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 attracted 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)
• Representative or branch office of a foreign company
• Individual private entrepreneur.

What are the main features of Russian LLC (OOO) and PLC (AO)?

• LLC minimum share capital is 10,000 Roubles (375 USD)
• PLC minimum share capital 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. There are no restrictions on Russian or foreign shareholding. Minimum individual shareholder – 1. Minimum directors – 1
• Newly formed company is required to register with Tax authorities, State Committee for Statistics and three non-budgetary funds (Pension fund, Obligatory Medical Security fund and Social Security fund).
• At least 50 per cent of the authorized capital to be paid up
• 50 per cent of the authorized capital of PLC shall be paid-up within 3 month of registration.

LLC and PLC have a three-level management structure consisting:

• General Meeting
• Board of Directors
• Executive Body

General meeting is the highest management body and must be held at least once a year. Board of Directors undertakes general supervision of the company activities that are not referred to at the General meeting. Executive body of a company may be represented by both an individual and collegial body. The executive body acts according to the Charter document.

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. A separate work visa would also be required.

What are the main features and requirements of a Representative Office or a Branch?

• 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 that are classified as Russian non-resident entities for currency control purposes.
• ROs are not officially allowed to undertake commercial activity in Russia.
• Branch as a subdivision of a foreign legal entity may conduct commercial activity.
• ROs and Branches shall be registered with 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.
• Head of RO or Branch should be appointed by the foreign legal entity. Such executive body acts according to the POA issued by the foreign legal entity.
• Reporting for Branch or taxable RO 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 RO or a 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. 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 banking facilities?

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 managed to attract large volume of capital to its capital markets. Currently, there are several strong banks developed in Russia 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 setup up their branches in Russia (HSBC, Barclays Bank etc).

To talk to a Russia formation specialist call us on +44 (0)208 421 7470, speak to us live on Live chat which you can see on the right hand side, or simply fill in your enquiry below and we'll get back to you.