Establish a Subsidiary in Russia

Updated on Monday 18th April 2016

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open a subsidiary in russia.jpgRussia is considered one of the most influent economic powers of the world, so many foreign companies choose to open subsidiaries here.

A subsidiary established in Russia is a Russian company where a majority of capital or shares with voting rights are owned by a foreign legal entity. The liability of the shareholders of this type of business is limited by the contribution to the capital.

Incentives for Russian subsidiaries

Numerous incentives are offered for the subsidiaries, especially financial exemptions, due to the vast network of treaties signed by Russia all over the years.

For example, the withholding taxes on dividends, interests or royalties paid to a company with a treaty country residence are minimized or abolished. The profits are taxed only in the country of origin or, if they are paid, the amount is refunded.

The main regulations of the subsidiaries opened in Russia are given by the Civil Code of the Russian Federation.

How to open a subsidiary in Russia

A foreign investor can incorporate a subsidiary in Russia in the form of private limited liability company and the public limited liability company, open or closed.

The limited liability company can be founded by one or more shareholders (maximum 50), with a minimum share capital of 10,000 rubles. A half of the share capital must be deposited in a bank account before registration and the other half in maximum three months from the incorporation. The management is assured by a board of directors and an executive committee, appointed by the general meeting of the shareholders. The capital of such company is divided into non transferable shares and the liability of the shareholder is determined by their contribution to the capital.

There are two types of joint stock companies that can be registered in Russia: open - when the shares are freely transferable to the public, or closed - when the shares are transferable only between the shareholders in the company.

An opened joint stock company is based on a minimum share capital of 100,000 rubles, while a 10,000 rubles share capital must be deposited by the closed joint stock company. The management is assured by the general manager, but if the company has more than 50 shareholders, a board of directors must be appointed. Also a supervisory board can be appointed, but it’s not mandatory.

The procedure of registration

The registration of joint stock companies takes around one month and consists in:

- notarizing the foundation deeds,

- depositing the minimum share capital in a bank account,

- paying the registration fee,

- registering for the single number of state registration and the number of tax identification from the Federal Tax Service,

- notarizing the bank signature card,

- making a seal for opening the permanent bank account,

- informing the Federal Tax Service regarding the opening of the bank account.

- registering at the Moscow Center of Quotation of Work Places.

Only if the above steps are taken, the company may do business in Russia.

If you want to register a subsidiary in Russia, you may contact our  company formation agents who will provide you with all the information you need and will help you with the registration procedure.

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