What Word Means Forcing People Into Public Service

05.09.2019

A guide to opening an LLC in Russia

Earlier focusing on the means for foreign founders to plant a legal presence in Russia, it would be helpful to say a few words about common forms of local business structures for not-resident investors.

Distributorship contract

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

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

Representative office or branch. A branch and representative office (RO) of a FLE are stand-alone subsidiaries governed by a parent company and performing all or some of its functions. In practice, branches and representative offices are the most common forms of business 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 revenue enhancement treaties between Russia and FLE'southward countries of origin are meant to forbid double taxation. To work in Russia, branches and representative offices are subject to accreditation, which takes virtually thirty days and requires a 120,000 roubles fee.

Joint venture. In that location is no such matter as a joint venture (JV) in Russian law. Essentially, it is an unofficial proper name for an system established by local and foreign businessmen in Russia. JV is registered as an ordinary visitor, a joint stock company (JSC) or a limited liability visitor (LLC).

To course a joint venture a foreign investor may establish a new visitor or purchase a stake in an existing Russian-endemic enterprise by acquiring a participatory interest in the company's charter upper-case letter or by becoming a participant through an increase in the charter capital.

The advantages of this type of business organization in Russian federation include the ability to tap several markets and strong economical 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 about 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 like, the departure is that after JSC incorporation, it is necessary to additionally register the shares issue and delegated the powers of keeping the register 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 taxation system (STS), a preferential tax authorities offered by the state, which is beneficial to small and medium businesses.

This commodity will focus on registration of an LLC with non-resident founders, as the near familiar and easy-to-apply business form for foreigner investors.

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

Is it possible to open an LLC with foreign participants (foreign national or a FLE) in Russian federation? Under par. four of fine 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 like 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-help.ru

On the basis of par. vii of art. eleven of the Law N xiv-FZ registration procedure for LLC with foreign participation is determined by the federal constabulary.

Under fine art. 6 of the Federal Law of 09.07.1999 North 160-FZ "On Strange Investment in the Russian Federation" (hereinafter – Police N 160-FZ) the foreign investor is entitled to implement investment on the territory of the Russia in any 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). However, Russia'due south Federal Law "On Limited Liability Companies" No. 14-FZ dated 08.02.1998 (fine art. 7 par. 2, sec. 3) sets out the following restriction with respect to LLC incorporation: A visitor may not have another economical visitor consisting of i person as the merely participant.

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

Challenges and difficulties of establishing an LLC with 100% foreign participation by a foreign company consisting of 1 person in Russian federation.

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

Requirements for the preparation and submission to the registering body of an application for registration of an LLC with strange capital. Applicant.

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

If a founder of an LLC was a foreign individual or a legal entity and for some reasons could non come to Russia, a Russian national used to become the founder of an LLC. This was the easiest and most often used option, the bespeak beingness that both nationals (foreign and Russian) used to go the founders of the LLC.

The share of a Russian national in the charter capital could take been 001%, ane%, or of any other insignificant size. In line with the minutes of the meeting of founders, the Russian national was ordered to register the company. It was this national who could take acted as an bidder responsible for filing the documents for state registration of the company.

The procedure immune to avert many issues with the signature'southward certification by a consul or translation of applications and their certification by strange notaries. After registration of an LLC with foreign participation, the share owned by a Russian national could take 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 strange participant.

But the Social club of the Federal Taxation Service of Russian federation No. MMV-seven-half-dozen-/25@ "On Approval of Forms and Requirements for the Execution of Documents to exist Filed with the Registering Body for State 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 visitor were charged with responsibility to human action as applicants for company incorporation, i.e., it was no longer possible for ane of them to take on powers delegated by other applicants. (Previously, one applicant for registration of an LLC with few founders was enough.) Therefore, if the future legal entity is founded past two or more than persons, the application for the LLC registration in column 2.20. Listing N of the awarding "Information almost the Bidder" is exist filled with information virtually all founders (including foreign ones). The application'south list "Data about the applicant" is signed by the specified person and notarized.

Therefore, foreign individuals, as well equally heads of foreign entities who are willing to register an LLC in Russian federation, accept to come to Russian federation and certify their signatures in the awarding for the company registration. If in that location are 3 or v or more participants, all of them have to utilise to Russian federation'south notary offices and notarize their signatures in the application.

