INCORPORATION OF A COMPANY OF LIMITED LIABILITY IN RUSSIA
The law relating to incorporation of company in Russia is governed by Russian Federal Law on Corporation, Law on Foreign Investment as well as by the Russian Civil Code.
PROCEDURE FOR INCORPORATION
The Foundation Meeting
All founders or their representatives must sign the minutes of the foundation meeting, and a unanimous vote is needed to found the corporation. At the foundation meeting, the founding shareholders approve the bylaws and compile the documents needed for registration.
A company should have a minimum of two shareholders, being either legal entities or persons. Their names appear on public records.
The Statute on Corporations and the Law on Foreign Investment require the following documents be included in the registration application:
- one notarized originals of the application for registration (zayavka);
- two notarized originals of the minutes of the foundation meeting, or, if there is only one founder, the founder's resolution to create the corporation;
- two notarized originals of the corporate bylaws;
- a notarized certificate attesting to the foreign founder(s)' good credit standing issued by a bank or other financial institution (with a notarized translation into Russian);
- a notarized certificate of good standing from the commercial register of the foreign investor's domicile (with a notarized translation into Russian); and
documents confirming the payment of at least 50 percent of the foundation capital.
For documents notarized outside the Russian Federation, the notarization must be authenticated by the Russian Federation Consulate or it must be accompanied by an apostile. These documents must be submitted to the appropriate registry within 30 days of the Foundation meeting. Failure to do so will render the documents invalid. Upon acceptance of the documents the registry issues a temporary certificate of registration.
The foundation capital (capital paid-in at incorporation) must consist of the number of shares of common stock specified in the bylaws, in multiples of ten, all with the same face value.
The minimum share capital of the company is 63,500,000 rbs (about US$12,750), and there is no maximum capital. Fifty percent of the share capital should be paid up by or before the time of incorporation, with the remaining fifty percent payable within one year of the date of incorporation. Companies with high levels of capitalisation require special permission from the Anti-Monopoly Committee of the Russian Federation.
Certificate of Paid-In Capital
When submitting the registration documents, the corporation must present proof to the registry that 50 percent of the foundation capital has been paid in. The remaining 50 percent must be paid within one year.
The company name is acceptable in either Russian (Cryllic) or English. If in Russian, the name will begin with the abbreviation A.O. (Company Limited by Shares), and if in English, will be followed by the abbreviation J.S.C. (Joint Stock Company). The name shall not include the words "Insurance" or "Bank". A special licence is required if the words "Moscow" or "Russia" are included in the name of the company.
In the event that the founding members propose a name for the corporation that is already registered, they will be notified of this fact within 10-12 days of submission of their application.
The corporation must submit two similar but distinct registration application forms.
- One, the Application Form (zayavleniye), constitutes the formal request to the registrar for registration. It must be signed by the general director or the shareholder-appointed manager.
The second, the Application for Registration (zayavka), is considered to be a formal contract among founding shareholders, and as such constitutes one of the foundation documents. At the foundation meeting, the shareholders must individually sign the zayavka.
Contents of the Application Registration Documents
The application documents must contain the following items:
- name of the corporation,
- its place of business,
- the purposes of its creation and principal types of activities,
- a specification of the liability of the shareholders,
- the amount of foundation capital,
- the names and places of business and residence of the founders,
- the nationality of the founders, and
the amount of shares acquired and held by them, as well as the total contribution provided by each founder in rubles.
The corporation must pay a one-time fee at the time the application for registration is submitted. This payment covers registration costs and is non-refundable if the corporation is denied registration.
REGISTRATION & ACCREDITATION DUTIES AND CHARGES
Registration duty is 2000 rubles. There are also charges for registration of company's seal, registration at State Committee for Statistics.
New company formation may take about 1 month.
Accreditation duties for Representative Offices and Branches are considerably higher. The State Registration Chamber duties are:
1-year accreditation duty - 1000 USD
2-year accreditation duty - 2000 USD
3-year accreditation duty - 2500 USD
Branch may be opened for 5-year period - duty is 3500 USD.
There is a requirement for a registered office to be maintained in Russia. Sovereign can provide this service for its clients.
The Russian company may only have one current bank account which must be held with a Russian bank. A minimum of two persons should be authorised to sign the account mandates/instruction (one of them being a Director and the other- the Chief Accountant or his deputy).
The Russian company will pay income tax at the rate of 32%. Federal and Municipal taxes, which vary according to the levels of capitalisation are also levied. As the total taxation level is rather high, it is reasonable to use Russian companies as corporate representatives or agents, in order to reduce this fiscal burden.
Term of Incorporation
A Russian company can be incorporated within 2-3 weeks (including opening of a bank account).