Common Limited Liability Company FAQs Russia

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What is a limited liability company (LLC)?

A limited liability company, or LLC, is a business entity created under state laws that has the characteristics of both a corporation and a partnership. Like a corporation, the owners of an LLC are not personally liable for business debts. Like a sole proprietorship or partnership, an LLC has operating flexibility and is a pass-through entity for tax purposes. This means the LLC’s profits are passed through and taxable to the owners of the LLC.

What legal documents do I need to form an LLC?

  • Application for registration of a company (form Р11001);
  • Decision (protocol) on forming of a company (in the prescribed manner);
  • Foundation documents in duplicate (in case of paper filing by hand or by post), or in one copy (in case of e-filing);
  • Extract from the business register of the appropriate foreign country or other equal proof of the legal status of the foreign legal entitythe founder;
  • Documents on payment of state duty.

Related: How to Pay Yourself in an LLC

Can my LLC have an unlimited lifespan?

Yes. Recent changes to the IRS code have promoted changes in state laws permitting LLCs to be created with an unlimited life.

What is the difference between a “member” and a “manager” of an LLC?

A member is an owner of the LLC and is similar to a stockholder of a corporation. A manager is a person chosen by the members to manage the LLC and is similar to a director of a corporation. A manager can also be a member.

Does an LLC have to hold meetings?

The answer is usually no unless the LLC’s operating agreement requires meetings. Russian lawyers operating agreements make meetings optional. This is one of the key advantages of an LLC – fewer formalities. 

This means less paperwork and less chance that the members will accidentally violate the law and thereby lose their liability protection.

How much will it cost to form and operate an LLC?

To register a company in Russia, it is necessary to have the amount of at least 10000 rubles to be contributed to the bank account as being the charter capital.

What are the main differences between an LLC and a JSC corporation?

 JSC and LLC are the two most common company types nowadays in Russia. There are some significant differences between these two forms of legal entities.

JSC issues stocks and bonds per procuration of the shares which may be offered to the public, unlike LLC which does not issue stocks or bonds. Within the frames of JSC, share transfer may be executed upon the agreement of both parties, when it comes to LLC, they may be transferred upon an agreement certified by a notary provided that such agreement is executed within the approval of 75% of the shareholders that represent 75% of the capital. When it comes to LLC, the capital is not divided equally, however, for JSC the capital is equally divided.

Companies’ fields of activity also may vary. LLC does not operate in such business fields as banking and insurance and in other fields that are determined by specific laws, unlike JSC which may operate in every field. For this reason, financial institutions find the structure of a JSC more credible and influential. One more formal difference between JSC and LLC is that the first one may be incorporated for an indefinite period, unlike the second one which shall only be incorporated for 99 years. As for JSC, the minimum shareholder number is 5 and there is no determination related to the maximum shareholder number. On the contrary, the minimum shareholder number for LLCs is 2, and the maximum is considered to be 50.

However, these two types of companies have something in common. There are a few similarities between JSC and LLC. Both can be incorporated by filing articles of association with the State Registry. Both may be foreign-owned, having shareholders from abroad. In both cases, shareholders’ liability is limited to their contributions. Both require at least one investor to appear as a natural person or a legal entity. The investor can be a resident or non-resident as well. The annual accounts which consist of the balance sheet, profit loss accounts, and the annual report must be approved by the shareholders within the 6 months after the closing of the financial year.

Do I need an attorney to form an LLC?

No, you do not need an attorney to form an LLC. You can prepare the legal paperwork and file it yourself, or use a professional business formation service, such as Russian lawyers. If you choose to form your LLC through a Russian lawyer, you will only need to answer a few simple questions online. We will take care of all of your paperwork, file the necessary documents with the state and even send you an LLC kit with seals and certificates.

How many people are needed to form an LLC?

Only one person is needed to form an LLC. 

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