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05.09.2019

A guide to opening an LLC in Russia

Before focusing on the ways for foreign founders to institute a legal presence in Russia, information technology would exist helpful to say a few words about common forms of local concern structures for non-resident investors.

Distributorship contract

This grade of business does not require opening a company in Russia. Distributorship contract is an economically feasible options for foreign small businesses. At an early on stage, when there are no regular employees and no reliable distribution channels, a foreign legal entity (FLE) may allow the Russian companies to sell the FLEs' goods in Russian federation.

Cooperation betwixt the manufacturer and the official benefactor may take several forms. A FLE may grant a Russian benefactor exclusive rights to import goods and sell them in Russia. A FLE may cull several distributors for various groups of goods or impose territorial restrictions requiring the customers to purchase products just from a sure distributor. Most usually a distributor grants smaller dealers the rights to work with clients and focuses on product promotion and partner network expansion.

Representative office or co-operative. A co-operative and representative role (RO) of a FLE are stand up-alone subsidiaries governed past a parent company and performing all or some of its functions. In practice, branches and representative offices are the nearly common forms of business organisation for medium and large FLEs. They may open and close accounts in the Russian and foreign banks, brand transactions and sign contracts. Branches and representative offices are managed by an appointed head/director.

FLEs' branches or representative offices registered in Russia pay taxes in line with the Russian tax legislation and international agreements. Double taxation treaties between Russia and FLE'due south countries of origin are meant to prevent double revenue enhancement. To piece of work in Russia, branches and representative offices are subject to accreditation, which takes about thirty days and requires a 120,000 roubles fee.

Joint venture. At that place is no such thing as a joint venture (JV) in Russian police force. Essentially, it is an unofficial name for an organization established by local and strange businessmen in Russian federation. JV is registered as an ordinary company, a articulation stock visitor (JSC) or a express liability company (LLC).

To course a joint venture a foreign investor may establish a new company or buy a stake in an existing Russian-owned enterprise by acquiring a participatory interest in the company'southward charter capital or past condign a participant through an increase in the charter capital.

The advantages of this type of business in Russia include the power to tap several markets and strong economic growth. What is more, the Russian partners are fully aware of the marketplace climate, well versed in legal matters and have the required expertise and contacts.

A company with a foreign founder.

The nigh popular forms of company registration in Russia are joint stock companies and limited liability companies. Such legal entities operate under their own charter and in line with the Russian laws. The incorporation procedures for a JSC and an LLC are very similar, the difference is that later JSC incorporation, it is necessary to additionally register the shares issue and delegated the powers of keeping the annals of shareholders to a professional registrar. The liability of the participants for the company's debts is limited to the payment of their shares in the charter uppercase. LLC may opt for a simplified tax system (STS), a preferential revenue enhancement regime offered by the state, which is beneficial to small and medium businesses.

This article will focus on registration of an LLC with non-resident founders, equally the most familiar and easy-to-use business concern form for foreigner investors.

Before going into details, it is necessary to outline the existing terms for establishing an LLC with foreign participation in Russia.

Is information technology possible to open an LLC with foreign participants (foreign national or a FLE) in Russian federation? Under par. 4 of art. 66 of the Russian Civil Code the participants in the economic companies and the investors in the limited (commandite) partnerships may be the citizens and the legal entities. The law may prohibit or restrict the participation of the individual categories of citizens in the economic partnerships and companies, with the exception of the public joint-stock companies. The similar rule is prepare out in par. 1 of art. 7 of the Federal police force "On Limited Liability Companies" (On LLC) dated 08.02.1998 N14-FZ.

Registration of LLC with foreign participation
+7(495) 589-05-39 and info@ur-assistance.ru

On the ground of par. 7 of fine art. 11 of the Law N 14-FZ registration procedure for LLC with foreign participation is determined by the federal police force.

Under art. 6 of the Federal Police force of 09.07.1999 Due north 160-FZ "On Strange Investment in the Russian federation" (hereinafter – Law Northward 160-FZ) the foreign investor is entitled to implement investment on the territory of the Russian Federation in whatsoever forms not prohibited by the legislation of the Russian federation.

When registering an LLC, foreign individuals and foreign legal entities may act every bit founders (participants). Withal, Russia's Federal Law "On Express Liability Companies" No. 14-FZ dated 08.02.1998 (art. seven par. ii, sec. 3) sets out the following restriction with respect to LLC incorporation: A company may not take another economic company consisting of 1 person as the but participant.

The provisions of this Federal Police force shall extend to companies with i participant inasmuch as this Federal Police force does not stipulate otherwise and inasmuch as this does not contradict the substance of advisable relations.

