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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

Representative Office

Branch

Russian Legal Entity




When considering legal presence of your business in Russia, the following options are available:

Important note: When planning any presence and activities in Russia, it is advisable to pay specific attention to actions that may accidentally give rise to a permanent establishment of your company within the territory of the Russian Federation changing the tax status of your business. The first place to check is appropriate double taxation treaty between the Russian Federation and the home country of your business, which generally takes preference over the local laws.



Representative Office



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 (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.

Branches and representative offices are not considered as legal entities under the Russian law, but they still shall be registered in the Unified State Register of Legal Entities (EGRUL). Reference: clause 3 of Article 55 of the Russian Civil Code.



The following legal entity types are the ones most commonly used in Russia:

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.

All possible types of the Russian legal entities are listed in Chapter 4, Part 1 of the Russian Civil Code[1].

Comparison of the Most Popular Legal Entity Types

CriteriaLLC (OOO)Joint-Stock Company
JSC (АО)Public JSC (ПАО)
Number of participants / shareholdersNo more than 50AnyAny
Possibility of one participant / shareholderYes*Yes*Yes*
Statutory minimum charter capitalRUR 10 000RUR 10 000RUR 100 000
Possibility to issue shares and convertiblesNoPrivate 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 securitiesYes (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 / shareholdersList of participants maintained by LLC itselfShareholders’ register maintained by licensed registrarShareholders’ register maintained by licensed independent registrar
Requirements to shareholders’ / participants’ meetingsNo specific requirements to participants’ meetingsShareholders’ meeting to be held at least once a year
Right of first refusalYes, details may be stipulated by the Articles (Ustav)May be stipulated by the Articles (Ustav)No
Corporate governanceA private person is allowed to be both director and participant, Board of Directors or a charted accountant are not requiredShareholders’ 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 / shareholdersNon-notary approval may be stipulated by the Articles (Ustav)Either a licensed registrar or a notaryLicensed registrar (counting commission at the shareholders’ meeting)
Vote requirements on decisionsDecisions are mostly taken by a simple majority with selected decisions requiring 2/3 of votes or unanimity
Annual audit requirementNoYesYes
Requirements on disclosure of information to the publicNo, reporting obligations only in case of issue of securitiesOnly for JSCs with number of shareholders exceeding 50: annual report and annual financial statementsAnnual 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 / shareholdersNames of participants and their shares are available publiclyInformation on shareholders is not available publiclyInformation 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[2] and the federal law #208-FZ “On Joint Stock Companies” dated December 26, 1995[3].



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