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Types of legal presence in Russia

The first steps

Once you have decided to start business in Russia you need to understand in which form of legal presence you are going to do business. Not always you need to open a legal entity in Russia.

If you are going just to sell your products directly to Russian partner, you can do it without registration. In this case you export goods from your country and your Russian partner should make custom clearance of these products. Selling goods to your Russian partners or customers directly doesn’t lead to permanent establishment in Russia and you do not need to register a legal entity.

However, once you decided to have any stocks in Russia, hire employees, make promotion of your goods or services, etc. you need to open legal entity in Russia. The most common forms are a limited liability company, joint stock company, Branch of foreign company in Russia and Representative oce of foreign company in Russia.

Features of different legal entities

Legal status;Independent Russian legal entity; Independent Russian legal entity;Not independent legal entity, the part of Head company; Not independent legal entity, the part of Head company Shareholders;Any Russian and foreign companies and persons may be founders and shareholders in any number of Russian companies. The company may be established by a single founder, as long as the founder is not a company owned by a single legal entity or individual;Any Russian and foreign companies and persons may be founders and shareholders in any number of Russian companies. The company may be established by a single founder, as long as the founder is not a company owned by a single legal entity or individual;No shareholders;No shareholders Minimum authorized capital;10 000 rubles;10 000 rubles;No;No Management structure;Both LLC and JSC has a three-tier management structure consisting of (1) the general meeting, (2) the board of directors, and (3) the executive body. General meeting is the highest management body and it must meet at least once a year. Board of Directors effects general supervision of the company’s business activities which are not referred to the competition of the General meeting. The Board of Directors may not be formed and in this case its powers are transferred to the General meeting. Executive body of a company may be represented by both an individual and collegial body. The executive body acts pursuant to the Charter document and doesn’t need a POA;Both LLC and JSC has a three-tier management structure consisting of (1) the general meeting, (2) the board of directors, and (3) the executive body. General meeting is the highest management body and it must meet at least once a year. Board of Directors effects general supervision of the company’s business activities which are not referred to the competition of the General meeting. The Board of Directors may not be formed and in this case its powers are transferred to the General meeting. Executive body of a company may be represented by both an individual and collegial body. The executive body acts pursuant to the Charter document and doesn’t need a POA;For both the RO and Branch an executive body (Head of RO or Branch) should be appointed by the foreign legal entity. Such executive body acts pursuant to the Power of Attorney issued by the foreign legal entity;For both the RO and Branch an executive body (Head of RO or Branch) should be appointed by the foreign legal entity. Such executive body acts pursuant to the Power of Attorney issued by the foreign legal entity State duties for registration; 4 000 rubles + notary and translation fees;4 000 rubles + notary and translation fees + registration of share issue;120 000 Rubles + 18 000 Rubles + notary and translation fees;120 000 Rubles + 18 000 Rubles + notary and translation fees Terms of registration;3 business days;3 business days;15 business days;15 business days Number of participants;Maximum 50;No limit;No;No Registration process;Registration is done by the Tax authorities, which keep the United State Register of Russian Legal Entities. Together with company registration, company is automatically registered in the State Committee for Statistics and nonbudgetary funds (Pension fund and Social Security fund);First stage of the registration process is the Registration of issue of shares, which may be done by the Central Bank of Russia or by specialized organization – Registrar. After that registration process is the same as for the LLC: Registration is done by the Tax authorities, which keep the United State Register of Russian Legal Entities. Together with company registration, company is automatically registered in the State Committee for Statistics and nonbudgetary funds (Pension fund and Social Security fund);Registration (accreditation) is done by the Tax authorities, which keep the United State Register of Foreign companies in Russia (Inter-District Tax office no 47 in Moscow). Together with company registration, company is automatically registered in the State Committee for Statistics. Registration in non-budgetary funds (Pension fund and Social Security fund) should be done by the company after the registration of the subsidiary. Besides it is necessary to get the certification of the number of foreign employees of the Russian subsidiary by the Chamber of Commerce and Industry of Russia;Registration (accreditation) is done by the Tax authorities, which keep the United State Register of Foreign companies in Russia (Inter-District Tax office no 47 in Moscow). Together with company registration, company is automatically registered in the State Committee for Statistics. Registration in non-budgetary funds (Pension fund and Social Security fund) should be done by the company after the registration of the subsidiary. Besides it is necessary to get the certification of the number of foreign employees of the Russian subsidiary by the Chamber of Commerce and Industry of Russia

Information disclosure;Information about participants, their shares, is available in public sources in the State Register of Legal Entities;Information on the shareholders is contained in the shareholders’ register, which is not available to the public;Information available in the State register of accredited foreign companies in Russia;Information available in the State register of accredited foreign companies in Russia Commercial activity;Yes;Yes;Yes;No Import/export goods (registration at Custom office);Can import and export goods and can be registered at Custom office;Can import and export goods and can be registered at Custom office;RO or Branch can’t import or export goods and can’t be registered at Custom office (only for some certain cases for goods for own consumption);RO or Branch can’t import or export goods and can’t be registered at Custom office (only for some certain cases for goods for own consumption) Currency control regulation;Status of resident of Russia. All transactions in/out Russia are subject to currency control (conrmation documents such as contracts, acts, custom declarations, etc, as well as special forms should be submitted to the bank);Status of resident of Russia. All transactions in/out Russia are subject to currency control (conrmation documents such as contracts, acts, custom declarations, etc, as well as special forms should be submitted to the bank);RO and Branch are non-residents for currency control purpose. No any restriction for in/out Russia transactions. Need to put special VO code in the wire transfers. The only restriction is related to limitation of transaction for resident from the list of “unfriendly countries”;RO and Branch are non-residents for currency control purpose. No any restriction for in/out Russia transactions. Need to put special VO code in the wire transfers. The only restriction is related to limitation of transaction for resident from the list of “unfriendly countries” Employment;Employment regulation is completely applicable for both LLC and JSC. Contract with Managing Director should be signed by representative of shareholder;Employment regulation is completely applicable for both LLC and JSC. Contract with Managing Director should be signed by representative of shareholder;Employment regulation is completely applicable for RO or Branch. Contract with the Head of the RO or Branch should be signed by representative of Head office. All employment contracts should be done on behalf of Head office, but could be signed by Head of the RO or Branch;Employment regulation is completely applicable for RO or Branch. Contract with the Head of the RO or Branch should be signed by representative of Head office. All employment contracts should be done on behalf of Head office, but could be signed by Head of the RO or Branch Foreign employees;Can work after obtaining work permit;Can work after obtaining work permit;Can work after obtaining work permit. There is a limit number of foreign employees. The number of foreign employees should be registered in the Chamber of Commerce and Industry of Russia;Can work after obtaining work permit. There is a limit number of foreign employees. The number of foreign employees should be registered in the Chamber of Commerce and Industry of Russia Accounting and Tax Compliance;Companies shall file accounting and tax reports with the tax authorities on a quarterly basis. Financial statements should be submitted once a year;Companies shall file accounting and tax reports with the tax authorities on a quarterly basis. Financial statements should be submitted once a year;There is almost no distinction between a Branch (or taxable RO) and Russian legal entity in terms of tax compliance. RO which carry out auxiliary and marketing activity also should submit reports on their activities and possible income and all reports related to payroll and social contributions. No nancial statements, only annual report about RO or Branch activity;There is almost no distinction between a Branch (or taxable RO) and Russian legal entity in terms of tax compliance. RO which carry out auxiliary and marketing activity also should submit reports on their activities and possible income and all reports related to payroll and social contributions. No nancial statements, only annual report about RO or Branch activity

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