Who Has To Register For The Draft?

05.09.2019

A guide to opening an LLC in Russian federation

Before focusing on the ways for foreign founders to establish a legal presence in Russia, it would be helpful to say a few words about common forms of local business structures for non-resident investors.

Distributorship contract

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

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

Representative office or branch. A co-operative and representative role (RO) of a FLE are stand-alone subsidiaries governed by a parent company and performing all or some of its functions. In exercise, branches and representative offices are the almost common forms of business organisation for medium and large FLEs. They may open and close accounts in the Russian and foreign banks, make transactions and sign contracts. Branches and representative offices are managed past 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 taxation. To work in Russian federation, branches and representative offices are subject area to accreditation, which takes about xxx days and requires a 120,000 roubles fee.

Articulation venture. There is no such thing as a joint venture (JV) in Russian constabulary. Substantially, it is an unofficial name for an organization established by local and foreign businessmen in Russian federation. JV is registered as an ordinary company, a articulation stock company (JSC) or a limited liability company (LLC).

To form a joint venture a strange investor may establish a new visitor or purchase a stake in an existing Russian-endemic enterprise past acquiring a participatory interest in the company's charter majuscule or by becoming a participant through an increase in the charter uppercase.

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

A visitor with a foreign founder.

The most popular forms of company registration in Russian federation 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 divergence is that after JSC incorporation, information technology is necessary to additionally register the shares consequence and delegated the powers of keeping the register of shareholders to a professional registrar. The liability of the participants for the company'due south debts is express to the payment of their shares in the charter capital. LLC may opt for a simplified taxation system (STS), a preferential taxation 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, as the most familiar and like shooting fish in a barrel-to-use business organization grade for foreigner investors.

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

Is it possible to open up an LLC with strange participants (foreign national or a FLE) in Russia? Under par. four of fine art. 66 of the Russian Civil Lawmaking the participants in the economic companies and the investors in the express (commandite) partnerships may exist the citizens and the legal entities. The police may prohibit or restrict the participation of the individual categories of citizens in the economical partnerships and companies, with the exception of the public joint-stock companies. The like dominion is set out in par. 1 of art. seven of the Federal police "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-assist.ru

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

Nether art. half-dozen of the Federal Law of 09.07.1999 N 160-FZ "On Foreign Investment in the Russian Federation" (hereinafter – Constabulary N 160-FZ) the foreign investor is entitled to implement investment on the territory of the Russia in whatsoever forms non prohibited past the legislation of the Russia.

When registering an LLC, strange individuals and foreign legal entities may human action as founders (participants). However, Russia's Federal Law "On Limited Liability Companies" No. 14-FZ dated 08.02.1998 (art. 7 par. 2, sec. 3) sets out the post-obit restriction with respect to LLC incorporation: A company may not have another economic company consisting of ane person as the only participant.

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

Challenges and difficulties of establishing an LLC with 100% foreign participation by a foreign company consisting of ane person in Russia.

Features of registration of an LLC with a foreign founder. Registration of LLC with strange 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 upper-case letter. Applicant.

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

If a founder of an LLC was a foreign individual or a legal entity and for some reasons could not come up to Russia, a Russian national used to become the founder of an LLC. This was the easiest and virtually oftentimes used pick, 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 capital could have been 001%, ane%, or of whatsoever other insignificant size. In line with the minutes of the coming together of founders, the Russian national was ordered to annals the company. It was this national who could have acted equally an applicant responsible for filing the documents for state registration of the visitor.

The process allowed to avert many problems with the signature'due south certification by a consul or translation of applications and their certification by strange notaries. After registration of an LLC with foreign participation, the share endemic by a Russian national could have been sold to a foreign 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.

Just the Order of the Federal Tax Service of Russian federation No. MMV-7-half-dozen-/25@ "On Blessing of Forms and Requirements for the Execution of Documents to be Filed with the Registering Body for State Registration of Legal Entities, Cocky-Employed Individuals and Peasant (Subcontract) 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 visitor incorporation, i.east., information technology was no longer possible for one of them to take on powers delegated by other applicants. (Previously, ane bidder 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. List North of the application "Information well-nigh the Applicant" is be filled with information about all founders (including strange ones). The application'south list "Information about the bidder" is signed by the specified person and notarized.

