The procedures for establishing a legal entity in Russia are well-developed and are regulated by the Russian Federation Civil Code and by additional laws.

Non-profit organisation

Non-profit organisation (NPO) — is an organisation, whose main goal of the activities isn’t to make a profit and that does not divide profits between the employees. Non-profit organisations can be created for social, charity, cultural, educational, scientific and government purposes. Non-profit organisations in Russia are associations, unions, institutions, non-profit partnerships, autonomous non-profit organisations, community-based organisations, consumers’ cooperatives, charities, and some other forms of organisations. According to the Russian legislation, all NPOs are divided into two groups: corporations and unitary organisations. Corporations are organisations whose employees have the right to fully participate in their activities and form a supreme governing body.

Organisations, whose founders do not become the participants and do not obtain the membership rights, are unitary organisations. NPOs can have civil rights that correlate with the aims of the activities that are described in the company documents and can be responsible for these activities.

The activities of some of the NPO forms (all associations) are allowed without a state registration; however, in this case the organisation cannot obtain the legal entity status, it cannot own or on the basis of property law any separate property. Organisations can obtain property and non-property rights, perform duties (be a part of the civil turnover, conduct business activities), be a claimant and defendant in court only if they have the legal entity status.

Russian public associations are founded on their rules which must state the name and objectives, the structure and the type of public association, the conditions of becoming members or being withdrawn (only in case of the public associations with membership), the modality of appointing the boards and the board’s members, the procedure of amending the rules and other documents, the source of funds, the procedure of reorganization and liquidation.

The following documents must be registered no later than three months from the meeting where the decision of establishment was taken:

• an application for registration of the Russian NGO
• the charter of the public association in three copies
• the minutes of the meeting where the decision of foundation was taken
• information regarding the founders
• the proof of payment of the registration fees
• the details regarding the address of the governing body of the public association which is used for contacting.

All NPO must have an autonomous balance sheet, a bank account, be on the books of the tax and other public bodies of accounting and control (more info on Federal Tax Service Website).

For more information please check:

The Federal Law No.82- on Public Associations (1995, amended 2004) (in English)

The Civil Code of The Russian Federation

For-Profit Company

Foreign investor may set up (or register) a Russian legal entity in the form of limited liability company (LLC), joint-stock company (PJSC, which can be private or public) or partnership.

Joint stock and limited liability companies are forms that are most frequently used by foreign investors to enter the Russian market. Joint-stock and limited liability companies are governed by separate federal laws: Federal Law No. 14-FZ of 8 February 1998 “On Limited Liability Companies” and Federal Law No. 208-FZ of 26 December 1995 “On Joint-Stock Companies”. However, the registration process and requirements are similar.

The other way is to register a representative office or branch office of a foreign company in Russia.

1.1 Russian Legal Entities: Limited Liability Company, Joint-Stock Company, Partnership

Limited Liablility Company (LLC) and Public/Private Joint Stock Companies (PJSC) are Russian legal entities. They may conduct any form of commercial activity, provided it is not prohibited by the Russian legislation. For conducting any licensed type of activity it is necessary to obtain license.

Partnership is a form of legal entity similar to limited liability company. A full partnership is similar to the American general partnership, in which the partners bear (full) joint and some liability for the partnership’s obligations. A participant in a full partnership may not be a full partner in any other partnership. A limited partnership, which is closer to the European kommandit type of partnership, has both full partners and partners whose liability is limited to their contributions. A full partner in a limited partnership may not be a full partner in another partnership, and their liability is the same as for full partners as described above. Partnerships under Russian law are generally regarded as legal entities and taxed accordingly. Please refer to Limited Liability Company requirements and procedures.

Registration is done by the Tax authorities, which keep the United State Register.

Company also shall be registered with State Committee for Statistics and three non-budgetary funds (Pension fund, Obligatory Medical Security Fund and Social Security Fund).

• Registration duty is 2000 rubles (~34 USD).
• Minimum authorized capital for LLC and PJSC is 10,000 rubles (~US$170). Authorized capital is divided into shares/units which represent rights and obligations of a shareholder/participant in accordance with their participations in the authorized capital. The number of shareholders/participants in PJSC/LLC can not exceed 50. Any Russian and foreign companies and persons may be founders and shareholder in any number of Russian companies. The company may be established by a single founder, as long as the founder is not a company owned by a single legal entity or individual.
• Registration at State Committee for Statistics, which amount in general to no more than ~80 USD.
• There are also charges for registration of company’s seal; however, company seals are no longer a legal requirement in Russia following a change in the law in 2015, but many Russian businesses still have seals. The cost for producing one is R500 (US$9).

Limited Liability Company or Private Joint Stock Company can be founded by an individual (Russian or foreign) or by a legal entity; such cases are called Sole ownership. The founding document at Sole ownership company is a Charter. Such company doesn’t have some management bodies such as General Meeting of the Founders. There is no Board of Directors. All the decisions are taken by the sole founder. Legislative requirements on calling of the general meetings, and other procedural requirements do not apply to such company. The management of the company is done by issue of written decisions of the founder. If the founder is also a General Director in the company, the decisions are made by issuance of orders. At the same time such company is a separate legal entity, its assets are legally isolated from the assets of the founder.

