Wholly Owned Subsidiary in Russia: Foreign Ownership Rules

Can a foreign company own 100% of a Russian subsidiary?

Yes. Russian law generally permits a foreign legal entity to be the sole participant of a limited liability company or the sole shareholder of a joint-stock company, even when the parent itself has one shareholder. No local co-founder is necessary. Before filing, verify that the planned activity is not subject to a participation cap or prior clearance.

The former restriction and the current rule

Before 1 August 2025. A single-member parent could not become the sole owner of another business. International groups had to add a second participant or an intermediary, even without a commercial reason.
Current rule. Federal Laws No. 178-FZ and No. 201-FZ removed the general prohibition. A single-member parent may now hold the entire interest or all shares in a Russian business unless a separate statute provides otherwise.

For international investors, establishing a wholly owned subsidiary can reflect the intended structure. Arrangements created under the former rule are eligible for review, but transferring an interest still needs separate legal and tax analysis. The reform did not automatically alter registered interests, so legacy structures remain unchanged until a separate transaction is completed.

The single-owner structure

Individual or corporate owner → Foreign parent → Russian subsidiary

Legal status. The subsidiary remains a separate legal person with its own assets, contracts, personnel and statutory accounts.
Shareholder control. Rights are exercised through the participation interest or shares and written resolutions adopted by the sole participant.
Separate records. A fully owned subsidiary maintains its own contracts, bank accounts and statutory records.
Intragroup operations. Transactions need contractual support and, depending on their terms, tax or currency-control analysis.
Governance. The charter and internal approval framework should define the general director’s authority, matters reserved for the owner and any additional approval thresholds.

Restrictions on foreign participation

100 percent foreign ownership is generally possible where no special statute establishes a cap, clearance condition or other limitation. The reform removed the ban on two consecutive single-member businesses but did not override sector regulation, strategic investment controls or temporary countermeasures.

Review the actual business model rather than only the registration description:

Regulated sectors

Banking, insurance, mass media and certain other fields have special rules on participation, licensing or capital.

Strategic investment

Acquiring control over a business engaged in strategic activity may require prior clearance. Licences, assets and intended operations determine the assessment.

Later changes

A business unrestricted on incorporation may enter a special regime after obtaining a relevant licence, asset or line of work.

Countermeasures

The investor’s jurisdiction can affect a later stake transfer, funding, dividend payment or exit. Connection with an "unfriendly" state does not create an identical procedure for every incorporation.

Governance and supporting records

Trace the shareholding structure from the direct shareholder to the ultimate beneficial owner. The registering authority, notary and servicing bank can request registry extracts, constitutional papers, resolutions, powers of attorney and beneficial-owner information. Source-country records may also need legalisation or an apostille and a certified Russian translation.

Ensure that names, registration numbers, participation percentages and signing powers match across the filing package, bank questionnaire and structure chart. Inconsistencies delay incorporation or account opening even when the investment model is permitted.

When changing an arrangement created under the former prohibition, first review the transfer price, tax consequences, applicable countermeasures and procedure for registering the new participant.

Corporate support in Russia

We help international investors assess a proposed shareholding model against the subsidiary’s planned operations and identify applicable restrictions before filing. We prepare the sole founder’s resolution, charter, powers of attorney and related corporate documents and coordinate source-country records for use in Russia.

After incorporation, we provide accounting, tax compliance, payroll, HR administration and corporate legal support. Contact us before approving the structure to prevent governance or documentation issues from delaying registration or bank onboarding.

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