Russia - Establishing an Office Russia – Establishing an Office
The U.S. Commercial Service provides basic counseling on registration requirements and procedures. However, U.S. companies are strongly advised to seek legal advice on business registration. The U.S. Commercial Service staff can provide contact information of U.S. and Russian firms that offer professional legal services in this area. As a general rule, foreign nationals working in Russia are required to obtain a work permit.
Conducting business without a registration is illegal. Although there are federal laws governing the registration, it is often subject to local interpretation.
Russian law offers several commonly used structures to conduct business:
• Representative or branch office of a foreign company;
• Registration as an individual private entrepreneur;
• Subsidiary companies;
• Limited Liability Company (OOO);
• Privately held, closed joint stock company (ZAO); and
• Publicly held, open joint stock company (OAO).
Branch Offices and Accredited Representative Offices
Branch offices and accredited representative offices are both legally distinct from Russian corporations, which may be established by foreign firms either as joint stock companies with partial Russian ownership or as wholly-owned subsidiaries of a foreign firm. Foreign ownership is legally permitted to be as high as 100% in most sectors, but potentially limited in industries defined by the “Strategic Sectors Law” (discussed in this chapter under Joint Ventures/Licensing).
Federal Law N 106-FZ, last amended in May 2016, governs branch and representative offices of foreign entities. Pursuant to the law, accreditation of branches and representative offices of foreign companies is regulated by the Federal Tax Service of the Russian Federation (FTS). The FTS accredits branches and representative offices of all foreign companies, except for foreign banks and foreign civil aviation companies, which are accredited by the Central Bank of Russia and the federal Aviation Service, respectively.
The FTS maintains the register of accredited branches and representative offices of foreign entities (hereinafter the “Register”).
Individual accreditation and visa support for foreign employees of branches and representative offices is supported by the Chamber of Commerce and Industry of the Russian Federation (hereafter “CCI”).
The accreditation procedure is as follows:
An application for accreditation is submitted to the FTS within 12 months from the date the foreign company’s headquarters adopts a decision to open the branch or representative office.
• The application should include certain documents (the list of the documents will be published by the FTS) and shall be accompanied by CCI certification regarding the number of foreign employees of a branch or representative office;
• The term for FTS’ decision on an accreditation application is 25 business days;
• A document confirming entry into the Register constitutes confirmation of accreditation;
• Accreditation can be denied in the event of either inconsistencies in the documents submitted or a violation of the term for their delivery. Accreditation will be denied if the purposes of a branch or representative office runs contrary to Russian legislation, and in cases when FTS assesses that establishment threatens the sovereignty, political independence, territorial integrity, or national interests of the Russian Federation;
• Changes in the FTS Register occur within 10 business days from the date of delivery of required documents to the FTS.
Regulations of a branch or a representative office of a foreign company must contain certain provisions, as determined by law. The accreditation fee for each branch office is 120,000 rubles (approximately $2,000, at current exchange rates).
Further information is available 35Ton the FTS website.
Registration Options
The following basic laws and government resolutions regulate business registration in Russia:
• The 1999 Federal Law “On Foreign Investment in the Russian Federation;”
• The 1994 Part I of the Civil Code;
• The 2001 Federal Law “On State Registration of Legal Entities;”
• May 2002 Russian Government Resolution No. 319 “On Authorized Federal Entity of the Executive Power, Providing
State Registration of Legal Entities” and associated legal acts; and
• May 2014 Federal Law No. 106-FZ “On the Introduction of Amendments to Certain Legislative Acts of the Russian Federation,” regarding accreditation of foreign physical persons and legal entities.