A holding company in Russia is a legal entity that can control the management and the financial aspects of another company, as long as the holding company has a sufficient number of voting rights in the other company. Holding companies are incorporated with the sole purpose of controlling the assets of other businesses in accordance with the rights derived from the voting shares. Foreign investors who are interested in opening a holding company in Russia can receive an in-depth presentation on the main advantages of this type of company from our Russian company formation specialists.
Features of a Russia holding company
According to the Russian legislation, which has recently been modified (1st of September 2014), a Russian company can’t be 100% owned by a holding company if its shareholder is also owned 100% by another shareholder.
A company in Russia can be fully owned by a holding company if the other company has at least two shareholders.
There are two types of holding companies in Russia:
- pure holding companies;
- operating holding companies.
A pure holding company refers to the entity which owns voting rights and shares in another company with the purpose of controlling various aspects of that business, while the operating holding company has the function of the pure holding company, but it also conduct its own businesses; our Russian company formation agents can provide you with further information on the types of holding companies.
How can I register a holding company in Russia?
The Russian Civil Code provides complete information about the type of entities that can be used for registering a holding company. The limited liability company and the joint stock company are two important entities with which you can register a holding company in Russia. One of the most important benefits refers to the fact that the liability of the stockholders is limited to the invested amount of money at the time of holding company formation. While holding companies that run under the limited liability company have a limited number of 50 shareholders, the joint stock company is subject to only 5 members.
The Articles of Association of the holding company must be drafted and notarized, and then submitted to the Russian Trade Register. Holding companies have the obligation of being registered with the tax authorities in Russia. Plus, if employees are hired, the Chamber of Commerce and Industry must be notified in this sense. If you are interested in more details about the formation of a holding company in Russia, you are invited to discuss all the aspects with one of our company formation specialists in Russia.
Are holding companies vulnerable in front of bankruptcy?
No, holding companies in Russia are not liable in the case of bankruptcy on their subsidiaries. The losses in the firm are not in the attention of holding company owners. You can talk to our team and find out more about the benefits of a holding company in Russia.
Russia can represent an ideal investment destination for foreigners who want to develop their portfolios and access a market full of opportunities. Once the desired structure is chosen, the recommendation is to collaborate with our accountants in Russia and to benefit from support for payroll, bookkeeping, audits, tax compliance, and annual financial statements.
The finances of a holding company in Russia
The management of a holding company in Russia is in charge of the investments made in the firm and also the source of funds. For instance, the equity interests sold in the firm or to subsidiaries can be a great option. Also, revenues earned from the payments received from subsidiaries, in the form of interest payments, dividends, and distributions can be proper choices for holding company owners.
Is a holding company a solution for small companies?
Yes, not only large companies can be part of holding companies. Even single entrepreneurs can be interested in this form of business. For example, a limited liability company dealing with apartment buildings for rent can be owned by a holding company. In the case of business expansion, the benefits enter the attention of holding company owners.
Lower debt financing costs are beneficial
Powerful holding companies can easily obtain loans with lower interests, compared to the enterprises that do not activate under this structure. A newly-formed startup does not present the same level of confidence, compared to the holding company that owns it. Then, the loan obtained can be distributed to the subsidiaries involved. You can talk to our company formation agents in Russia and find out more details about the advantages of holding companies.
Is a holding company in need of everyday management?
No, each subsidiary has its own management and can activate in varied industries. Therefore, owners of holding companies do not need to be in charge of every action in this structure.
Advantages of a holding company
Foreign investors interested in opening a holding company should know that such a company can receive dividends from the company in which it owns voting rights and shares; a holding company can offer finance to the other company and own intellectual property rights, from which the shareholders of the holding can receive royalties. It can also provide a unified management and an optimized distribution of cash flow.
Making investments in Russia
Russia is a powerful financial destination and home to a large number of international companies that already thrive in this country. The investment climate is quite generous to foreigners, especially considering the advantages provided by the legislation that says all investors have equal rights, regardless of their nationality. The ease of registering a business, the tax regime, the experienced workforce are a few of the advantages of the business climate in Russia. Plus, the economic reforms implemented in recent years proved successful and helpful in front of international investors with interests in Russia’s excellent business climate. Below you can discover a few important facts and figures that highlight the economy and business in Russia:
- Around USD 463 billion was the total FDI stock for Russia in 2019.
- The 2020 Doing Business report issued by the World Bank ranks Russia 28th out of 190 economies in the world.
- Luxembourg, Cyprus, and the Netherlands are the main foreign investors in Russia.
- The extractive industry, financial and insurance, real estate, and energy are the main sectors in Russia sustained by foreign investments.
Holding companies are appealing to foreign investors interested in generating profits in Russia. If you believe it is time to register this kind of structure, please feel free to talk to one of our company formation specialists in Russia.
If you need further information on the holding companies in Russia, you can contact our Russian company formation agents for assistance.