Challenges and difficulties of establishing an LLC with 100% foreign participation past a strange company consisting of one person in Russia.

Features of registration of an LLC with a foreign founder. Registration of LLC with foreign participation is a rather popular service in the Moscow legal services market.

Requirements for the preparation and submission to the registering body of an awarding for registration of an LLC with foreign capital letter. Applicant.

Until recently, information technology was rather easy to establish an LLC with foreign investments. Opening an LLC by foreign nationals was even easier, if the newly established company consisted of both strange individuals or companies on the one hand and Russian founders on the other hand.

If a founder of an LLC was a strange individual or a legal entity and for some reasons could not come up to Russian federation, a Russian national used to become the founder of an LLC. This was the easiest and most frequently used option, the point being that both nationals (foreign and Russian) used to become the founders of the LLC.

The share of a Russian national in the lease upper-case letter could have been 001%, ane%, or of whatsoever other insignificant size. In line with the minutes of the meeting of founders, the Russian national was ordered to annals the company. Information technology was this national who could have acted every bit an applicant responsible for filing the documents for state registration of the company.

The procedure allowed to avoid many bug with the signature'southward certification by a consul or translation of applications and their certification by foreign notaries. Subsequently registration of an LLC with foreign participation, the share owned by a Russian national could have been sold to a strange national, or the Russian national could have left the LLC, upon application, and his share was subject to distribution or buyback by a foreign participant.

But the Gild of the Federal Taxation Service of Russian federation No. MMV-vii-6-/25@ "On Approval of Forms and Requirements for the Execution of Documents to be Filed with the Registering Body for Land Registration of Legal Entities, Self-Employed Individuals and Peasant (Farm) Holdings" dated 25.01.2012 has significantly complicated registration of LLC with foreign participation.

In line with the new forms for legal entities registration, all founders of the company were charged with responsibility to act as applicants for company incorporation, i.e., it was no longer possible for one of them to take on powers delegated past other applicants. (Previously, one applicant for registration of an LLC with few founders was enough.) Therefore, if the future legal entity is founded by two or more persons, the application for the LLC registration in cavalcade 2.xx. List N of the application "Data virtually the Applicant" is be filled with information about all founders (including foreign ones). The awarding's list "Data about the bidder" is signed past the specified person and notarized.

Therefore, foreign individuals, every bit well equally heads of strange entities who are willing to register an LLC in Russian federation, have to come to Russia and certify their signatures in the application for the company registration. If there are three or 5 or more participants, all of them take to apply to Russia'southward notary offices and notarize their signatures in the awarding.

Fortunately, when registering an LLC, foreign founders don't take to come up to a notary all at in one case, it is possible ane by i, and come to different notaries, however, the new requirements accept significantly complicated the registration of an LLC with strange participation.

Do I need to come to the Russia to annals an LLC with foreign founders?
When registering an LLC with foreign investments in Russia, in that location are a number of difficulties associated with the impossibility of a strange national - founder or head of a foreign legal entity – to come to Russian federation for registration.

However, the founders are effectively required to come to Russia. Every bit was mentioned before, during registration of an LLC in Russia, the application on the state registration of a legal entity when incorporated (form P11001) is filed with the registering body, and the application should be signed past all founders of the legal entity, and their signature should be certified by a notary.

Co-ordinate to par. 1 of fine art. nine of the Federal Constabulary dated Baronial 8, 2001, No. 129-FZ "On State Registration of Legal Entities and Individual Entrepreneurs" the following individuals may act as applicants during registration of a legal entity when incorporated:

• founder (founders) of a legal entity at the time of its establishment;

• head of a legal entity acting every bit a founder of a legal entity being registered;

Russian federation's legislation therefore does not allow signing an application for state registration of a legal entity when incorporated by a person acting under power of attorney. A founder of a company or the caput of a FLE that is the founder of an LLC has to personally come to a notary.

Every bit for signing the decision on establishing an LLC, this decision may be signed past a person acting on the ground of a verified power of chaser. The application on state registration of a legal entity can be submitted to the registering body under the power of chaser, the certificate of state registration of a legal entity and the company's articles of association can as well be received past a representative under the power of attorney.

What if a strange national cannot come to Russia to certify the signature by a notary? There are several options.

Certification of an application for state registration in a consular office. According to fine art. 1 of the Russian law on notaries public, notarial acts on behalf of Russia in the territory of other states are performed by the authorized officials of Russia's consular offices.

