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Establishing a company in Russia

Establishing a legal entity or a company in Russia works much in the same way as in other parts of the world, but there are always some country-specific factors to take into account.


First, let´s take a look at some of the forms of legal entities available. If you are a foreign investor looking to set up a company in Russia, you should think which kind of legal entity best suits the business activity you have in mind.


Representative offices and Branch offices

Representative and branch offices are always established by another legal entity, usually your company which is located in another country. There are two main differences between the two:

-         A representative office can only fulfill representative functions, such as performing market research or advertising activities on behalf of the parent entity. A branch office however can perform all or part of the business activities that the parent entity performs.

-         A representative office can have no income of its own, instead it is simply financed by the parent entity. A branch office on the other hand can have its own sales and income in-country.

Usually a representative or branch office is represented by the head of the office, who acts on the basis of a power of attorney issued by the parent entity. Financial and legal responsibility of the offices´ activities remains on the parent entity.

Establishing a representative office or a branch office in Russia generally takes approximately 2-3 months.


Limited liability company or LLC

A limited liability company in Russia is a formally independent legal entity. This means that it has full financial and legal responsibility for its own operations. The LLC is not responsible for debts of it´s shareholders or founders and vice versa. The limited liability company must have a director on payroll who represents the company according to statutes in the company´s charter. It´s also possible to nominate a supervisory management body or a management board. In general, the company director has a wide range of legal responsibilities on the company´s behalf.

Establishing a limited liability company in Russia requires the following documents:

-         A company charter

-         A decision on founding the company (foundation minutes)

-         A commercial register extract of the parent company or comapnies (or personal information of the founders if they are physical persons)

The process of establishing a LLC generally takes approximately 1-2 months depending on how long it takes to gather the necessary founding documents. Some notarizations and translations of the documents are necessary.

There are a number of practical issues to think about when starting a company in Russia. These include the company address, which needs to be an actual physical place with space for at least one person to work in. In case foreigners are to work as the company CEO or in other positions, they need to receive a work permit. If the company will work in sectors such as banking, insurance, special waste management and others, a business permit will be required.

If you are interested in starting a business in Russia, contact Leinonen Russia for more information and assistance.


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