Fortunately, when registering an LLC, foreign founders don't have to come to a notary all at once, information technology is possible ane by ane, and come to different notaries, however, the new requirements have significantly complicated the registration of an LLC with foreign participation.

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

However, the founders are effectively required to come to Russia. As was mentioned earlier, during registration of an LLC in Russia, the application on the country registration of a legal entity when incorporated (class 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.

According to par. one of art. ix of the Federal Law dated August eight, 2001, No. 129-FZ "On State Registration of Legal Entities and Individual Entrepreneurs" the following individuals may human activity 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 as a founder of a legal entity being registered;

Russia'south legislation therefore does not permit 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 head of a FLE that is the founder of an LLC has to personally come to a notary.

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

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. Co-ordinate to art. 1 of the Russian police force on notaries public, notarial acts on behalf of Russia in the territory of other states are performed past the authorized officials of Russia's consular offices.

However, exercise shows that there are many pitfalls in this process, and information technology is necessary to ask about the possibility of certification of the founder'due south signature in each detail consulate.

For case, there are conventions in force, co-ordinate to which "a consular official has the right to certify signatures of nationals of the represented land", which ways that just signatures of Russian nationals are subject to certification.

Moreover, in accordance with par. 12 of Annex 1 to the Order of the Federal Tax Service of Russia of 01.eleven.2004 North SAE-iii-09/16@ "On methodological clarifications for filling the forms of documents used in the state registration of legal entities and individual entrepreneurs" section 12 of an application for country registration of a legal entity when incorporated is filled by a notary in line with article 80 of the Russian constabulary on notaries public.

If department 12 is filled in by a delegate rather than a notary, the Federal Tax Service may officially refuse registration of an LLC with foreign participation. In the all-time-case scenario, there'south a notary in a Russian consulate.

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

Alternatively, a notary may agree to certify an awarding in Russian, for instance, if one translates an application only to ensure a notary understands the purport of the certificate without certifying the data specified in the awarding and certifies the signature of a signee. In this case, a notary verifies the authority and certifies the signature of an applicant on a dissever page, and attaches information technology to the application in Russian, and so the documents are apostilized, translated (apostille + notary's signature sheet), the translation is certified by a notary and so the documents are submitted to the registration body. This is the nigh popular way of registration of an LLC by a greenhorn, with no need to come to Russia.

Information technology should be noted that all foreign documents are accepted only with the marks of consular legalization or apostilized, besides equally with a notarized translation of these documents. Other requirements are set for participants from countries that have signed a mutual assistance treaty with Russian federation, countries that have signed and countries that have non signed the Hague Convention of 1961. Thus, for the countries that signed the treaty "On legal assistance and legal relations" dated October 07, 2002 (Ukraine, Belarus, Czechia, Latvia, etc.), documents notarization is plenty. Residents of countries that signed the 1961 Hague Convention submit apostilized documents to the Russian registration body. Both the documents themselves and the apostille must be translated into Russian, and a translation must be certified by a notary public. Documents of foreign investors from countries that take not signed the Hague Convention are legalized in Russian federation'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 tin certify their signatures in the application for registration of the LLC with a Russian notary public. After that, a strange national or a foreign legal entity is incorporated into a registered LLC on the basis of a sales agreement or by an increment of charter majuscule of the company through contributions of tertiary parties accepted into the company. Of course, this process takes longer, consists of several stages of registration of an LLC with foreign participation. However, it requires much less coin that could have been spent for travelling to Russian federation, accommodation, etc. Though, every bit practice shows, foreigners still prefer more than "traditional" options, they are non used to looking for loopholes of "uncomfortable" legislation.

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

Less attractive option for foreigners. All the same, nosotros have to mention information technology too.

If a foreign national or a foreign legal entity are planning to be the only participants of the registered LLC and cannot come to Russia to annals a company, have no partners in Russian federation, who could act as founders for the futurity LLC, information technology is possible to buy an already registered company. After the buy of a set-fabricated visitor, the head of the legal entity may submit documents to the registration body to change the participants of the LLC and incorporate strange participants into the LLC. Actually, we're going dorsum to option 4. While changing participants of an LLC a sometime 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 excerpt from the register of strange legal entities of a corresponding country of origin or other equivalent legal proof of the juridical status of the strange legal entity, besides as a Russian translation of the passport of the caput of the investor'south company, is submitted for registration of the LLC.

