Company Registration in Russia- An Overview
Russia is the largest continent in the world with about seventh of the land mass covering the globe. Though it is largest continent in the world, there is very less population in Russia. Majority of the population is present in cities such as Moscow and St. Petersburg. Due to the prominence of bureaucracy in Russia, doing business is quite difficult.
In terms of economy, 10% of the revenue of the government is got from the sale and export of Vodka. An investor going for company registration in Russia should incorporate the same in Moscow. This is because of excellent infrastructure, high amount of skills and labour. In 2012, the GDP of Russia was 2 trillion USD. This figure is on comparable basis with that of China.
However, due to government bureaucracy and the situation in Crimea, the economy went down. With this the oil prices also slumped causing a downfall in the Russian Economy. However, companies can still be incorporated in Russia.
Russia is considered as the 11th largest economy in the world. It is also a member of the BRICS which contribute to resolving problems in developing nations. Company Registration in Russia is quite cheap and the cost of incorporating a company in Russia is about 10,000 roubles. Russia is the only continent which is surrounded by 10 seas which makes it accessible to all individuals.
Being surrounded by Europe and Asia, Russia is the prominent place to do businesses. It is the second largest exporter of oil. All the above reasons make it beneficial for an investor to go for company registration in Russia.
Benefits of Company Registration in Russia
The following are the benefits of company registration in Russia:
- Largest Exporter of Specific Products
Russia is the largest exporter of specific products. For example 10% of the revenue of the government is got from the sale and export of Vodka. Hence due to the demand of these products, the government generates considerable amount of revenue. It is the second largest exporter of oil after Middle East.
- Excellent Infrastructure
Russia offers excellent infrastructure in cities such as Moscow and St. Petersburg for companies to conduct business. The government offers different forms of incentives for companies to operate.
- Ease of Conducting Business
Large industrial centres such as Moscow and St. Petersburg offers scope for companies to carry out business with ease. Company Registration in Russia is quite cheap and the cost of incorporating a company in Russia is about 10,000 roubles.
- Work Force
When compared to Western countries, Russia has prominent and skilled workforce. The average cost of employing skilled labour in Russia is USD 1000. This is comparatively less when compared to the cost of employing skilled labour in other countries. Russia has one of the largest workforces in the world.
- Cheap Utilities
The cost of living in urban cities such as Moscow and St. Petersburg is quite cheap when compared to western countries such as the UK and Europe. This includes rent, daily utilities and transport.
An investor should go for company registration in Russia due to the above reasons.
Eligible Business Structures for Company Registration in Russia
The following are eligible business structures for company registration in Russia:
- Russian LLC
A Russian LLC is also known as ‘OOO’. This company can be easily incorporated. Minimum of 50 members can be shareholders for this entity. The minimum share capital for this form of entity is 10,000 Russian Roubles. Only one shareholder and one director is required to form this type of entity. The director has to be a Russian resident. A company can also be a shareholder in an LLC, however a natural person must also be appointed as a shareholder.
- Russian Joint Stock Company
A Russian Joint Stock Company is also known as ‘OAO’. This company can be formed with one shareholder and one Russian director. The director has to be a resident of Russia. The shareholder can be of any nationality. The OAO can either be a Listed Joint Stock Company or a Non Listed Joint Stock Company. The minimum capital required for forming this type of company is 100,000 Russian Roubles. This company can issue shares to the public.
- Branch Office
A branch office in Russia is a mere extension of the foreign parent company. The scope of the activities would be defined by the foreign parent company. If an individual wants to set up a branch office under Company Registration in Russia, then a local representative would be required. The branch office can carry out local business and generate invoices through sales.
- Representative Office
A representative office in Russia is also a mere extension of the foreign parent company. A representative office cannot carry out any activities which generate profits in Russia. Usually representative offices in Russia would only promote the business of the parent company.
Minimum Eligibility Criteria for Company Registration in Russia
The following eligibility criterion has to be sufficed for company registration in Russia:
- Minimum Capital
The minimum capital for company registration in Russia is as follows:
• Russian Limited Liability Company (LLC)- 10000 roubles
• Russian Non Listed Joint Stock Company- 10000 roubles
• Russian Listed Joint Stock Company- 100000 roubles.
