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Regional office of company in Russia

How to open the regional office of foreign company in Russia?


At this moment three main variants are used in practice in process of foreign business arrangement:
— subsidiary company;
— representative office;
— branch;

In order to register the subsidiary company, the foreign organization must grant full package of documents to the local registration authority according to the location where subsidiary company (LLC, JSC, CJSC) will be situated. The legal entities are registered in the Local branches of the Federal Tax Service of the Russian Federation. These registration authorities are located on the territory of Russia according to the territorial principle. There can be a single (e.g. Moscow and Saint-Petersburg) or several (Moscow region) registration authorities in a constituent of the Russian Federation. The necessary registration authority can be defined through the domicile of the subsidiary company.

ATTENTION: According to the legislation of Russia the executive head of the foreign holding company has to act as a filer of the documents necessary for creation of the subsidiary company. The filer may present personally during the filing of the documents to the registration authority, still it is possible to file the documents by proxy. In the latter case the registration authority will send documents which approve registration to the address of established subsidiary company by mail.

The foreign company must grant the full package of documents to the State Registration Chamber under the Ministry of Justice of the Russian Federation in order to open the representative office of branch in Russia. In addition to the accreditation the representative office or branch of the foreign company has to cooperate with the local government authorities.

ATTENTION: All documents required for accreditation of the branch or representative office may be filed by proxy to any Russian authorities. So, all the documents which refer to accreditation can be signed abroad and presence of the signer in Russia is not required. Some banks may require personal presence of the signer of signature card at the final stage of opening a bank account, but this requirement depends on the internal politics of a particular bank.

Hereafter you can get acquainted with the main characteristic of mentioned variants of business establishment with short pros and cons description.

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Variant 1: Subsidiary company


Limited liability company (LLC)


LLC is the most widespread form of legal entities in Russia. It has the least number of obligations which burden the company’s owners. Capital of the LLC is divided in “parts” (shares), which do not act as “stocks” and therefore do not require the registration in the Russian public authorities. Participation share of each company’s member is defined according to his investment in the capital.
Members of the LLC are responsible for its debts only within the size of their shares. One of the most important features of the LLC is the presence of preemptive rights of the members to the acquisition of share in case if any member intents to sell his share to third parties. According to the legislation such alienation must be notarized.

Main characteristics of the Russian LLC:

• Company may consist of one or several members. The number of members should not exceed 50 people. However, if the number of participants exceeds 50, the company must be reorganized to the JSC (Joint Stock Company) or production cooperative in term of one year. In addition, the company can’t have only one member if this member is another legal entity which consists only from one member.
• The authorized capital shall not be less than 10 000 Roubles (approximately 220 Euro).
• 50% of the authorized capital must be paid in before the state registration of the LLC. Other 50% must be paid in within one year after the state registration of the LLC.
• The management is implemented through the General meeting of members, Board of directors (formed at the discretion of the members) and General Director/Board.
• If the company is founded by several members (e.g. joint venture), they may conclude a shareholders’ agreement.

Documents and information required to create the LLC

From the holding-company:
• Certificate of incorporation / Abstract of trade register / other similar document;
• Operating agreement and Articles of Organization;
• Documents which confirm the registered address of company;
• Letter of recommendation from a bank about financial solvency of the company;
• Document about tax registration with taxpayer identification number;
• Certificate from the Trade register about the directors of holding company (if data differs from the information mentioned in the internal documents).

The documents must be notarized and legalized (apostille or consular legalization).

The signatures of authorized persons also must be notarized.


From the foreign founder (natural person)

• Personal data, based on a notarized translation of the passport or other identity documents of a person (scanned copy);
• Copy of the temporary registration (scanned copy);
• Immigration card (scanned copy).

Data required to found the LLC:

• Full commercial name of the new company in Russian;
• Short commercial name of the new company in Russian;
• Full commercial name of the new company in English;
• Short commercial name of the new company in English;
• Area of the business activity of the new company;
• The address of new company;
• Each founder’s full name, scanned copy of the passport with address and citizenship.
• Structure of the management body:

General meeting of members;
Board of Directors;
Executive body (General Director / Governing board).
Notice: all mentioned parts of management body, except of the Board of directors, are required. Russian companies are controlled by the General meeting of members and the executive bodies (represented individually by the General Director or collectively by the Governing board) . If the Board of Directors exists, it has more functions of observation, rather than control. Members of the Board of Directors can’t represent the company, except situations when they act under the letter of attorney. Members of the Governing Board are always the employees of company, but members of the Board of Directors may not have such status.

