Many foreign visitors to Moscow and St. Petersburg fall in love with the historic cities, vibrant culture, and rich opportunities to start a profitable business. While a great deal of research and planning must go into a decision to start a company in Russia, you may be relieved to learn that it does not require a lot of money up front. The minimum amount of share capital that must be raised before registering a business is, in fact, quite reasonable.
Regulations Differ for LLCs and JSCs
One of the first decisions you will make as you form your business plan is whether you and your partners want to form an LLC or a JSC. Briefly put, a limited liability company (abbreviated LLC in English or OOO in Russian) is a corporate legal structure that combines the limited liability features of a corporation with the organisational flexibility and tax advantages of a partnership.
A joint stock company (JSC) is a company whose stock is jointly owned by stockholders. It is much more complicated to incorporate a JSC in Russia and, for this reason, many entrepreneurs choose the LLC option. Whichever structure you choose, you will have to specify an amount of authorised capital in the corporation’s charter before registering the business in Russia.
Minimum Initial Capitalization Requirements
Determining the amount of authorised capital for your business is an important decision. The amount you specify in your charter will be the maximum amount of capital your company will be allowed to raise through shares. Companies will often register with authorised capital that is well beyond their current financial needs so that they can offer more shares in the future if it becomes necessary.
Russian law does not place a cap on the authorised charter amount, but it does set minimums as follows:
- A public JSC must be at least 1,000 times the statutory minimum wage. As of January 2016, this works out to 100,000 RUB, or around $1,400 US.
- A non-public JSC must have a minimum charter capital of 100 times the minimum wage, which comes out to approximately 10,000 RUB, or $140 US.
- For both public and non-public JSCs, the first half of the charter capital amount must be paid within three months and the remainder must be paid by the end of the first year.
- For an LLC, the minimum charter capital is also 10,000 RUB, or $140 US. One hundred percent of the charter capital amount must be paid within four months of the LLC’s date of registration.
- The charter capital in excess of the minimum charter capital amount for both LLC and JSC companies can be paid by contribution of movable and immovable assets, securities, intellectual property and other valuable property rights, subject to an independed evaluation by the licensed assessor.
The public and non-public JSCs are obliged to register the issuing of stock in the Central Bank of the Russian Federation within one month upon the company’s incorporation. The JSC should submit various documents and forms to register its stock, and submit a report on the issuance of stock. The registration within Central Bank takes 30 days and a state fee of 35,000 RUB. Any operations involving shares are not permited until registration is completed.
Jus Privatum Can Help at Every Step Along the Way
As a businessman or woman, you may already have a good idea of what you want to do with your company in Russia, but don’t know how to go about it from overseas, in a foreign language, and under unfamiliar laws and requirements. As your legal and business advisors, we are here to support your success. Contact us to find out what we can do for you.