Notwithstanding, practice shows that there are many pitfalls in this process, and it is necessary to ask well-nigh the possibility of certification of the founder's signature in each particular consulate.

For case, there are conventions in force, according to which "a consular official has the correct to certify signatures of nationals of the represented state", which means that simply signatures of Russian nationals are subject field to certification.

Moreover, in accordance with par. 12 of Addendum one to the Lodge of the Federal Taxation Service of Russia of 01.xi.2004 N SAE-3-09/16@ "On methodological clarifications for filling the forms of documents used in the country registration of legal entities and private entrepreneurs" department 12 of an application for state registration of a legal entity when incorporated is filled by a notary in line with commodity 80 of the Russian police on notaries public.

If section 12 is filled in by a consul rather than a notary, the Federal Tax Service may officially refuse registration of an LLC with strange participation. In the all-time-instance scenario, there's a notary in a Russian consulate.

Certification of an application for registration of an LLC by a foreign notary, apostilization.

Alternatively, a notary may agree to certify an application in Russian, for example, if one translates an awarding only to ensure a notary understands the purport of the document without certifying the information specified in the application and certifies the signature of a signee. In this case, a notary verifies the say-so and certifies the signature of an bidder on a dissever page, and attaches it to the application in Russian, then the documents are apostilized, translated (apostille + notary's signature sail), the translation is certified by a notary and and then the documents are submitted to the registration torso. This is the most popular way of registration of an LLC by a foreigner, with no need to come to Russian federation.

It should exist noted that all strange documents are accepted but with the marks of consular legalization or apostilized, as well as with a notarized translation of these documents. Other requirements are set up for participants from countries that have signed a mutual assist treaty with Russia, countries that have signed and countries that have not signed the Hague Convention of 1961. Thus, for the countries that signed the treaty "On legal help and legal relations" dated October 07, 2002 (Ukraine, Belarus, Czech republic, Latvia, etc.), documents notarization is enough. Residents of countries that signed the 1961 Hague Convention submit apostilized documents to the Russian registration torso. Both the documents themselves and the apostille must be translated into Russian, and a translation must exist certified by a notary public. Documents of foreign investors from countries that have non signed the Hague Convention are legalized in Russia's consular offices located in these countries.

Registration of an LLC without participation of a strange national or a legal entity, followed by incorporation of foreigners into an LLC. An LLC is being registered with the participants who can certify their signatures in the application for registration of the LLC with a Russian notary public. Afterward that, a foreign national or a foreign legal entity is incorporated into a registered LLC on the basis of a sales agreement or by an increase of charter capital of the company through contributions of third parties accepted into the company. Of grade, this process takes longer, consists of several stages of registration of an LLC with foreign participation. However, it requires much less coin that could take been spent for travelling to Russia, accommodation, etc. Though, as practice shows, foreigners still prefer more "traditional" options, they are not used to looking for loopholes of "uncomfortable" legislation.

Buying a ready-fabricated visitor, followed by re-registration and incorporation of strange participants into an LLC.

Less bonny option for foreigners. All the same, we have to mention it besides.

If a foreign national or a foreign legal entity are planning to be the simply participants of the registered LLC and cannot come to Russia to register a company, have no partners in Russia, who could act every bit founders for the future LLC, it is possible to buy an already registered company. After the buy of a ready-made company, the caput of the legal entity may submit documents to the registration body to alter the participants of the LLC and incorporate foreign participants into the LLC. Really, nosotros're going back to option iv. While changing participants of an LLC a former participant who used to be a founder leaves the company, and his share is bought out or distributed among foreign participants.

Documents required from foreign founders for registration of an LLC with strange participation.

If a foreign company is the founder, the extract from the annals of strange legal entities of a corresponding state of origin or other equivalent legal proof of the juridical condition of the strange legal entity, as well as a Russian translation of the passport of the head of the investor'southward company, is submitted for registration of the LLC.

Information technology should be noted that if an application for registration is notarized by a Russian notary, the latter will ask the director of the investor'south company to provide a certified translation of the visitor's lease and a decision to appoint him every bit the head of the company. A notary volition need these documents to confirm the authority of the manager, they are not submitted for registration. Moreover, if the managing director of a foreign company does non speak Russian, a certified translator will be required, equally the manager must confirm that he or she is conscious of his or her actions and intentions to annals the company.

Other documents may include a certificate of state registration, a charter and a decision on the institution. It is recommended that all available documents be provided. Foreign documents must be translated into Russian, the translation must be notarized, and the documents must be apostilized.

If the founder of a company is a strange individual, a notarized translation of the passport of the foreign founder of the LLC volition be required.

