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Company Act in Russia

Company Act in Russia

When it comes to observing the rules of the Company Law in Russia, investors must be aware of the Companies Act 1995 and Companies Act 1998. These are the main rules that a company must abide by in Russia. Some changes have been brought to the Company Act in Russia in order to make it more accurate and to keep it updated. Foreign investors can easily set up companies in Russia and can choose the proper business structure for their future operations in this country. For a better understanding of the business conditions and the ways in which a company can be registered in Russia, we suggest you address to our team of company formation agents in Russia.

Types of companies mentioned by the Company Act in Russia

A foreign investor who comes to Russia in order to set up a company must know the rules stipulated by the Company Act in Russia. This set of laws applies to all companies available in Russia. Local entrepreneurs or from abroad must choose the type of company that suits best for their interests and for the future commercial activities on the market.

According to the Civil Code of the Russian Federation, the most popular business structures selected by foreign investors are the limited liability company and the joint stock company. The Company Act in Russia also mentions general and limited partnerships. All companies that are set up in Russia must not break the Russian law, both in activity and in registration procedures.

How can I open an LLC in Russia?

The limited liability company or the Russian OOO, as it is known, is a suitable business structure that can be established by both national and foreign entrepreneurs with a minimum share capital of RUB 10,000 deposited in a Russian bank account. A Russian OOO can be registered by at least one shareholder and no more than 50, according to the Company Act.

Local and foreign investors who want to expand their business in Russia can do so by taking into account the legislation in force. If we refer to accounting. Our experts can handle tasks such as payroll, bookkeeping, tax registration, maintenance of company accounts, and more. We, therefore, invite you to contact our accountants in Russia and discover the personalized services offered.

How can I open a joint stock company in Russia?

Joint stock companies in Russia can be private or public and can be registered with a minimum share capital of RUB 100,000 for the public ones and RUB 10,000 for the private ones. Just like for any type of company, the Articles of Association stand at the base of the joint stock companies and need to be accepted by the Trade Register in Russia. The main difference between a public and a private joint stock company is that the first one can issue shares and trade them on the stock exchange, while the private one cannot.

Let us remind you that our company incorporation representatives in Russia can offer detailed information about the characteristics of joint stock companies and the ways in which they can be registered in Russia.

The sole proprietorship in Russia

One of the most flexible and simple forms of business in Russia is the sole proprietorship which addresses to small entrepreneurs who will act as self-employed. Foreigners who want to be sole traders in Russia need to acquire residency in Russia. The following documents are necessary for opening a sole proprietorship in Russia:

  • •    identification documents attesting the country of residence of the entrepreneur;
  • •    a copy of the criminal record from the home country;
  • •    the documents that show the entrepreneur lives in Russia (Russian residency);
  • •    the evidence that the state duty has been paid in Russia.

As soon as the Trade Register in Russia accepts the above-mentioned documents, the sole proprietorship is registered for business in this country. We can also provide you with accounting services in Russia

The Labor Law in Russia

The Labor Law in Russia goes hand in hand with the Company Act in Russia and it is the second most important for foreign investors. The Labor Law falls under the regulations of the Labour Code of the Russian Federation from 2006. Both responsibilities and obligations of the employer and the employee are mentioned by the Employment Law in Russia. According to Russian legislation, the relationship between an employer and an employee is stated by an employment contract that has to be signed by both parties. The labor legislation in Russia takes care of a wide range of aspects, from working hours and discrimination, to data protection, work conditions, and security.

Subsidiaries in Russia

Subsidiaries are independent legal structures that are normally chosen by owners of large companies due to the features that align with the business requirements and needs. A subsidiary can be established as a limited liability company and a deposit of RUB 10,000 as the minimum share capital. Still related to the rules of subsidiaries in Russia, it is good to note that an executive committee and a board of directors must be appointed. Plus, the registration for tax purposes is mandatory for subsidiaries in Russia.

There is also the possibility of creating a joint-stock company under which the subsidiary can run its activities in Russia, whether open, for minimum share capital of RUB 100,000, or closed for RUB 10,000. The registration of a subsidiary, according to the Company Act in Russia starts with the submission of the foundation deeds and the registration with the Moscow Center of Quotation of Work Places. If you would like to establish a subsidiary in Russia and need assistance and support, our company formation agents in Russia can help.

Establishing a branch in Russia

Branches in Russia are regulated by the Law 1999 on Foreign Investments, plus the Company Act. This is a dependent structure that must report all the financial operations, plus other important activities to the parent company from abroad. One of the most important rules for registering a branch in Russia refers to the accreditation issued by the State Chamber of Registration in Russia. The certificate of registration of the parent company from overseas, the declaration of opening a branch in Russia, and other specific financial documents must be submitted to the entitled registration authorities. The process of registering a branch in Russia might seem complex to foreigners not knowing quite well the business direction and regulations in this country. This is why you should talk to one of our company formation specialists in Russia and solicit complete support and guidance.

Can I purchase a shelf company in Russia?

Yes, shelf companies are vintage companies already incorporated in Russia. In order to have operations on the market, shelf companies must be purchased and activated. Such structures have no financial operations and therefore, no liabilities or debts. The purchase process is straightforward and can be overseen by one of our Russian company formation agents, as soon as you deliver a few important documents. If the ownership transfer is concluded, you can simply start the activities on the Russian market. Feel free to get in touch with us for comprehensive support and tailored services to your business needs.

Are holding companies available in Russia?

Yes, according to the Company Act in Russia, at least two stockholders can open a holding company in Russia, by choosing from operating or pure holding companies. A holding company can own the intellectual property rights of another company, at least 10% of the shares in the firm, and, in some cases, the voting rights. 

Making investments in Russia

Russia is one of the most powerful economies in the world and a huge FDI inheritor on an international scale. The business possibilities are excellent in Russia, and the climate is meant to attract foreign investors in a large number each year. Among the advantages of the Russian business environment, overseas entrepreneurs enjoy the tax regime, the transportation and logistics, the appealing free trade zones, and the well-developed sectors of interest. The marine industry is one of Russia’s solid points because the country has important exits to the Black Sea, the Arctic Ocean, the Sea of Japan, the Pacific, and the Barents Sea that allow a wide range of import and export activities with countries worldwide.

There are also 5 important special economic zones that host the IT companies in Russia, with numerous tax advantages and other benefits that sustain the business development in these areas. The following facts and figures highlight the business direction and economy of Russia:

  1. Around USD 463 billion was the total FDI stock for Russia in 2019.
  2. The Bahamas, Cyprus, the Netherlands, Bermuda, Luxembourg, and UK are the key investors in China.
  3. The Doing Business report issued by the World Bank ranks Russia 28th out of 190 worldwide economies.
  4. Most of the FDIs are directed to the metallurgy, extractive industry, and the financial sector.

The Commercial Code in Russia is one of the most important set of laws that regulates the business and the companies in this country. It is recommended to have a clear picture of the Russian business legislation before commencing an activity.

For more details about the Company Act in Russia, you may contact our company formation specialists in Russia.