A step-by-step guide to creating a legal entity

Whether you are a foreign citizen, a person without citizenship, or a representative of a foreign company you can register a legal entity by yourself. The information beneath could help you pass the registration process and compile the necessary documents.

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Starting a business

Deciding on a business legal structure

The list of business legal structures and the features of their legal status, including the requirements for company officers, the liabilities of founders, the registration requirements.

Registering and running an open joint-stock company (OAO, the Russian equivalent of public company), closed joint-stock company (ZAO, corresponds more to the concept of private companies), or limited liability company (OOO) requires more legal administration than an individual entrepreneur or partnership. On the other side, if you are a partner or an individual entrepreneur, the outstanding debts incurred by the business can be met from your assets.
In Russia, the most common legal entities with foreign capital are limited liability companies, open joint-stock companies, or closed joint-stock companies.

In all three cases, the liability of their shareholders for the company debts is limited to the number of their contributions to the nominal capital of the company.

One of the main differences between open and closed joint-stock companies is the number of shareholders, which is limited to 50 in the case of a closed joint-stock company. As a general rule, shares in both companies are freely transferable. However, existing shareholders of a closed joint-stock company have pre-emptive rights in acquiring the shares of the withdrawing partner.
It is highly unlikely that start-ups will be starting life on the stock exchange so in a «Starting a business» chapter we will concentrate on limited liability companies.

When you have decided on the right business legal structure before you start company formation you should choose the name and the location (legal address) for the company.

Depending on your company location you should be advised on

the appropriate registering office, where you should file the documents for business registration;

the local tax office, where your company should register for taxation purposes.

Forming the foundation documents

Following Russian legislation, the founders who are creating the company should prepare and approve the foundation documents.
A limited liability company, as well as a closed joint-stock company, may be formed by one or more individuals or legal entities.

If the number of shareholders exceeds 50, the company must be transformed into an open joint-stock company.
The foundation documents inter alia should contain:
the full name of the company and the abbreviation it is going to use in business, the names and signatures of the founders who are forming the company, the amount and nature of the shareholders’ contributions (cash or in-kind), and the procedure, in which the contributions will have to be made the rules for running the company, internal management affairs, and legal responsibility.

Also, the company executive bodies must be appointed that are usually named as directors in the charter.
Any modifications and changes to the charter and the founding agreement must also be registered. The same involves limited liability companies in the case of a change of shareholders.

Depending on your company location you should be advised on

List of documents required for opening of LLC company in Russia:

The appropriate registering office, where you should file the documents for business registration;
The local tax office, where your company should register for taxation purposes.

Forming the foundation documents.

The foundation documents inter alia should contain:

The full name of the company and the abbreviation it is going to use in business;
The names and signatures of the founders who are forming the company;
The amount and nature of the shareholders’ contributions (cash or in-kind) and the procedure, in which the contributions will have to be made the rules for running the company;
Internal management affairs;
Legal responsibility.

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