Legal Presence in Russia
Legal Presence Summary | Representative Office | Branch | JSC (AO) | LLC (OOO) | Sources |
Last updated: December 6, 2016
Options on Legal Presence in Russia
When considering legal presence of your business in Russia, the following options are available:
- Representative office of a foreign legal entity,
- Branch of a foreign legal entity,
- Russian legal entity.
Representative office (predstavitelstvo, представительство) is a subdivision of a foreign legal entity that represents and protects its interests in Russia.
Representative offices are not entitled to undertake commercial activities with a focus on advertising and promoting the business, networking, collection of information (marketing research, etc.) and other auxiliary activities. A representative office shall be accredited by the state authorities in order to operate in Russia with accreditation granted for unlimited period.
Branch (branch of a foreign company, filial inostrannoi kompanii, филиал иностранной компании) is a subdivision of a foreign legal entity that carries out all functions or part of functions of a foreign legal entity in Russia (including functions of the representative office).
Branches are entitled to undertake commercial activities in Russia. They shall be accredited by the state authorities in order to operate in Russia with accreditation granted for unlimited period.
Russian Legal Entity
The following legal entity types are the ones most commonly used in Russia:
- Limited Liability Company (OOO, Obschestvo s Ogranichennoi Otvetstvennostyu, Общество с Ограниченной Ответственностью),
- Joint Stock Company (AO, Aktsionernoye Obschestvo, Акционерное Общество) or Public Joint Stock Company (ПАО, Publichnoe Aktsionernoye Obschestvo, Публичное Акционерное Общество).
The limited liability company (OOO) is the most convenient type of legal entity to be established due to comparative simplicity of registration and further maintenance (reporting, etc.). However, in some cases, such as the number of shareholders exceeding 50 or the free float plans, you may choose another form.
|Criteria||LLC (OOO)||Joint-Stock Company|
|JSC (АО)||Public JSC (ПАО)|
|Number of participants / shareholders||No more than 50||Any||Any|
|Possibility of one participant / shareholder||Yes*||Yes*||Yes*|
|Statutory minimum charter capital||RUR 10 000||RUR 10 000||RUR 100 000|
|Possibility to issue shares and convertibles||No||Private placement only (to be registered at the Central Bank)||Both public and private placement (to be registered at the Central Bank)|
|Possibility to issue bonds and other securities||Yes (to be registered at the Central Bank)||Yes (to be registered at the Central Bank)||Yes (to be registered at the Central Bank)|
|Registration of participants / shareholders||List of participants maintained by LLC itself||Shareholders’ register maintained by licensed registrar||Shareholders’ register maintained by licensed independent registrar|
|Requirements to shareholders’ / participants’ meetings||No specific requirements to participants’ meetings||Shareholders’ meeting to be held at least once a year|
|Right of first refusal||Yes, details may be stipulated by the Articles (Ustav)||May be stipulated by the Articles (Ustav)||No|
|Corporate governance||A private person is allowed to be both director and participant, Board of Directors or a charted accountant are not required||Shareholders’ Meeting, the Board of Directors (at least 5 directors, in case the number of shareholders in below 50 the Charter may delegate functions of the Board to the Shareholders’ Meeting), an executive body and internal auditing commission / elected internal auditor|
|Approval of decisions of participants / shareholders||Non-notary approval may be stipulated by the Articles (Ustav)||Either a licensed registrar or a notary||Licensed registrar (counting commission at the shareholders’ meeting)|
|Vote requirements on decisions||Decisions are mostly taken by a simple majority with selected decisions requiring 2/3 of votes or unanimity|
|Annual audit requirement||No||Yes||Yes|
|Requirements on disclosure of information to the public||No, reporting obligations only in case of issue of securities||Only for JSCs with number of shareholders exceeding 50: annual report and annual financial statements||Annual report, annual financial statements, announcements on shareholders’ meetings, prospectus and other information specified by the Russian legislation and / or the Russian Central Bank|
|Public access to information on participants / shareholders||Names of participants and their shares are available publicly||Information on shareholders is not available publicly||Information on shareholders is not available publicly|
* The sole participant / shareholder shall not be a legal entity, which in its turn has the sole participant / shareholder (a private person or a legal entity).
Source: compilation of factosphere.com based on the federal law #14-FZ “On Limited Liability Companies in the Russian Federation” dated February 8, 1998 and the federal law #208-FZ “On Joint Stock Companies” dated December 26, 1995.