- Resident Director
An applicant going for the process of company registration in Russia has to appoint a local resident director. This is a mandatory requirement as per the Commercial Code of Russia. All companies require to appoint a residence director. A shareholder can be of any nationality. Hence it would be crucial to appoint a local director who has experience in running company matters.
- Minimum Number of Shareholders
An LLC can have up to 50 shareholders. However, the Federal Law states that minimum one shareholder is required for a company in Russia. Companies can also be shareholders. However, if a company is appointed as a shareholder, then a natural person has to be also appointed. Therefore a company alone cannot be a shareholder. This rule would also be applicable to shareholders in public entities.
- Minimum Number of Directors
There has to be minimum of five directors for a joint stock company in Russia. There is no upper limit on the number of directors in Russia. If the company has more than 1000 shareholders, then the number of directors appointed for a company has to be seven. However, if the company has more than 10000 shareholders, then nine directors have to be appointed. For a limited liability company, there is no maximum amount of directors.
Procedure for Company Registration in Russia
International investors prefer using the Limited Liability Corporation or LLC for company registration in Russia. This is due to the flexible structure and tax benefits offered by the entity. The below procedure would be related to incorporating a limited liability company in Russia.
The following procedure has to be adopted:
- Reserve the Name
First and foremost, the applicant for company registration in Russia has to reserve the name of the LLC. The name of the LLC must be unique and not conflict with any other name.
- Registered Office
In the next step, the applicant would have to choose the registered office of the business.
The applicant would also have to think about the products and services offered by the company. This would come under the purview of the scope of the company. The geographical region or presence of the company has to be determined by the applicant.
- Minimum Capital
Depending on the type of business utilised, there would be different capital required. For an LLC, the minimum capital required is 10,000 roubles. The capital would have to be deposited with the bank.
- Charter Documents
After determining the capital of the company, the charter of the LLC has to be drafted. The Charter of the LLC would include drafting the Memorandum of Association of the Company (MOA). Apart from this, the rules and bye laws of the company would also be determined. Such rules and bye laws would be considered and present in the Articles of Association (AOA) of the Company.
- Convene General Meeting
Convening the general meeting of the company would decide particular matters. The following matters would be considered in the general meeting:
• Appointment of directors
• Electing the Management Body of the Company
• Conclude drafting the AOA
• Appoint the Auditor of the Company.
- Notarised Documents
All the documents have to be in Russian and notarised by the notary. If the documents are not in Russian, they must be translated into Russian. If the documents are provided by a foreign company, then they would require an apostle to verify the identity of the documents. This is a mandatory requirement be carried out.
- Filing Registration Form
There are two ways to fill the application form. One is the offline procedure which requires department visit and other processes. There is also an online procedure to carry out this process. This process of registration can be done through the National Tax Agency. In the online version, there is no English translation. With this, the applicant would have to pay the respective fee for company registration in Russia. The fee is 4,000 roubles.
- Submit Documents
All the documents along with the registration form have to be submitted to the authority. Documents can be submitted in the following methods:
• Manual submission;
• Delegated submission;
• Notary submission; and
• Electronic submission.
- Complete Application
When the above documents along with the registration form are submitted, the authority will review the application. If there are no issues with the application, then the authority would register the company. Usually it would take around three to five working days. After this the applicant has to open a bank account, register with the tax authority and carry out other appointments.
Compliances for Company Registration in Russia
The following compliances have to be followed for company registration in Russia:
- Corporate tax
All companies have to pay corporate tax of 20%. Tax returns must be filed quarterly and annually with the respective tax authorities.
- Shareholders Meeting
All companies are required to have one shareholder meeting. This is known as an annual general meeting.
- Board of Directors Meeting
Board meetings would be required, if the charter or incorporation documents require the company to have a board meeting.
- Business Registration Requirements
Companies have to register as per the requirements of the respective state authority. If the company issues shares, then share registrations have to also be carried out.
The following documents are required for Company Registration in Russia:
- LLC (Limited Liability Company) Registration Form
- Meeting of the Minutes of the Board Meeting
- Charter Documents of the LLC
- Articles of Association
- Memorandum of Association
- Registration Fee Invoice
- Rental Documents (Guarantee of Rent) or Leased Premises Information
- State Trade Register Statement (this would be required for foreign legal entity)
- Foreigners Passport (in case the shareholder is a foreign citizen)
- Notarised Documents.