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

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

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

Regardless of whether the founder of a visitor with strange participation is an individual or a legal entity, a notarized power of chaser for submission and receipt of documents from the registering body is required. Of course, the power of attorney must be translated into Russian and the translation must be notarized. Over again, this power of attorney is issued just to submit and receive documents from the registering body, it is incommunicable to use it to verify an awarding for registration of an LLC.

Intricacies related to the participation of a strange investor in the management of a company registered in Russia. Is a work let required?

The most important thing is that the founder may lack a work allow or residence let to register a company with strange participation. Moreover, every bit mentioned above, the registration can exist carried out in the founder's absence, therefore a visa is not required. In other words, a foreign national may be both the founder and the head of the company to be established in Russia.

Nonetheless, in order for the head of the company to piece of work successfully, it is nevertheless recommended that a greenhorn apply for a work permit in Russian federation. Since work permits and visa invitations are issued for top-managers without quota, hiring of highly qualified specialists (HQS) is profoundly simplified.

There'south no demand to apply for a permit to recruit foreign workers, to mail service a vacancy in the employment heart, to provide a Russian language certificates and medical certificates.

The highly qualified specialists (HQS) according to Russian law include foreign nationals earning over 2 million roubles per yr under agreements/contracts. It is causeless that these employees accept strong cognition and experience in their area of specialization. A three-twelvemonth work permit is granted to them under a simplified procedure compared to other foreign workers.

Importantly, if y'all hire a foreigner for an executive position when registering a company in Russian federation and plan to outcome a work permit for him/her, it is not recommended that you register him/her as a director at once!

The process for obtaining a work permit for HQS from visa countries implies issuing invitations and work visas. Therefore, if you first register a foreigner as a manager of the future company, and and so utilize for a work allow for him, you will face difficulties and will have to make changes to the annals of legal entities and lay him/her off. Therefore, 1 should follow the rule: first piece of work permit, then registration every bit a director.

Restrictions on LLCs with foreign participation

The Russian legislation does not provide for whatever restrictions on the employ of a simplified tax system (STS) past Russian entities formed by strange founders. These restrictions are listed in fine art. 346.12 and 346.xiii of the Russian Revenue enhancement Code.

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

The law imposes restrictions on foreign investors' participation in the charter majuscule of entities deemed strategic for Russia's defence and security. The following sectors take been defined as strategic: repairing, disposal of weapons and military machine equipment, using radioactive materials, TV and radio broadcasting with a large coverage, publishing a periodical print publication with the circulation at least 1 m copies for each consequence and 39 more than industries. Nether 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 control over strategic concern entities has to either utilize for a prior authorization or notify the authorized body of a planned transaction. The process for applying for a prior say-so is explained in art. 12 of the Constabulary.

There are restrictions on foreign investments in insurance and banking sectors. The Constabulary "On Organisation of Insurance Business organisation in the Russia" dated 11.27.1992 N 4015-1, Federal Human activity "On banks and cyberbanking activity" dated 02.12.1990 N 395-1;

Restrictions also apply to foreign ownership and leasing of land plots.

Under par. 2, art.15 of the Russian Country Code, foreign legal entities shall not accept title of plots of country 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 Country Edge of the Russian Federation and other territories of the Russian Federation specifically indicated under federal laws.

This means that the state plots in the border territories and within the seaport boundaries cannot be in the buying of foreign citizens or foreign organisations (par. 3. art. 15, Land Code; par. 2. art. 28 of 261-FZ dated 08.11.2007).

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

These are certain land plots in sure edge territories, within the boundaries of seaports, etc. Russian companies with a foreign participation of more than 50% cannot ain agricultural land, foreign investors may only lease agricultural country.

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

Our company has been working in the legal services market since 2006.

Our principal business organisation focuses on state registration of legal entities and individual entrepreneurs. We will help you to register your company in Moscow in the shortest possible time and on favourable terms.

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Modify of LLC participants by means of shares sale agreements.

Incorporation or withdrawal of LLC participants by increasing the charter capital

Source: https://www.businessgarant.com/announce/2019/09/05/a_guide_to_opening_an_llc_in_russia/

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