by Dr. Götz-Sebastian Hök Rechtsanwalt (Berlin) and Dr. A. Zalivako (Moscow)

Herewith we would like to give an overview of a legal procedure related to creation of a Russian legal enterprise with foreign investments (the “Company”) and its registration with Russian Federation state registration bodies.

Legal form of the Company is a subject for a primary decision where certain reasons should be taken into consideration. The Company may be established in a form of a joint stock company or a limited liability company. The establishment and registration procedures of both are virtually identical. However limited liability companies in Russia currently enjoy a greater flexibility afforded with respect to internal organization in contrast with joint stock companies. Legal atmosphere in which limited liability companies are permitted to operate is much less restrictive. Therefore it is often decided that in the absence of a strong reasons for doing otherwise the Company is formed as a limited liability company.

It is also important to note that unlike a joint stock company a limited liability company also allows non-proportional distribution of votes/interests, i.e., the charter of the Company may provide that a participant whose interest in the Company represents only 50% of the charter capital of the Company may have 60% of the votes.

There are certain documents need to be prepared by Russian and foreign founders (the “Founders”) for submission to the Russian State Registration Authorities for the Company’s registration. Below we would like to give a short description of such documents to enable a business person interested to preliminary evaluate a complexity of an approaching bureaucratic procedure.

Documents of the Company
(i) Protocol of the Founders’ meeting. The Protocol shall contain decisions to create and register the Company; to approve the Foundation Agreement and the Charter of the Company; to determine the Charter capital formation substantial details; and to appoint a General Director and a Chief Accountant of the Company.
(ii) Foundation Agreement. The Founders shall approve and sign the Foundation Agreement, which reflect their obligation to create the Company set forth the procedure of its establishment.
(iii) Charter. The Charter should be drafted in Russian and signed by a chairman of the meeting of the Founders convened for the purpose of creation of the Company.
(iv) Confirmation of Legal Address. It may be required to present an evidence of the Company’s legal right to occupy certain premises for the purpose of the state registration of the Company and is necessary while registering the Company with the tax authorities.
(v) Contribution to the Charter Capital of the Company. The Founders can pay their contributions to the charter capital in monetary form or in-kind. As it is required by Russian Law fifty percent of the charter capital must be paid prior to the state registration of the Company.

Documents of the Founders

1. Documents from the Foreign Founder

(i) Excerpt from the Trade Register (e.g. certificate of good standing, certificate of incorporation or other similar document).
(ii) Charter or Articles of Incorporation of the Founder.
(iii) Letter of Creditworthiness from the Founder’s bank stating that the Founder’s bank has an ongoing relationship with the Founder, familiar with its financial affairs, and confirming availability of funds sufficient to cover the contemplated transactions.
(iv) Powers of Attorney issued by the Foreign Founder to person(s) (i) authorized to participate in the Founder’s meeting, to sign the Foundation Agreement and the Charter, (ii) to open bank accounts of the Company and (iii) to represent the Founder before the RF state registration authorities with respect to establishment the Company.

All the documents listed above must be notarized, affixed with an Apostille and translated into Russian language.

It is also worth to be mentioned that registration authorities may at any time unexpectedly require an additional document to be presented.

2. Documents from the Russian Founder.
(i) Certificates of Registration (notarized copy).
(ii) Charter with all changes and amendments (notarized copy).
(iii) Certificate of Registration with tax authorities (simple copy).
(iv) State Statistics Committee registration codes (simple copy).
(v) Powers of attorney issued by the Russian Founder to person(s) (i) authorized to participate at the Founders meeting and to sign the Foundation Agreement and the Charter, (ii) authorized to open bank accounts of the Company and (iii) representing the Russian Founder before the RF state registration authorities with respect to establishment the Company.

Registration Procedure.

The Company should be registered with the State Registration Chamber (“SRC”) and with local registration authorities. Local registration procedure details may vary from one locality to another, but the general rules are basically the same. As an example we take a registration procedure established in the city of Moscow to be completed with the Moscow Registration Chamber (“MRC”).

1. Temporary Registration with SRC. All necessary documents should be submitted to SRC, which will issue a temporary registration certificate. The registration process with SRC usually takes up to four weeks. Once SRC temporary certificate has been obtained, the Company should submit it together with other required documents for a local registration. The MRC registration may take up to four weeks as well.

2. State Statistics Committee. Registration with the State Statistics Committee is one in a series of formal ancillary registrations, which also requires submission of many of the same documents. Obtaining the Committee certificate usually takes 3-5 days.

3. Seal. The Company must possess a round seal, as it is indispensable for doing business in Russia.

4. Tax Inspectorate. Within 10 days upon registration with SRC the Company should submit an application amended with necessary documents to the local tax authorities for registration.

5. Social Funds. The Company must also submit an application amended with necessary documents to the Pension, Employment, Social Insurance and Medical Insurance Funds for appropriate registration.

6. Permanent Registration. Upon completion of the above-described procedures a permanent registration certificate may be obtained.

7. RF Antimonopoly Authorities Notification. In certain cases the State Antimonopoly Committee of the Russian Federation must be notified of the Company’s establishment.

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