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Open a Joint Stock Company in Russia

Open a Joint Stock Company in Russia

Joint stock companies and limited liability companies are the two most common types of legal corporate entities under the Russian corporation laws. Under the current legislation, joint stock companies can be further divided into two kinds – public and non-public. Our company formation representatives in Russia are at your service if you would like to set up a joint stock company in Russia.

Public joint stock company 

The key characteristics of a public joint stock company incorporated in Russia are as follows:

  • – The legal name and the charter of the company must show that it is a public entity;
  • – There is no limit on the number of shareholders;
  • – The company is allowed to distribute shares via open subscription and/or via the stock exchange; 
  • – It may not have as its sole shareholder another business entity consisting of a single entity;
  • – The charter capital must be at least 1,000 times of the statutory monthly minimum wage (in current term,  RUB 100,000);
  • – The company board of directors shall consists of at least five members;
  • – The functions of the Registrar and the counting commission must be done by an independent licensed organization;
  • – The Charter cannot make reference to the competence of the general meeting of shareholders for functions not listed by the Russian Federation Civil Code and the laws on joint stock company.

Private joint stock company in Russia

The key characteristics of a non-public joint stock company incorporated in Russia are as follows:

  • • The shares and securities of the company are not publicly listed and it is not open for subscription;
  • • No obligation to establish a board of directors;
  • • The number of shares and votes that belong to one shareholder as well as the nominal value of shares can be restricted;
  • • The charter capital must be at least 10 times of the statutory monthly minimum wage (in current term,  RUB 10,000);
  • • The charter of the company can make reference to the competence of the general meeting of shareholders for functions not listed by the Russian Federation Civil Code and  the laws on joint stock company.

What are the steps for opening a joint stock company in Russia?

To set up a joint stock company in Russia, the following steps are required:

  • – Registration with the tax authorities;
  • – Registration with State Committee;
  • – Company seal creation;
  • – Registration with the State Statistics Committee; 
  • – Registration with social insurance funds (Pension Fund, Social Security Fund, Obligatory Medical Security Fund);
  • – Registration of the shares issued by the joint stock company with the Central Bank of Russia.

The entire process of company formation in Russia for a joint stock company could take up to two months. In some cases, approval of the Federal Antimonopoly Service may be required depending on the size and significance of the assets or revenue of the founders. Our specialists in company formation in Russia are available to assist you through the registration procedure.

What are the conditions for JSCs in Russia?

There are no harsh requirements for joint stock company incorporation in Russia, however, it is recommended to pay attention to the initial capital of RUB 100,000 for which half of it can be paid within 3 months, in the case of open ones. The same thing is available for closed joint stock companies with the mention that such entities can be registered with a minimum share capital of RUB 10,000.

As for the management board of joint stock companies in Russia, at least 5 members are needed and at least one general meeting is necessary each year. It is important to know that a joint stock company can be represented jointly or separately by a few “one-person” executive bodies, as stipulated by the Company Act in Russia. This kind of body is in charge of daily management operations in the firm, mentioning that reporting is needed. You can talk to our team of consultants for additional information about the general rules for opening a joint stock company in Russia.

The flexibility of joint stock companies in Russia

As mentioned earlier in this article, joint stock companies in Russia are a popular structure among international and local entrepreneurs, due to their flexibility and more. Here are some of the most important aspects in this regard:

  • • In general shareholder’s meetings, the management can be in charge of questions related to the business they handle, in this case, the joint stock company in Russia.
  • • In a private JSC in Russia, the board of directors can also act as a supervisory body. Moreover, a single director can substitute for the management board in the firm.
  • • RUB 10,000 or around EUR 143 is the minimum charter capital for private joint stock companies in Russia.

Considering the above, you can decide what kind of joint stock company you can establish in Russia. In this regard, we remind you that our company formation agents in Russia will be able to assist you with the formalities involved, so do not hesitate to contact us.

Audit for joint stock companies in Russia

Auditing the annual accounts for a joint stock company in Russia requires an external auditor. In this sense, the following information is important if you are thinking of setting up a joint stock company in Russia:

  • • The audit committee is needed for public joint stock companies in Russia. The committee can be appointed by the board of directors.
  • • Also, an executive in charge of organizing and performing an internal audit will be appointed for the assessment of risk management and the efficiency of internal control systems.
  • • The internal audit can take place on its initiative, at the decision of the shareholders, following a meeting in this regard.

