All you need to know about starting a Russian Subsidiary of a Foreign Company in Russia
As limited liability companies or non-public joint stock companies are the most suitable forms for small and medium enterprises under Russian law, foreign companies establish such offices in Russia.
Limited Liability Companies (LLC):
- The authorized capital of LLC shall be not less than 10 thousand rubles and
- From the date of LLC’s registration, capital shall be paid in full within 4 months.
- The company’s authorized capital might be paid in money or in property.
- capital shall be evaluated in monetary equivalent, if the property contributed as payment for shares.
- It is divided amongst its shareholders.
Shareholders:
- The shareholders of LLC may be individuals and legal entities.
- The number of the LLC’s shareholders is restricted:
- A company cannot consist of less than 2 shareholder, and more than 50 shareholders.
- An LLC cannot have as a single founder or shareholder another legal entity.
Documents for Registration:
- a registration application, a company’s charter, and
- a document confirming payment of a state duty.
If a foreign legal entity is one of the company’s founders:
- a registration certificate,
- an excerpt from a trade register,
- memorandum and articles of association,
- a certificate on the company’s address,
- a letter from bank on good financial standing, and
- a tax registration certificate.
If a foreign individual is one of the LLC’s founders:
- documents certifying the individual’s identity.
When an LLC is created by the several persons jointly, all of them are treated as applicants for the purposes of state registration.
The Applicant’s signature on an application shall be notary certified. Note well this cannot be delegated.
Important Points with respect to company’s CEO:
A company acquires a special permission for hiring of a foreign citizen, and
a foreigner obtains a work permission/patent,
So, there is no opportunity to appoint a foreigner as a CEO of the company at the stage of a company’s state registration.
However, the CEO may be changed, providing that all requirements for attraction of foreign employees are fulfilled.
In case a foreign investor wishes to escape possible difficulties connected with an LLC’s state registration, there is an opportunity to buy a share in an existing Russian company.
Joint-Stock Companies (JSC):
- The authorized capital of JSC shall be not less than 10 thousand rubles
- there can be more than fifty shareholders in a non-public JSC
- The procedure and package of documents for JSC’s registration is almost the same as for LLC’s.
- Added to this are some additional requirements linked shares emission and state registration by the Russian Central Bank (which is in charge of regulating the activities on the securities markets).
- JSC provides for higher operational costs like certification of minutes of general shareholders’ meetings by a notary or by a registrar.