Russia Limited Liability Company (LLC)
The Union of Soviet Socialist Republics dissolved in 1991 when Russia transformed into self rule and called itself the “Russian Federation”. It adopted a new constitution in 1993.
The Russian Federation consists of executive, legislative and judicial branches of government. The president is the chief of state representing the executive branch and is elected for four years terms by the voters. The Russian president oversees the legislative branch and is the head of the Russian Security Council and acts as the commander-in-chief of the country’s armed forces. There is no vice president. However, if the president is unable to perform his duties, the premier takes his/her place.
The Federal Assembly is its legislative branch consisting of a 178-seat Federation Council and 450-seat State Duma which represents the 21 Russian Republics and 66 independent regions and territories.
Russia’s judicial system arbitrates any disputes that arise between the executive and executive branches as well as those between local and regional governments.
Corporate legislation in Russia is guided by Russian commercial law. This law regulates corporate activity and actions, setting the various rules and boundaries for the legal actions of businesses. It also regulates how stock investments work in the country.
A Russia Limited Liability Company (LLC) qualifies for many benefits including:
• Limited Liability: Those involved in a Russia LLC are not responsible for the company’s obligations or the losses associated with the LLC. The LLC participants are only responsible for the amount of participation value they established with the company through the company’s charter.
• Only One Member Required: Russia LLCs can be formed be one person, several people, or by local or foreign corporate entities.
• Easy Withdrawal: As long as the company charter specifies it, those involved with a Russian LLC can, whenever they wish, withdraw from the corporation and get an amount that is equivalent to its pro rata share of the corporate net assets.
• Privacy: Company and limited company owners forming a Russian LLC can pick nominee shareholders in order to ensure confidentiality in the company.
• Shares are Optional: Russia LLCs do not need to issue shares. This means a Russia LLC is far more flexible when the company needs to change its charter capital.
A Russia LLC must pick a unique name that is not similar to already existing corporation or company names. There are a few other restrictions on LLC company names in Russia. Russia LLCs cannot use:
–the full or abbreviated name of state or federal authorities or Russian Federation or local government bodies.
–abbreviated or the full name of the Russian Federation, or foreign countries.
–abbreviated or the full name of any international or inter-governmental organization.
— abbreviated or the full name of any public association.
–designations counter to moral principles or the public interest.
Other name restrictions also apply:
- If the Russian Federation owns at least 70% of a LLC, then it can apply for permission to use ‘Russia’ or a derivation of the name in the company’s name.
- The LLC’s name must contain an “OOO” before its name.
- The LLC must have its full name in the Russian language, but may also have an official corporate name in a foreign language.
- The LLC’s Russian name may include foreign words translated into the Russian alphabet.
Office Address and Local Agent
A Russia LLC must have a local registered agent and a local office address. This address will be used for process service requests and official notices.
A Russia LLC must have at least one member or shareholder (if shares will be issued).
Directors and Officers
A Russia LLC is required to have at least one director. Russian offshore LLCs cannot have more than fifty participants.
Russia LLCs are formed with a two-tier management system. These two-tiers are:
- The General Participants’ Meeting, which acts as the body in the company with the most power. The General Participants’ Meeting alone can amend the company charter and approve financial reports.
- The executive body of the company or the collective executive body of the company. The executive body of the company is typically made up of the general director, president, etc. The collective executive body is made up of the management board, the directorate, etc. The executive body, whether collective or not, is expected to run the day-to-day activities of the company.
Also, the Federal Law regarding “Limited Liability Companies” allows a LLC to create a Board of Directors. If such a board is formed, it must oversee the company’s general activities. However, Russia LLCs are not required to form a Board of Directors.
A Russia LLC must have a minimum authorized capital of RUR 10,000 ($330 USD).
Fifty percent of this capital must be paid on the date the company files to become an LLC.
The corporate flax tax rate in Russia is 20% which applies to a LLC.
Annual registration for a Russia LLC costs 2000 rubles ($70 USD). Other yearly fees also apply, which includes the registration of the company’s seal, and the registration at the State Committee for Statistics, which usually costs about $80 USD.
A Russia LLC should be aware that corporate records regarding directors and shareholders may be made open to the public. However, for those that wish to keep privacy, nominee directors and shareholders can be utilized. Using the option to name nominee directors and shareholders will retain privacy and confidentiality for the company.
Accounting and Audit Requirements
Russia LLCs only require internal audits when more than 15 participants make up the company.
Annual General Meeting
A Russia LLC is required to hold an annual general meeting. They must complete the General Participants’ Meeting, and this group has the most power in the company. During the General Participants’ Meeting, these participants typically amend the company charter and approve financial reports.
Time Required for Registration
A Russia LLC can expect the entire registration process to take about thirty days. This turnaround time depends on the company’s success with name approval, and their attentiveness and completeness with company registration documentation.
A Russia LLC can purchase a shelf company to speed up the registration process.
A Russia Limited Liability Company (LLC) qualifies for many benefits including: limited liability for its members, only one member required to form a LLC, issuing shares is optional, privacy afforded with nominee shareholders, and a member can easily withdraw if the company charter allows it.