Stages of registration of a Russian legal entity (Limited Liability Company, Public/Private Joint Stock Company, Partnership):

1. Registration at the Tax authority (5-7 working days) Once the company documents have been drawn up, a founder need to incorporate the business by sending the following documents to the registration office of the Federal Tax Service (FTS):

• registration application form including notarized signatures (200 rubles, US$3)
• copies of foundation documents
• proof of legal status of business founder(s)
• receipt of state registration fee (4000 rubles, US$67)

Once these documents have been sent, the Federal Tax Service will make a decision within 5 working days and will either approve business to the State Register or refuse the registration. A list of grounds for refusal can be found in article 23 of the Federal Law no. 129-FZ. If the business in Russia is accepted, this process also registers the business for tax purposes. The founder will receive the following documents within 7 days of the submission of application:

• the Incorporation Certificate (or Certificate of State Registration) and Tax Certificate from the FTS
• Tax Identification Number for the business
• Copy of foundation documents with the mark of registering authority
• Extract from the Common State Register of Legal Entities notarized copy of the signatures (cost of R200, US$4 per person) for the account.
• Documents confirming the identity and authority of the signatories of the account Russian business license (if applicable for your business)

2. Registration at the State Committee for Statistics (2-5 working days)

3. Making of the seal of the Company. (2-5 working days)

4. Registration at non-budgetary funds (Pension Fund, Social Security Fund, Obligatory Medical Security Fund) is done by Tax inspectorate

5. Opening of the bank account. The procedure of opening accounts and the list of the required documents are defined by the Instruction of the Bank of Russia of 14.09.2006 N28-I.

6. Registration of the shares issue with the Federal Services for Financial Markets (24-30 working days). Is applicable only to Private and Public Joint Stock Companies.*

List of documents required from a company – non-resident:

• Certificate of Incorporation or extract from the Trade Register of the country of origin.
• Memorandum and Articles of Association.
• Resolution of the Company’s executive (managing) body upon the appointing of the Head of the new company or Power of Attorney to the person authorized by the Company.

Documents mentioned above require Consulate legalization or apostille with notarized translation to the Russian language.

1.2 Representative Office and Branch of a foreign legal entity

Representative Office (RO) and Branch of a foreign legal entity are subdivisions of a foreign company; they are not considered as a separate legal entity. They are considered as Russian non-resident entities for currency control purposes.

Representative Office is a subdivision of a foreign legal entity that represents the company’s interests in Russia. They officially are not allowed to undertake commercial activity in Russia. Accreditation charges of the State Registration Chamber (GRP) depend on the term for which a Representative Office is set up:

• 1 year – 1000 USD
• 2 year – 2000 USD
• 3 year – 2500 USD

There is no requirement for the authorized capital.

Branch is a subdivision of a foreign legal entity that may conduct commercial activity.

• Accreditation charge of the GRP for 1, 2, 3 and 5 years accreditation is 60,000 rubles (~US$1000).
• There is also a state duty which is also 60,000 rubles (~US$1000 Under the Federal law there is a requirement to form assets, but the amount is not stipulated).

Representative Offices and Branches may be accredited at several state bodies, such as State Registration Chamber (GRP), Chamber of Trade and Commerce and various Ministries of the Russian Government, although the Consolidated State Register of ROs and Branches is kept by GRP. Representative Offices and Branches also shall be registered with the Tax authorities, State Committee for Statistics and three non-budgetary funds (Pension fund, Obligatory Medical Insurance fund and Social Security fund). For both the Representative Offices and Branches an executive body (Head of RO or Branch) should be appointed by the foreign legal entity. Such executive body acts pursuant to the Power of Attorney issued by the foreign legal entity.

Stages of accreditation:

1. Accreditation with the accreditation authority (14-21 working days)

2. Producing the seal (2-5 working days)

3. Registration at the State Committee for Statistics (2-5 working days)

4. Registration at the State Tax Inspectorate (5-7 working days)

5. Registration at non-budgetary funds is done by tax inspectorate

6. Opening of a bank account

Required documents:

• notarized copy of the signatures (cost of R200, US$4 per person) for the account.
• Incorporation Certificate and Tax Certificate from the FTS
• Founding documents of your business
• Russian business license (if applicable)
• Notarized signatures
• Documents confirming the identity and authority of the signatories of the account

List of documents required from a foreign legal entity:

• Memorandum and Articles of association of a foreign legal entity (charter, bylaw).
• Certificate of Incorporation of a foreign legal entity or Extract from the Trade Register.
• Letter of introduction provided by a Bank that serves for a foreign legal entity in the country of incorporation that proves its solvency.
• Resolution of a foreign legal entity about opening of the Representative or Branch Office and appointing of the Head.
• Power of Attorney given to the Head of the Representative or Branch Office.
• Certificate of registration with Tax authorities with Tax Code of a foreign company (or its analogue in the country of its establishment).

Documents mentioned above require Consulate legalization or apostille with notarized translation to the Russian language.

Company seals are no longer a legal requirement in Russia following a change in the law in 2015, however many Russian businesses still have seals. The cost for producing one is R500 (US$9)

Sources

• The Civil Code of the Russian Federation

• Federal Law No. 14-FZ of 8 February 1998 “On Limited Liability Companies”

• Federal Law No. 208-FZ “On Joint-Stock Companies” of 26 December 1995

• Corporate Governance Code (approved by the decision of the Board of Directors of the Bank of Russia on 21 April 2014)

• Tax Code of Russia