• Full name of the General Director, each member of the Governing Board and Board of Directors, scanned copies of their passports, addresses, citizenship.

Notice: if the General Director is a foreigner, then he has to obtain the work permit.

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There are no legal restrictions on hiring Russian or foreign citizens for the post of the General Director of the Russian company. If the company intends to hire foreigners, then the employer must obtain permits for foreign workers and work permit for each foreign worker. Under the law, the employer has the right to invite and use foreign workers only if he has the permission to hire foreign workers.

Therefore, the permit to engage foreign workers must be received before these employees start working. On its basis employer has to obtain the personal work permits for each foreign employee.

Procurement of the work permits is the responsibility of employer.

• Full name of the Chief accountant and the scanned copy of his passport;
• Amount of the authorized capital of the new company.
• Name and address of the bank where the company will open account.

Joint-stock company (JSC)

JSC is rarely used for the creation of new enterprises in Russia due to more complex legal requirements. Therefore there is only basic information about this type of companies below.
There are two basic forms of JSC in Russia: an Open joint-stock company (number of members is not limited) and a Closed joint-stock company (number of members must not be more than 50).
Capital of the JSC is divided in stocks, which are the subject of the Russian securities laws and must be registered in the relevant government agencies;
Legislation does not provide to the members of JSC preemptive right to buy stocks in case if any member intents to sell his stocks to third parties.
The authorized capital of the OJSC shall not be less than 100 000 Roubles (approximately 2200 Euro), authorized capital of the CJSC must be more than 10 000 Roubles (approximately 220 euro).
The JSC is controlled by the General meeting of members, Board of Directors and General Director/Board.
If the company is founded by several shareholders (e.g. joint venture) then they may conclude a shareholders’ agreement.

Variant 2: Representative office

Foreign company may operate in Russia through the representative office.
The representative office of the foreign company is not considered to be a separate legal entity. Its head is appointed by the foreign company and acts by proxy.
The main objectives of the representative office are: business development, protection of interests of the foreign company. The representative office does not have the right to carry on commercial activity.
The representative offices have to be registered in the State Registration Chamber under the Ministry of Justice, or in the Chamber of Commerce and Industry of the Russian Federation.
In addition to the accreditation, the registration process includes: registration in tax authorities, statistical authorities, state non-budgetary funds and the opening of bank accounts.


Documents and information required to open the representative office:

• Certificate of incorporation / Abstract of trade register / other similar document;
• Operating agreement and Articles of Organization;
• Documents which confirm the registered address of company;
• Letter of recommendation from a bank about financial solvency of the company;
• Document about tax registration with taxpayer identification number;
• Certificate from the Trade register about the directors of holding company (if data differs from the information mentioned in the internal documents).

Information required to open the representative office:

• Full name of the representative office;
• Area of the business activity of the holding company;
• Address of the representative office;
• Full name, scanned copy of the passport, term of office, address and citizenship of the head of representative office;
• Name and address of the bank where the accounts of the representative office will be opened.
 

Variant 3: Branch


Foreign company may operate in Russia through the branch.
The affiliated branch of the foreign company is not considered to be a separate legal entity. Its head is appointed by the foreign company and acts by proxy.
The branch of foreign company is a division of this company, which carries out all or some of its functions. The branch has the right to conduct an independent commercial activity.
The branches have to be registered in the State Registration Chamber under the Ministry of Justice of the Russian Federation.
Besides the accreditation process of registration of the branch includes registration in tax authorities, statistics and state extra-budgetary funds, as well as the opening of bank accounts.


Documents and information required to open the branch:


• Certificate of incorporation / Abstract of trade register / other similar document;
• Operating agreement and Articles of Organization;
• Documents which confirm the registered address of company;
• Letter of recommendation from a bank about financial solvency of the company;
• Document about tax registration with taxpayer identification number;
• Document which confirms the head’s of branch authority to present the company to third parties.
• Document about tax registration with taxpayer identification number;
• Certificate from the Trade register about the directors of holding company (if data differs from the information mentioned in the internal documents).


Information required to open the branch:


• Full name of the branch;
• Area of the business activity of the holding company;
• Address of the branch;
• Full name, scanned copy of the passport, term of office, address and citizenship of the head of branch;
• Name and address of the bank where the accounts of the branch will be opened.

The State Registration Chamber analyzes the documents for accreditation within 18 days.
Approximate time required to create the branch is 2 months (after the receipt of all requested documents / information from the client).
 

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