Registration of companies with foreign capital in Russia

There are different forms of presence of foreign capital in Russia: opening a foreign currency account in a Russian bank in order to perform operations with securities, agency agreements with Russian companies (to conduct trading operations and render services in Russia), joint venture agreements, a representative office or an affiliated branch set up, and finally, creation of a separate legal entity with partial or total foreign ownership.

It is important for a foreign company to determine the right form of ownership to build presence in Russia. The choice of the form of ownership depends on the type of activity that company plans to realize in Russia and the results that it anticipates. The right form of ownership allows the company to avoid the practical difficulties of working in Russia and to reduce the overhead costs.

“Intersolution" company will provide you with business consultation on the best form of ownership and taxation schemes and prepare all the necessary documents for registration. We offer our clients the registration of representative offices and affiliated branches, as well as separate legal entities with foreign capital in St. Petersburg and region.

Representative offices and affiliated branches of foreign companies in Russia are not considered as separate legal entities according to the legislation of the Russian Federation.

A representative office represents the interests of a foreign company in Russia and protects them.

An affiliated branch performs the part or all the functions of a parent organization including the representative office functions given that it is set up for commercial purposes, and the branch bears property responsibility related to its activities in the Russian Federation. A branch has the right to perform business activity in Russia.

Therefore, the main difference between the representative offices and affiliated branches in Russia is that the representative offices are not allowed to run production and commercial operations.

A separate legal entity with foreign capital is a commercial organization set up by foreign investors in Russia and subordinate to the Russian legislation, which is applicable to the Russian companies.

The registration process of foreign companies’ representative offices in the Russian Federation is as follows (the registration process of affiliated branches doesn’t differ significantly):

The Chamber of Commerce and Industry of the Russian Federation issues a permit to the foreign companies to open representative offices in Russia. The State Registration Chamber (organized by the Ministry of Justice of the Russian Federation) accredits the representative offices of foreign companies. Accreditation is granted for 1, 2 or 3 years and can be prolonged. In order to get accreditation, the company has to pay duties, the amount of which depends on the period of accreditation. From the date of accreditation, a representative office is considered to be opened.

Registration of companies with partial or total foreign ownership has the same procedure as registration of Russian companies (except for the several differences).

The most commonly used forms of commercial legal entities in Russia are the following:

• Limited liability companies (OOO)

• Joint stock companies (ZAO, OAO)

A limited liability company (OOO) may be established by one or more persons or legal entities, and the number of participants must not exceed 50 persons. The charter capital consists of contributions made by its participants. The initial charter capital is minimum 10000 rubles (about $350 USD). A limited liability company doesn’t issue shares unlike a joint-stock company.

A joint stock company (ZAO, OAO) is a legal entity, which issues shares in order to raise the capital. Like in a limited liability company, the number of participants in a close joint-stock company (ZAO) must not exceed 50 persons. The initial charter capital is minimum 10000 rubles (about $350 USD). An open joint-stock company (OAO) has an unlimited number of participants. The initial charter capital is minimum 100000 rubles (about $3500 USD). Unlike ZAO, OAO is allowed to apply for IPO. A disadvantage of OAO is that it is a highly regulated form of ownership.

Such form of ownership as OOO is preferred by most of the companies, as it requires the minimum capital and efforts for a company set up.

No matter what form of ownership you choose, we will prepare the necessary documents and apply for the process of company registration. Some of the parent company’s documents are required to register a company with foreign capital. We will translate them into Russian if necessary.