Check out our overview of the regulatory framework related to the incorporation procedures in Russia and the nature of the selected forms of legal presence. Among the most common legal forms belongs the legal entity incorporated by a foreign entity or individuals, such as founders or shareholders. Other forms of legal presence that can be incorporated by a foreign entity in Russia are either a representative office or a branch.
In our overview we are outlining the main differences between these legal forms in terms of incorporation documentation and registration duties, limitation for business activities and licenses, asset requirements and management, while also pointing out some important local-specific issues to consider and take care of when starting your business in Russia. Furthermore, we provide you with valuable estimations on costs aligned with the incorporation processes and timeline you need to consider.
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Main differences: representative office, branch and LLC
Hereby we provide a concise comparison between representative office, branch and Legal entity according to the main applicable regulations under the Russian law. The Russian legislation provides many different forms of legal entities, however, Limited Liability Company (LLC) is the most commonly used. Therefore, all references to a legal entity mentioned below refer to LLC by default.
Main differences: JSC and LLC
Take a look also on the brief overview of main features and comparison between the Joint Stock Company and Limited Liability Company, according to the regulations under the Russian law.
Important to know
As long as the legal entity incorporation process in Russia is a highly a formal one, the following rules applicable for specific matters should be considered and taken care of.
- Legal entity trade name: must be in Russian language and contain its legal form, i.e. “OOO” (LLC) or “АО” (JSC). Names in foreign languages are admissible but only in addition to “main” name in Russian.
- “Russia” or “Russian Federation” in the name: using of the words “Russia”, “Russian Federation” and cognate words in the name of legal entity requires special permit of Russian state authorities. However, brief words like Rus or CIS can be used without a special permit.
- Employment of foreigners: the foreigners to be employed by the legal entity are subject to obtaining of a work permit issued by the Russian Federal Migration Authorities. The work permit application request should be filed to the authorities after the complete incorporation of the legal entity.
- All documents issued abroad: such as extracts from the state register in relation to founder or founder’s incorporation documents should be duly notarized and legalized, e.g. with the apostille.
Main differences: branch and representative office
Branches and representative offices are not individual legal entities, but rather structural subdivisions of a parent company. The difference between them lies mainly in the fact that the branch may perform all types or some of the business activities of the parent company, while the representative office is not allowed to perform any business activities of the parent company and is limited only to representation and protection of the parent company’s interests, particularly assigned to perform certain marketing functions.
Important to know
As long as the branch or representative office incorporation process in Russia is a highly a formal one, the following rules applicable for specific matters should be considered and taken care of.
- Employment of foreigners: the foreigners to be employed by the branch or representative office are subject to obtaining of the work permit issued by the Russian Federal Migration Authorities. The work permit application request should be filed to the authorities after the complete incorporation of the legal entity.
- All documents issued abroad: such as extracts from the state register in relation to parent company, parent company’s incorporation documents should be duly notarized and legalized, e.g. with the apostille.
Incorporation costs: representative office, branch and LLC
Hereby we provide an overview of statutory costs implied from the incorporation of a representative office or branch. Please note that the amounts stated below are average costs that always depend on the volume of the constitutive documents of the parent company.
Representative Office / Branch Expenses State duty for incorporation 120 000 RUB Documents translation 50 000 RUB Notary fees 30 000 RUB Registered seat set-up 600 RUB
See also an overview of statutory costs related to the incorporation of a Limited Liability Company. Please note, that the amounts stated below are average costs that always depend on the volume of the constitutive documents of the founder.
Limited Liability Company Expenses Share capital statutory minimum 10 000 RUB State duty for incorporation 4 000 RUB Documents translation 50 000 RUB Notary fees 30 000 RUB Registered seat set-up 300 RUB
Incorporation timeframe: representative office, branch and LLC
Please find below our estimation on required timeframes for the incorporation process.
Frequently asked questions
Q: What premises may be chosen as a legal address for the registered office?
A: Any premises are accepted to be chosen as the legal address, except for the residential ones, such as individual flats, houses, etc.
Q: Can the foreigners be appointed CEO and Chief Accountant?
A: Yes, the foreigners are allowed to be employed as CEO or Chief Accountant. They become the subject for obtaining the work permit.
Q: What kind of property can be chosen, for the contribution for the payment of the share capital?
A: Any property is accepted: i.e. cash, tangible assets, intellectual property, etc. However, it is strongly recommended to use the cash deposit as the first option, as the other options require performing of the appraisal, in some cases, this needs to be performed by an independent appraiser.
Q: How shall the out-of-pocket expenses be reimbursed? – notary, translation, post, etc.?
A: Out-of-pocked expenses, such as notary fees, translation costs, post expenses shall be reimbursed at cost.
Q: Does the Russian legislation stipulate a requirement to get special permits to carry out certain activity?
A: Yes, pursuant to Russian legislation in order to be entitled to carry out certain types of activity, such as banking, insurance, armament, radioactive, toxic, etc. the legal entities have to apply for special state permits (licences). The list of activities that can be performed only under a special licence is determined by the legislation.