The Best way to start a business in Russia -2022

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For foreigners to start a business in Russia there are several different legal ways available, which are explained hereafter.
There are three legal structures for doing a business:

Open a Company in Russia
Open a Company in Russia
  1. If you are already doing a main business abroad there are reasonably setting up and registering in Russia the branch or the permanent establishment (PE) of the foreign company.
  2. It is also possible forming a legal commodity with the participation of the foreign capital, or
  3. Register as an individual entrepreneur, who is running a business without the formation of a legal entity.
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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.

Starting a business

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
1) the appropriate registering office, where you should file the documents for business registration;
2) 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.

The minimum capital requirement is 10 000 RUR.
Contributions can be made in cash or kind. At the time of enrollment, each member must have paid up at least 50% of the amount of his contribution, and the balance must be paid within 12 months.

Depending on your company location you should be advised on 

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

2) 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.

The minimum capital requirement is 10 000 RUR.
Contributions can be made in cash or kind. At the time of enrollment, each member must have paid up at least 50% of the amount of his contribution, and the balance must be paid within 12 months.

Filing the required documents to the registration office.

The authorized tax authorities decide on the registration of the commercial organizations (except the credit and bank organizations), and also regarding the number of the noncommercial organizations.

You should file the required set of documents to a registration tax office in a place of the future location of forming the company.

You can file the required documents in the following ways:

– paper filing by hand in the registration office (personally or through your authorized representative);

– paper filing by post;

– e-filing via the Internet, including the use of a single portal of public and municipal services.

Within no more than 5 working days since receipt of the documents, the registering authority should examine the documents submitted and either make the decision on the state registration of your company making appropriate records in the State Register, or make the decision on refusal of registration.

An exhaustive list of the grounds for refusal of registration is defined by par. 1, art. 23 of the Federal Law № 129-FZ.

Receiving the incorporation documents.

If review of your documents has passed successfully, on the day appointed by registering authority you can take out the subsequent documents:

– The Incorporation Certificate;

– The Tax Certificate;

– One copy of foundation documents gives you back with the mark of registering authority;

– Extract from the Common State Register of the Legal Entities.

It is important to note that the abovementioned records should be issued by registering authority no later than on the 6th working day since the day of receipt of the application for the state registration.

In case you did not refer to the registration authority for obtaining the documents, they will be sent to the legal address of your company. At the e-registration, you can choose the way of receiving the documents.

Manufacturing the stamp.

After receiving the documents of company registration you should make your company stamp.

Manufacturing of the seal is provided by a commercial organization at your company director’s choice.

Opening a bank account.

With the registration records and company seal, you are entitled to open an account in any bank of your choice.

Note that within seven days from the date of a bank account opening you must notify your tax authority with this information.

Open a Company in Russia
Open a Company in Russia
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The Best way to start a business in Russia -2022
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The Best way to start a business in Russia -2022
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Open a company in Russia
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The Best way to start a business in Russia -2022
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