Currently in the Russian Federation practice the following 3 main variants of organization of foreign business:
   -subsidiary;
—  representation;
 — branch.

     When registering subsidiaries (OOO, OAO, ZAO) foreign organization must submit a complete package of documents to the registering authority at the location of the future subsidiaries of the company.
      On the territory of the Russian Federation registered bodies in the sphere of registration of legal entities are territorial offices of the Federal tax service. These registered bodies are distributed in the Russian Federation on a territorial basis.

       One subject of the Russian Federation can be registered as a single body (for example, in Moscow and St. Petersburg), and several registered bodies (for example, in the Moscow region). To determine the appropriate registering authority by place of registration (location) of the created subsidiary.

        IMPORTANT: According to the requirements of the Russian legislation, the head of a foreign company being the founder, is obliged personally to act as the applicant (signatory) documents required to create a subsidiary.
    To accelerate the timing of registration, the petitioner may personally be present when submitting documents to the registering authority, however, also possible and filing of documents under power of attorney. In the latter case, the documents confirming registration will be sent by a registered mail to the address established subsidiaries

      To open a representative office or branch at any point of the Russian Federation the foreign firm must submit a complete package of documents for accreditation in the State registration chamber under the Ministry of justice (address: Moscow, Smolensky Boulevard, 3/5) or in the Trade-industrial chamber of the Russian Federation (Moscow, street Ilyinka, 6).

       In addition to accreditation, a representative office or a branch of a foreign organization must implement a number of other actions for interaction with regional state authorities to the location of the representative office or branch.

        IMPORTANT: When the accreditation of a branch or representative office with all the necessary documents to any Russian authorities may be cast by proxy. Thus, all documents relating to accreditation, can be signed abroad and the personal presence of the signer in Russia is not required. Some Russian banks may require personal presence of the signatory signature card at the final stage of opening a Bank account, however this requirement is subject only to internal policies of a particular Bank.
         Following are the main characteristics of such business start with a brief description of advantages and disadvantages.

      Option 1: Subsidiary company
      1.1 limited liability company (LLC)
      1.1.1, OOO — the most common form of legal entity with the lowest number of mandatory requirements that burden the owners of the company. The capital is divided into "parts" (shares), which do not act as "stock" and therefore not subject to the requirements of Russian securities legislation and is not subject to registration as securities in the relevant Russian state authorities. The share of each owner of the company is determined depending on the size of the contribution to the capital.
      1.1.2 the Members of the LLC liable for the debts of the LLC only to the extent of the value of their shares. One of the most important features — the existence of the right of participants to purchase shares if any party declares its intention to sell its stake to third parties. In accordance with the law, such alienation is subject to mandatory notarization.

      1.1.3 Main features of a Russian LLC:
   -in society can be one participant or several. The number of participants cannot exceed 50. However, if the number of participants exceeds 50, the company must spend over one years in the reorganization of OAO (open joint stock company) or production cooperative. In addition, the LLC may not have as a sole participant another business entity consisting of one person;
     -the authorized capital should be not less than 10 000 roubles (approximately 220 Euro);
     -50% of the share capital must be paid before the state registration of the LLC. The remaining 50% of the share capital must be paid within one year after the state registration of the LLC;

management of the company through the General meeting of participants, Board of Directors (formed at the      -discretion of participants) and General Director/Board.
      -In the case of a company with multiple members (e.g. joint venture), the possible conclusion of the agreement between the parties.

      

      1.1.4 Documents and information necessary to create an LLC
    Foreign parent company:
     A) certificate creation / extract from the trade (commercial) register / other similar document;
     B) Memorandum and articles of Association;
     C) a certificate of the registered place of business / other documents confirming location of the company;
     D) a recommendation letter from the Bank on the financial stability of the company;
    E) the certificate of tax registration indicating the tax number.
     F) certificate from the commercial registry in relation to the appointed Directors of the parent company     (if they differ from those stated in the internal documents of the company-founder).
      The documents referred to in paragraphs (A) to (F) must be notarized and legalized (apostille or consular legalization). Authorized signatories must be notarized.

    From a foreign physical person-founder:
    A) personal data, based on the notarized translation of the passport or other documents certifying identity of natural person (scanned copy);
    B) copy of temporary registration (scanned copy);
     C) a copy of the immigration card (scanned copy).
The information required to create an LLC:
     A) Full name of the new Russian company in Russian;1
     B) Short corporate name of the new Russian company in the Russian language;
     C) Full name of the new Russian company in English;
     D) Short corporate name of the new Russian company in English;
      E) activities of the new Russian company;2
     F) the location Address of the new Russian company;3
     G) name of each founder, as well as copy of the passport with indication of registration (address), citizenship (in the case of companies physical persons);


    H) the management Structure:
     -The General meeting of participants;
     -The Board Of Directors;
     -Executive body (CEO / Board).