Regardless of whether the founder of a company with foreign participation is an individual or a legal entity, a notarized power of attorney for submission and receipt of documents from the registering body is required. Of form, the power of chaser must be translated into Russian and the translation must be notarized. Again, this power of chaser is issued only to submit and receive documents from the registering body, information technology is impossible to use it to verify an application for registration of an LLC.

Intricacies related to the participation of a foreign investor in the management of a visitor registered in Russia. Is a work permit required?

The most important affair is that the founder may lack a work permit or residence permit to register a visitor with strange participation. Moreover, as mentioned higher up, the registration can be carried out in the founder'southward absence, therefore a visa is non required. In other words, a foreign national may be both the founder and the head of the visitor to be established in Russia.

Still, in club for the head of the company to work successfully, it is still recommended that a foreigner use for a work permit in Russia. Since work permits and visa invitations are issued for top-managers without quota, hiring of highly qualified specialists (HQS) is greatly simplified.

There's no need to apply for a permit to recruit strange workers, to mail service a vacancy in the employment center, to provide a Russian language certificates and medical certificates.

The highly qualified specialists (HQS) according to Russian constabulary include foreign nationals earning over ii million roubles per yr under agreements/contracts. It is assumed that these employees have stiff noesis and experience in their surface area of specialization. A three-year piece of work permit is granted to them under a simplified procedure compared to other foreign workers.

Importantly, if you hire a foreigner for an executive position when registering a company in Russia and programme to result a work let for him/her, information technology is not recommended that you annals him/her as a director at once!

The process for obtaining a piece of work permit for HQS from visa countries implies issuing invitations and work visas. Therefore, if you offset register a greenhorn as a director of the future company, and then apply for a work permit for him, you will confront difficulties and will accept to make changes to the register of legal entities and lay him/her off. Therefore, one should follow the rule: first work allow, and so registration as a manager.

Restrictions on LLCs with foreign participation

The Russian legislation does non provide for whatever restrictions on the employ of a simplified revenue enhancement system (STS) past Russian entities formed by foreign founders. These restrictions are listed in art. 346.12 and 346.13 of the Russian Tax Lawmaking.

The Russian legislation provides for rather strict regulation of participation of entities with non-resident founders in certain sectors of Russia's economy.

The law imposes restrictions on foreign investors' participation in the lease capital of entities deemed strategic for Russia's defense and security. The following sectors have been defined equally strategic: repairing, disposal of weapons and military machine equipment, using radioactive materials, Boob tube and radio broadcasting with a large coverage, publishing a periodical print publication with the apportionment at least 1 thousand copies for each event and 39 more than industries. Under the Federal Law No. 57-FZ dated April 29, 2008 and the Federal Law No. 58-FZ dated April 29, 2008, a foreign investor seeking command over strategic business entities has to either apply for a prior authority or notify the authorized trunk of a planned transaction. The process for applying for a prior say-so is explained in art. 12 of the Law.

At that place are restrictions on foreign investments in insurance and banking sectors. The Constabulary "On Organisation of Insurance Business organization in the Russia" dated 11.27.1992 N 4015-ane, Federal Human activity "On banks and banking activity" dated 02.12.1990 North 395-i;

Restrictions also use to foreign ownership and leasing of country plots.

Under par. two, art.xv of the Russian Country Code, foreign legal entities shall not accept championship of plots of land located in the border territories recorded in the list established by the President of the Russian federation in compliance with the federal legislation on the Land Border of the Russian Federation and other territories of the Russian Federation specifically indicated under federal laws.

This means that the country plots in the border territories and inside the seaport boundaries cannot be in the ownership of strange citizens or strange organisations (par. three. art. xv, State Code; par. 2. art. 28 of 261-FZ dated 08.11.2007).

Foreign citizens, strange legal entities, stateless persons, equally well as the legal entities in whose authorized (pooled) capital the share of strange citizens, foreign legal entities and stateless persons exceeds 50%, may just possess land plots pertaining to subcontract lands on a leasehold footing, except for cases provided for by the 119-FZ dated 05.01.2016 (art. 3 of 101-FZ "On Farm land turnover").

These are sure land plots in sure border territories, within the boundaries of seaports, etc. Russian companies with a strange participation of more than l% cannot own agricultural land, foreign investors may only charter agricultural land.

Sectional Processing services in the field of registration of LLC with foreign participation.

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Our primary business focuses on land registration of legal entities and private entrepreneurs. We will help you to register your company in Moscow in the shortest possible time and on favourable terms.

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