Therefore, strange individuals, equally well as heads of foreign entities who are willing to register an LLC in Russia, take to come to Russia and certify their signatures in the application for the visitor registration. If there are 3 or five or more participants, all of them have to apply to Russia's 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, it is possible one by 1, and come to different notaries, all the same, the new requirements accept significantly complicated the registration of an LLC with foreign participation.

Do I need to come to the Russian federation 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 caput of a foreign legal entity – to come to Russia for registration.

Notwithstanding, the founders are effectively required to come to Russian federation. Every bit was mentioned earlier, during registration of an LLC in Russian federation, the awarding on the state 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 exist certified past a notary.

Co-ordinate to par. 1 of art. 9 of the Federal Law dated August 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 fourth dimension of its establishment;
head of a legal entity acting as a founder of a legal entity being registered;

Russia'south legislation therefore does not allow signing an application for state registration of a legal entity when incorporated past a person interim nether 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 be signed past a person acting on the footing 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 chaser, the certificate of state registration of a legal entity and the company'due south articles of clan can likewise exist received by a representative under the power of attorney.

What if a strange national cannot come to Russia to certify the signature past a notary? In that location are several options.

Certification of an application for state registration in a consular role. According to art. ane 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.

However, practice shows that at that place are many pitfalls in this process, and it is necessary to inquire about the possibility of certification of the founder's signature in each item consulate.

For example, there are conventions in force, co-ordinate to which "a consular official has the correct to certify signatures of nationals of the represented state", which means that merely 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 01.11.2004 N SAE-three-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 state 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 past a consul rather than a notary, the Federal Tax Service may officially refuse registration of an LLC with foreign participation. In the best-case scenario, there'due 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 example, if ane translates an application only to ensure a notary understands the purport of the document without certifying the information 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 split folio, and attaches it to the application in Russian, and then the documents are apostilized, translated (apostille + notary'due south signature sheet), the translation is certified by a notary and then the documents are submitted to the registration trunk. This is the almost popular style of registration of an LLC by a foreigner, with no need to come up to Russia.

Information technology should exist noted that all foreign documents are accepted only with the marks of consular legalization or apostilized, as well as with a notarized translation of these documents. Other requirements are set for participants from countries that have signed a mutual aid 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 assistance and legal relations" dated October 07, 2002 (Ukraine, Belarus, Czech republic, 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 have not signed the Hague Convention are legalized in Russia'south consular offices located in these countries.

Registration of an LLC without participation of a foreign national or a legal entity, followed by incorporation of foreigners into an LLC. An LLC is being registered with the participants who tin can certify their signatures in the application for registration of the LLC with a Russian notary public. After that, a strange national or a strange legal entity is incorporated into a registered LLC on the basis of a sales agreement or by an increase of charter upper-case letter of the visitor through contributions of third parties accepted into the visitor. Of class, this procedure takes longer, consists of several stages of registration of an LLC with foreign participation. Nevertheless, it requires much less coin that could have been spent for travelling to Russian federation, accommodation, etc. Though, equally practice shows, foreigners still adopt more "traditional" options, they are not used to looking for loopholes of "uncomfortable" legislation.

Ownership a gear up-fabricated visitor, followed by re-registration and incorporation of strange participants into an LLC.

Less attractive option for foreigners. Still, we have to mention it 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 Russian federation to register a visitor, have no partners in Russia, who could act equally founders for the hereafter LLC, it is possible to buy an already registered company. After the buy of a ready-fabricated company, the caput 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 back to option four. 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 amid strange participants.

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

If a foreign company is the founder, the extract from the register of strange legal entities of a respective country of origin or other equivalent legal proof of the juridical status of the foreign legal entity, too as a Russian translation of the passport of the head of the investor'due south company, is submitted for registration of the LLC.

