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The procedure for opening a business should include selecting the legal form of business registration, determining the taxation system, types of economic activity, the composition of the founders, the structure of management bodies, the amount of authorized capital, deciding on the lease/purchase of premises and making decisions on other important issues. Solving these issues during the incorporation process will help to reduce financial and managerial risks in the future. In the article “Registration of a foreign business in Russia”, we talked about ways of expanding the geographical boundaries of a business, opening a foreign business in Russia, their pros and cons, and specifics. This article is about one of the ways to open a business in Russia - registration of the LLC with foreign participation.
According to article 20 of the Federal Law № 160-FZ “On foreign investments in the Russian Federation” dated 09.07.1999, creation and liquidation of commercial organization with foreign investments are performed on the general conditions and in general order, however, exceptions may be set by the federal laws. In particular, there are currently certain requirements for the establishment of legal entities in the banking and insurance sectors, and restrictions for the participation of foreign investors in business entities of strategic importance for the country's defense and security of the state. In other cases, foreigners are free to register companies with foreign participation. The law also sets no restrictions on 100% participation of foreign investors in a legal entity, but in some cases transactions with shares in an LLC or voting shares made by foreign investors require prior approval.
Step-by-step instruction: How to open an LLC with foreign participation in Russia
If, having weighed up the pros and cons, you have decided to start a business in Russia in the form of an LLC, then we recommend that you use the following algorithm.
Step 1: Collecting the necessary documents
If it is required to register LLC with a foreign founder-physical person, it is necessary to issue a notarized translation of the document certifying the identity of a foreign citizen into Russian.
When registering an LLC with the founder - a foreign legal entity, it is necessary to obtain an extract from the register of foreign legal entities of the respective country of origin or other equal legal proof of the legal status of the foreign legal entity - the founder. There are certain difficulties with an extract from such a register, because the legislation of a number of countries allows the “de facto” existence of companies, which are subject to certain accounting or registration only if such a need arises under the legislation of the country where they are located or carry out their activities (meanwhile, the Law № 160-FZ allows the participation of such foreign investors). Documents are submitted to the authorized tax authority in Russian or in a foreign language with a translation into Russian certified in accordance with the procedure established by Russian legislation (notarized or in a manner equivalent to notarization). Documents issued or certified by competent authorities of foreign states shall be submitted with consular legalization of such documents or an apostille affixed, unless otherwise provided for in an international treaty of the Russian Federation.
Step 2: Determining the structure of an LLC and selecting the taxation regime
The law does not prohibit foreign citizens, companies to manage the LLC. At the same time, there are restrictions of the migration law when hiring foreigners. When choosing a director of the LLC when registering a company with foreign capital, it is also necessary to check the candidacy of the appointed director in the register of disqualified persons, because if a citizen is included in this register, the registration authority may refuse to register the company. When selecting a founder, also check if there are any restrictions on participation in legal entities by this founder. These checks can be carried out online using the Transparent Business service on the FTS website. If the director is a foreign citizen, a notarized translation of the foreign citizen's passport must be certified.
At this stage of registering an LLC with foreign participation, we also recommend choosing the system of taxation. If you plan to apply the general system of taxation, there is no need to submit additional documents to choose this regime, the LLC will automatically be registered with this system. To apply the simplified taxation system when registering an LLC, it is necessary to apply for the simplified taxation system. If you wish to use the simplified taxation system, you should bear in mind the restrictions on its use for certain companies (for example, you cannot use the simplified taxation system for companies in which another legal entity owns more than 25%).
Step 3: Determining the location of an LLC
We advise you to take the choice of location seriously already when setting up an LLC. After selecting an address, it is necessary to obtain documents from the owner of the premises confirming the use of the legal address: a letter of guarantee of the address for the registration of the LLC, a copy of the ownership document, a rental agreement (if the premises are rented). These documents are not necessary for registration, but may be useful in the future for the legitimate operation of the organization.
Step 4: Developing the constituent documents of the future LLC and taking a decision on its registration
Under Russian Law, the constitutive document of an LLC is its charter. When registering an LLC the founders may draft their own charter or choose a standard form from the approved forms.
To register an LLC, it is also necessary to make a decision on its establishment. In the case of the establishment of LLC by one person, the decision on its establishment is made by the founder alone (a decision of the sole founder is drawn up). If an LLC is established by two or more founders, the decision is made unanimously by all founders (in this case, the decision on the establishment of the LLC is documented by a protocol).
Step 5. Preparation of application for registration of LLC in R11001 form, notarization of the signature of the applicant (applicants) on the application (if necessary)
The application form is approved by the Order of the Federal Tax Service of Russia No. ММВ-7-6/25@ dated 25.01.2012. In order to register an LLC, it is necessary to fill out: the title page, sheets with information about the founders, the director (other persons performing his functions), the OKVED codes and information about the applicant.
There is no need to pre-sign the application for LLC registration. If the application is notarized, the notary's fee will be 2000-3000 rubles.
The law does not provide for mandatory certification of signatures of all founders with one notary. The signatures of different founders may be certified by different notaries, but in any case it is executed by one document (a new sheet with the notary certification is attached by the notary to the general application).
Step 6. Obtaining the registration permit for an LLC with foreign participation (if required)
For example, in order to open a credit institution with foreign participation, permission from the Central Bank of the Russian Federation is required. The necessity of obtaining a special permit is regulated by the laws establishing the peculiarities of carrying out a certain type of activity.
Step 7. Payment of the state duty for the registration of an LLC
The state duty for the registration of an LLC is 4 000 rubles. The state duty is not payable if the documents for state registration of an LLC are submitted in electronic form, but an electronic signature is required.
Step 8. Preparing a set of documents and submitting them for state registration of an LLC
List of documents for registration of LLC with foreign participation:
The list of documents to be submitted to the tax authorities for the registration of an LLC is closed, the tax authorities have no right to request additional documents.
Submit the documents to the registration authority or a unified registration center at the location of the LLC. Applicants are all founders of the LLC with foreign participation or their representatives on the basis of a notarial power of attorney from the founder. If the founder is a legal entity, the director (head) or the managing director (managing organization), or a representative by power of attorney acts on its behalf.
The registering authority is the tax inspectorate responsible for state registration (for example, in Moscow to register an LLC with a foreign founder you have to apply to Inter-District Office of the Federal Tax Service № 46). You can determine the registration authority on the website of the Federal Tax Service by using the "Find out Inter-District Office of the Federal Tax Service" service.
Step 9. Obtaining documents confirming the registration of an LLC
If the registering authority finds no grounds for refusal of registration, it makes a decision on state registration and makes an entry in the Unified State Register of Legal Entities indicating the OGRN of an LLC. No later than one business day after the deadline for the registration of the LLC you will receive an email indicated in the application:
Once these documents are received, the process of registering an LLC can be considered complete, but to establish and register an LLC is only half the battle, the registration of an LLC does not end the entire process of creating a business. For the normal functioning of the company the head (founder) must also take a number of actions after registration.
If a decision is made to refuse state registration, the registering authority will e-mail its decision to you within the same period of time.
