Step№ 32 – «Opening a Russian legal entity (LLC and JSC)»

“Your first 50 right steps to enter the Russian food market”.

Step № 32 – “Opening a Russian legal entity (LLC and JSC)”

In Russia there are several different types of legal forms to open your company. In this post we will discuss only those ones that are suitable for you as a foreign company.

A limited liability company (LLC or in Russian named ООО) and a joint-stock company (JSC or in Russian named AO) are organizational and legal forms of a legal entity that conduct their business in accordance with their own Charter.

Many of points related to registration of LLC and JSC are the same. Therefore, we will look at conditions, terms and costs of opening a company using the example of an LLC as the most common form of doing business in Russia.

LLC is responsible for its obligations, has a separate balance sheet and keeps its accounting records independently from its founders. The operation scheme of an LLC will be largely familiar and understandable to a foreign investor.

Benefits: The owner (called “a participant”) of the company is not responsible for the debts of the whole company: his/her responsibility is limited to the size of his share as a participant. An LLC has the ability to apply a simplified taxation system (USN), which is beneficial to small and medium businesses since the government has provided a preferential tax regime for this type of organization. To open an LLC you do not need any Russian partners. A foreign citizen or a foreign legal entity can be the owner of 100% of the charted capital and a sole proprietor.

So, when creating a company like this, a foreign founder can be sure that the development and business reputation of the company will depend entirely on him.

Conditions: To incorporate a company in Russia, you need a legal address, a charted capital (at least 10,000 rubles), and the general director, who can be a chief accountant at the same time.

A foreign citizen who is going to become a founder of an LLC must be legally visit or reside on the territory of the Russian federation, which means he must have a business visa or a residence permit.

The opening procedure takes 5 working days from the moment of document submission to the moment of getting a certificate of incorporation. Expenses (on average 10,000–15,000 rubles) include the costs of translation, certification and forwarding of documents, as well as the duty of 4,000 rubles.

If one of the founders of the LLC is a foreign company, then you will additionally need to provide legalized documents from the country of origin containing basic information about the company. Documents must be translated into the Russian language and notarized by a Russian notary.

Watch out: a foreign citizen, if he/she plans to hold any position in an LLC, requires a work permit.

Generally obtaining such a permit is time consuming. First, you need to get a quota and/or a permission to employ foreign labor. After that, you can apply for a work permit which you can get within 30 calendar days from the date of application.

But these terms and conditions do not apply to highly qualified specialists who will get a salary of at least 167,000 rubles a month before tax. When hiring such a specialist, you will not need to get a permission to employ foreign labor, place a vacancy in the Employment Service database, provide documents confirming your knowledge of the Russian language or medical certificates.

The best legal solution to speed up the registration of an LLC is the appointment of a Russian citizen as a general director that can be replaced by a foreign citizen after receiving all permits.

Yours faithfully,

Alexander Sinyanskiy

Business Adviser in the Russian Food Industry  

Please read the same my other steps:

Step № 2 – “Look at you products and website by the eyes of a Russian”

Step № 3 – “Do not offer commission!”

Step № 4 – “Learn and research about your future competitors”

Step № 5 – “Assess potential obstacles”

Step № 6 – “The most critical MUST-DO: localize and translate your food business into the Russian language”

Step № 9 – “”Do everything only according to the law”

Step № 10 – “Corruption and crime”

Step № 12 – “We are looking for a food distributor in Russia! Just one exclusive distributor!”

Step № 19 – “Always collect all the information about your Russian partners”

Step№ 21 – “GMO food, organic food and food additives”

Step № 24 – “Who are your potential clients in Russia?

Step № 26 – “Russian social networks”

Step № 33 – “Open a joint venture or buy a stake in a Russian business”

Step № 34 – “Opening a branch or a representative office of your company in Russia”

Step № 41 – “Are you thinking of selling your food franchise to Russia? Good idea!”

Step № 46 – “How to find a distributor or buyer for FREE in the food market of Russia”

Step № 47 – “Holidays and days off in Russia. What for? Of course for business”

Step № 48 – “E-commerce in Russia”

Step № 49 – “Start your food business in Russia remotely and manage all processes without problems”

Lack of customization for the Russian food market, on the example of a bread machine of a very famous global company.

You often ask me why I do not use Whatsapp? I answer!

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