       Note: create all controls required, with the exception of the Board of Directors. Russian companies are managed by General meeting of participants and Executive bodies (General Director individually or collectively, in the face of the Board).
        In the case of a society, Board of Directors, he has more of a surveillance than control. The members of the Board of Directors may represent the company, except when they act under a power of attorney. The   Board members are employees of companies and members of the Board of Directors as such may not be.

      I) name the General Director, each member of the Board (if it is formed in society), each member of the Board of Directors (if it is formed in society) and copies of their passports, term address, citizenship;

      Note: if the CEO is foreign citizen must have obtained a work permit.
There are no legislative restrictions on hiring Russian or foreign citizens to the post of General Director of the Russian company. If the company intends to employ foreign nationals, the employer is obliged to obtain the permission to attract foreign workers and work permits for each foreign employee.
      Under the law, the employer has the right to invite and use foreign workers only if it has permission to hire foreign workers.
     Thus, in relation to all foreign workers permits to hire foreign workers must be obtained prior to the commencement of their work. Personally a work permit for each foreign employee must be obtained on the basis of permission for attraction of foreign workers. Obtaining work permits is the responsibility of the employer.

     J) name of the Chief Accountant and a copy of his passport;
     K) the authorized capital of the new Russian company;
     L) Bank Name and address (phone number) or contact person, which will open the new account of the Russian company.

 

       - AO is rarely used for the creation of new enterprises in Russia due to more complex legal requirements, therefore, further communicated only the basic information about this type of companies:
        -AO exists in two major forms — joint-stock company (number of participants not limited) and closed joint-stock company (quantity participants, no more than 50);
        -The capital stock is divided into shares that are subject to the requirements of Russian securities legislation and must be registered as securities in the relevant Russian state authorities;
         -In open JSC, unlike the LLC and closed joint-stock companies, no pre-emptive right of shareholders to acquire the shares if any shareholder announces his intention to sell their shares to third parties;
        -The authorized capital of an open JSC must be not less than 100 000 rubles (approximately 2200 Euro), closed JSC — not less than 10 000 roubles (approximately 220 Euro);
        -Management of the JSC is carried out through the General meeting of participants, Board of Directors and CEO/management Board;
         -In the case of a company with multiple shareholders (e.g., joint venture) it is possible to sign a shareholders ' agreement between the shareholders.

     

        Option 2: Representation
       2.1 a Foreign company can conduct business in Russia through a representative office.
       2.2 office of a foreign company is a separate legal entity that represents the interests of foreign companies in Russia. Head of the representative office is appointed by a foreign company and operates under a power of attorney.
       2.3 the Main objectives of the mission: business development, representation and protection of interests of a foreign company. The representative office is not entitled to conduct an independent commercial activity.
       2.4 representative Offices are registered in the State Registration Chamber of the Ministry of Justice of the Russian Federation and Russian Chamber of Commerce and industry (related to accreditation).
        2.5 in addition to accreditation, the process of registration includes registration in the tax bodies, statistical bodies and state extra-budgetary funds, opening of Bank accounts.

       2.6 Documents and information necessary for opening a Representative office
       A) certificate creation / extract from the trade (commercial) register or other similar document;
       В) Memorandum and articles of Association;
       C) certificate of registered seat of a company or other documents certifying the company location;
       D) a recommendation letter from the Bank on the financial stability of the company;

       E) the certificate of tax registration indicating the tax number.
       F) the certificate (decision) confirming the authority of the chief representative to represent the company before third parties.

   

      2.7 Information required for opening a representative office:
      A) the full name of the representative office;
      B) activities of the parent company;
      C) registered address of the location of the representative office;5
      D) the full name of the head of the representative office, copy of his passport, the term of office, address, domicile, nationality;6
      E) Bank Name and address (phone number) or contact person, which will open the accounts of the mission.
   The approximate duration of the creation of the Representative office — 2 months (after receiving all requested documents and information from the client).

​            

         Option 3: Branch
     3.1 a Foreign company can conduct business in Russia through a branch.
     3.2 foreign company Branch is not a separate legal entity.
     3.3 the Head of mission is appointed by the company and acts under a power of attorney.
     3.4 branch of a foreign company is a division of this company that performs all or part of its functions. The branch has the right to conduct an independent commercial activity.
     3.5 Branches should be accredited by the State Registration Chamber of the Ministry of Justice of the Russian Federation.
     3.6 in addition to accreditation, the process of registration includes registration in the tax bodies, statistical bodies and state extra-budgetary funds, opening of Bank accounts.

