Commercial Law in Russia

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School of Business Administration Turiba
Tourism and Hospitality Management Program

Anna Tihonenko
STA2D1

“The Commercial Activities in Russia”

Tourism and Hospitality Faculty
Supervisor: Ivo Krievs

Riga, 2012
There are several options available who want to start a business in Russia. These include:

1) Registeration with state authorities as an individual entrepreneur (commonly referred to as a sole proprietorship). This is not a legal entity but an extension of the individual, meaning you are personally liable for all obligations of the business, including debts. Can be a suitable option for those providing consultations or similar types of service. Once registered as an individual entrepreneur, you become a Russian tax resident and must submit a Russian Personal Income Tax Declaration. Russian Tax Residents (employed or operating under a sole proprietorship) are required to submit a report of their work (and other) income received in Russia. If you live in Russia for less than 183 days (nonresident status) you still must report income received in Russia, but should be subject to exemptions when paying income tax at home, thanks to Double Tax Treaties between Russia and your country of residence. 2) Representative offices and branch offices are not regarded as legal entities. They only act on regulations of the legal entity that created them. A representative office only represents the interests of the foreign legal entity while a branch is established to carry on the Russian business activities of the foreign legal entity in its own name. Representative offices and branch offices of Russian companies do not need to be registered by the state, however it is necessary that they be registered with both the tax authorities and the social funds in the place of their location. The management of a foreign legal entity must annually file a report on its activities with the State Registration Chamber of the Ministry of Justice of the Russian Federation.

3) Russian legal entity in the form of a Limited Liability Company (LLC); 4) Public or a private Joint Stock Company (JSC), or a Partnership. The LLC and JSC can be founded by an individual or by a legal entity (either foreign or Russian). Creating a legal entity provides greater protection than registering as an individual entrepreneur (sole proprietor) since assets and liabilities of the LLC and JSC are legally isolated from those of the founder. It is possible for one individual to create a legal entity. When registering under sole ownership, however, the founding document, or Charter, differs from a typical corporation. In such a company there is no management body such as the Board of Directors. All decisions are taken by the sole founder, and as a result, procedural requirements such as the General Meeting do not apply. Foreign individuals and foreign companies can be founders and shareholders in any number of companies. It is needed to summarize the information that is given. Among the information, we can conclude that, Russian legal entity involve:

1)Limited liability company (LLC);
2) Private joint stock company (PJSC).

Subdivision of a foreign company:

1) Representative office (RO);
2) Branch.

Legal Status

LLC and PJSC are Russian legal entities. They may conduct any form of commercial activity, provided it is not prohibited by the Russian legislation. For conducting any licensed type of activity it is necessary to obtain license.

The number of shareholders/participants in PJSC/LLC can not exceed 50. Any Russian and foreign companies and persons may be founders and shareholder in any number of Russian companies. The company may be established by a single founder, as long as the founder is not a company owned by a single legal entity or individual. Some peculiarities exist for the companies with single founder.

RO and Branch of a foreign legal entity are not considered as a separate legal entity. RO and Branch...
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