It should be noted that if an awarding for registration is notarized by a Russian notary, the latter will ask the managing director of the investor'southward company to provide a certified translation of the visitor's lease and a decision to appoint him as the head of the visitor. A notary will need these documents to confirm the authorization of the director, they are non submitted for registration. Moreover, if the director 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 visitor.

Other documents may include a certificate of country registration, a charter and a conclusion on the establishment. It is recommended that all bachelor 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 foreign private, a notarized translation of the passport of the strange founder of the LLC will be required.

Regardless of whether the founder of a visitor with foreign participation is an private or a legal entity, a notarized power of attorney for submission and receipt of documents from the registering body is required. Of course, the power of chaser must be translated into Russian and the translation must be notarized. Over again, this power of attorney is issued only to submit and receive documents from the registering body, it 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 Russian federation. Is a work permit required?

The most important thing is that the founder may lack a work permit or residence permit to register a company with foreign participation. Moreover, as mentioned in a higher place, the registration tin can exist carried out in the founder's absence, therefore a visa is not required. In other words, a strange national may be both the founder and the caput of the visitor to be established in Russian federation.

However, in lodge for the caput of the company to piece of work successfully, information technology is still recommended that a greenhorn employ for a work allow in Russian federation. Since work permits and visa invitations are issued for superlative-managers without quota, hiring of highly qualified specialists (HQS) is greatly simplified.

There'southward no need to apply for a allow to recruit foreign workers, to post 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 2 million roubles per year under agreements/contracts. It is assumed that these employees accept strong knowledge and feel in their surface area of specialization. A 3-twelvemonth work permit is granted to them under a simplified process compared to other foreign workers.

Chiefly, if yous hire a foreigner for an executive position when registering a company in Russia and program to issue a work allow for him/her, information technology is not recommended that you register him/her as a director at once!

The process for obtaining a work allow for HQS from visa countries implies issuing invitations and work visas. Therefore, if yous first annals a foreigner as a managing director of the future company, and then use for a work permit for him, y'all will face difficulties and will take to brand changes to the register of legal entities and lay him/her off. Therefore, one should follow the rule: offset work permit, and then registration as a director.

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Restrictions on LLCs with foreign participation

The Russian legislation does non provide for any restrictions on the use of a simplified taxation system (STS) by Russian entities formed by foreign founders. These restrictions are listed in art. 346.12 and 346.xiii of the Russian Tax Code.

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

The constabulary imposes restrictions on foreign investors' participation in the charter capital of entities accounted strategic for Russia's defense force and security. The following sectors have been defined equally strategic: repairing, disposal of weapons and military equipment, using radioactive materials, TV and radio broadcasting with a big coverage, publishing a periodical print publication with the circulation at least 1 m copies for each issue and 39 more industries. Under the Federal Law No. 57-FZ dated Apr 29, 2008 and the Federal Law No. 58-FZ dated April 29, 2008, a foreign investor seeking control over strategic business entities has to either apply for a prior authorization or notify the authorized trunk of a planned transaction. The procedure for applying for a prior authorization is explained in art. 12 of the Law.

There are restrictions on foreign investments in insurance and cyberbanking sectors. The Constabulary "On Organization of Insurance Business concern in the Russian Federation" dated 11.27.1992 Due north 4015-1, Federal Human activity "On banks and cyberbanking activity" dated 02.12.1990 Due north 395-ane;

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

Under par. 2, art.15 of the Russian Land Code, strange legal entities shall not have title 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 within the seaport boundaries cannot be in the buying of strange citizens or strange organisations (par. three. art. 15, Land Code; par. 2. fine art. 28 of 261-FZ dated 08.11.2007).

Strange citizens, foreign legal entities, stateless persons, every bit well as the legal entities in whose authorized (pooled) capital letter the share of strange citizens, foreign legal entities and stateless persons exceeds 50%, may but possess state plots pertaining to farm lands on a leasehold basis, except for cases provided for past the 119-FZ dated 05.01.2016 (art. 3 of 101-FZ "On Farm land turnover").

These are certain country plots in sure border territories, within the boundaries of seaports, etc. Russian companies with a foreign participation of more than 50% cannot own agricultural land, foreign investors may merely charter agricultural state.

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