Russian Corporate Structures

Any investor set to work in the territory of the Russian Federation will have to make a decision, that is, choose which of the three existing methods of doing business is suitable for him: either open a Russian legal entity, create a joint venture, or open a branch or representative office of a foreign legal entity. Each of the forms has its own advantages.

The opening of a legal entity in Russia can be carried out either in the form of a limited liability company (LLC) or a joint stock company (JSC). These legal forms of a legal entity conduct their activities according to their own charter. These forms are usually used to create subsidiaries, as they may be 100% owned by foreign founders. Many issues related to the registration of an LLC and a JSC are the same. Therefore, we consider the conditions, terms and cost of opening a company using the example of an LLC, as the most common form of doing business in Russia.

The LLC is responsible for its obligations in a self-sufficient manner, has a separate balance sheet and maintains accounting reports on its own. The LLC’s functioning scheme will be largely familiar and understandable to a foreign investor. The LLC has the ability to apply a simplified taxation system (STS), which is beneficial to small and medium-sized businesses, since the state has provided a preferential tax regime for this type of organization. In order to open an LLC, you need a legal address, registered capital (at least 10 thousand rubles).

A foreign citizen who is about to become the founder of an LLC should legally reside in Russian territory. The opening procedure takes 5 business days from the date of submission of documents to obtain a certificate. The costs (an average of 10-15 thousand rubles) include the costs of translation, certification and the forwarding of documents, as well as the state duty of 4 thousand rubles. If one of the founders of the LLC is a foreign company, then you will additionally need to provide legalized documents from the country of incorporation containing basic information about the company. Documents must be translated into Russian and certified by a Russian notary.

If you are interested in starting work with an existing Russian company, then it is better to do this in the form of a Joint Venture, which involves the creation of a new company with the participation in the registered capital of a Russian individual or legal entity. Furthermore, a foreign investor can acquire a stake in the authorized capital of a Russian company or become a new member of this company through an increase in its registered capital.

This form allows more efficient use of the benefits presented to foreign investors, for example, a foreign founder can introduce industrial equipment without duties, analogues of which are not produced in Russia. The procedure and costs of creating a joint venture are similar to those applicable when opening an LLC.

If a foreign investor buys a stake in an existing Russian company or becomes a new member of this company by increasing the authorized capital, then the registration of changes takes 7 business days, while the certification of documents by a notary usually costs about 15-17 thousand rubles. In addition, in the case of an increase in the authorized capital, a state duty of 800 rubles is also paid. Additionally, the costs of translation, certification, and the forwarding of documents will be required.

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