Transfer of shares of a JSC in Russia

It is good to know that the shares of private and public joint stock companies in Russia are treated like securities and must be registered in compliance with the Securities Market Law. As such, issuing new shares means carrying out requires filings with the Central Bank of Russia, as the legislation stipulates. As such, the decision of issuing shares, alongside the prospectus for issued shares are the documents requested in this endeavor.

On the other hand, once the share transfer is registered in the company’s documents it will then take effect. Public joint stock companies in Russia can make closed and public offerings of shares in Russia, without restrictions on transferability to third parties. In the case that 30% of shares are acquired by a third party or existing shareholder, a buyout offer is required to be backed by a bank guarantee.

Making investments in Russia

Even in the social context, Russia is still a solid business destination and on the list of international investors with perspectives. You might want to read the following facts about Russia’s economy:

  • • The GDP growth rate was around 4.7% annual change, according to data for 2021.
  • • Also in 2021, the GDP was approximately USD 1.779 trillion.
  • • Around USD 12,194 was the GDP per capita in the same year.
  • • The 2023 Index of Economic Freedom ranks Russia 125th, after Nigeria.
  • • 53.8 is Russia’s economic freedom score.
  • • According to recent data, around 6.7% is the inflation rate in Russia.

If you believe that Russia is your next destination for business, you may discuss the legal formalities with one of our local specialists. We can help you with the procedures of company formation in Russia.

JSC liquidation in Russia

In case an entrepreneur wants to close a joint stock company in Russia, this can be made in respect with the Commercial Code, if a court of law issues a decision in this sense. There is also the possibility of voluntary company liquidation, meaning that the owners must agree in this sense, under specific conditions. There are no complex formalities in closing a joint stock company, if all the conditions are respected and if you decide for support from our team of consultants in Russia.

What are the advantages of joint stock companies in Russia?

There are many reasons to believe that a joint stock company can be the ideal business entity for a foreigner in Russia. Here are a few examples:

  • • The long-term existence is connected to joint stock companies in Russia.
  • • The members forming the joint stock company in Russia are not liable for any company debts or losses.
  • • Because of the issued stocks, JSCs in Russia have complete access to large capital contributed to the company.
  • • The directors of joint stock companies in Russia are selected by the owners.
  • • Fiscal funds and liquidities can be used by joint stock companies in Russia.

We remind that our local specialists can help you register a company in Russia by handling the formalities of the selected structure.

FAQ about joint stock companies in Russia

1. Is there a limit in case of the number of shareholders of JSCs in Russia?

No, there is no limitation referring to the number of stockholders of a joint stock company in Russia.

2. Can a joint stock company in Russia be listed on the stock exchange?

Yes, joint stock companies in Russia can be listed on the stock exchange in Russia or outside the country. Specific rules are imposed, but you can solicit assistance from our consultants.

3.  What is the capital for joint stock companies in Russia?

RUB 10,000 are necessary for opening closed JSCs and RUB 100, 000 for an open joint stock company in Russia. Feel free to ask any questions about how to open a joint stock company in Russia.

4. Is the general meeting necessary for JSCs established in Russia?

Yes, it is a mandatory condition to have a general meeting as owners of joint stock companies in Russia. This needs to take place once in the year, whether in Russia or in another country.

5. Who can form joint stock companies in Russia?

Any domestic or foreign investor looking for business in Russia at a large scale can decide on registering a joint stock company, respecting the applicable legislation in this country. Although it is not a complex registration procedure, it is recommended to ask for the support of our team of company formation specialists if you want to open a company in Russia.

Legislation and corporate governance

The incorporation and operation of a joint stock company in Russia are governed by the Civil Code of the Russian Federation, Federal Law No. 208-FZ of December 26, 1995 (as amended) on joint stock companies and Federal Law No. 39-FZ of April 22, 1996 on the securities market, if shares are issued.  Although not mandatory, joint stock companies are recommended to observe Code on Corporate Governance adopted by the Central Bank of Russia.

For more information on setting up a joint stock company in Russia and on the relevant legislations and corporate governance, please contact our Russian experts on company formation in Russia.