal banks, with banks being allowed to hold substantial stakes in non-financial firms. As a positive sign, many western banks have set up up their branches in Russia, including HSBC and Barclays Bank.
How easy is it to close a Greek company?
Please click here for further details and services on closing a company.
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