     

      3.7 Documents and information necessary for opening a Branch:
      A) certificate creation / extract from the trade (commercial) register / other similar document;
       B) Memorandum and articles of Association;
       C) a certificate of the registered place of business / other documents confirming location of the company;
       D) a recommendation letter from the Bank on the financial stability of the company;
       E) the certificate of tax registration indicating the tax number.
       F) the certificate (decision) confirming the authority of the head of the branch to represent the company before third parties.
    3.8 Information needed to create a branch:
    A) the full name of the branch;
    B) activities of the parent company;
    C) registered address of location of the branch;8
    D) the full name of the head of the branch, a copy of his passport, the term of office, address, domicile, nationality;9
    E) Bank Name and address (phone number) or contact person, which will open the account branch.
  State Registration Chamber will review the documents for accreditation within 18 days.
        The approximate duration of the establishment of the branch, 2 months (after receiving all requested documents/information from the client).

   

         Features of labor laws of Russia
      All companies doing business in Russia must comply with the labor legislation of the Russian Federation. The following is a brief list of important questions that you need to pay attention:
      1. A written contract defining the main terms of the employment relationship between the parties and their duties must be concluded with every employee working in Russia. The employment contract must contain certain mandatory provisions of Russian law.
       2. The employer has the right to establish a three-month probationary period for new employees. There are categories of employees that cannot be set on probation.
       3. Employment contracts can be terminated only on special grounds stipulated by law and may not be modified in the employment contract.
       4. The wages of the employee cannot be less than the minimum wage (SMIC), established by Russian legislation. It should be borne in mind that the size of the minimum wage often modified by decisions of public authorities. Regional agreements between local authorities, associations of employers and trade unions can be set higher minimum wages for the relevant subject of the Russian Federation.
   5. Employees in Russia are entitled to annual paid vacation of at least 28 calendar days per year.
   6. In Russia there are 12 public holidays are non-working days:
   A) 1, 2, 3, 4 and 5 January: Christmas holidays
   B) Jan 7: Christmas
   C) 23 February: defender of the Fatherland Day
   D) March 8: international women's day
   E) may 1: Holiday of spring and labor
   F) may 9: Victory Day
  G) June 12: Russia Day
   H) November 4: national unity Day

    7. When work in Russia hiring foreign nationals must observe the mandatory provisions of Russian laws relating to the employment of foreign citizens in the Russian Federation.
 Each foreign citizen should obtain work permit before starting to work in Russia, and working visa (if visa is necessary). Depending on the circumstances, foreign nationals can be employed as a standard procedure (which usually takes at least 3 months from the date of submission of required documents) and the procedure for employment of foreign citizens — highly qualified specialists (shorter procedure). Each of them has its own peculiarities.
      8. Employers must observe the rules of safety, rules of processing of personal data of employees and to make binding local regulations, which must be communicated to all employees against signature to their employment.
      9. Employers urged to adopt local regulations on labour.
       Such acts should contain rules on recruitment and dismissal of staff, basic rights and duties of employer and employees, disciplinary action (these provisions are, as a rule, reproduce the Labour code), date of payment of wages, hours of work and leisure, rules about bonuses, sick leave, reimbursement of expenses, dress code, restrictions on Smoking, restrictions on use of office equipment for personal needs, and other issues that are important from the point of view of the employer.
      The employer must bring these rules to each employee, and each employee shall acknowledge such terms and conditions with your signature.

Notes
     1. name of legal entities, including such words as "Russia". "Moscow", "Federal", CIS, etc., and their combinations require special permission from the appropriate authorities. 
      2. certain activities are subject to licensing. 
      3. location (address) OOO got to meet his mailing address. Note that the address of the legal entity is confirmed by a letter of guarantee (original copy) of the lessor or the certificate of ownership for the purposes of state registration with the tax registration; 
      4. the documents referred to in paragraphs (A) to (F) above must be notarized and legalized (apostille or consular legalization). Authorized signatories must be notarized. 
      5. The location address of the representative office must comply with its mailing address and be confirmed by a rental contract. 
       6. if the chief representative is not a citizen of the Russian Federation, must be received a work permit. 
       7. the documents referred to in paragraphs (A) to (F) above must be notarized and legalized (apostille or consular legalization). Authorized signatories must be notarized. 
        8. Address the address of the branch must match his postal address and confirmed in the rental agreement. 
        9. the work permit must be obtained, if the head of the branch is not a citizen of the Russian Federation. 

 

 

On the registration of foreign companies in Russia 

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