The most common forms of entrepreneurial activity by foreign investors in Russia are:
- establishing branches of foreign legal entities in the Russian Federation
- launching commercial enterprises with foreign investments:
- establishment of a Russian business by a foreign citizen or foreign legal entity
- acquisition of a share in the equity capital of a Russian business by a foreign citizen or a foreign legal enterprise
Establishing of a branch office of a foreign organization is accomplished by accreditation with the State Registration Chamber within the Ministry of Justice of the Russian Federation in compliance with the regulation of the Russian Government dated 21.12.1999 No. 1419.
Note: Under Russian legislation it is also possible for a foreign company to open a representative office in the Russian Federation which conducts solely representative functions for the foreign company without performing entrepreneurial activities, unlike a branch office which can partially or completely perform all the functions of the head office. The opening of a representative office is accomplished by accreditation.
In Russia Joint - Stock and Limited Liability Companies are the most common forms of legal business structures in which legal entities carry out their activities.
A Joint-Stock Company is an entity, whose equity capital is divided into a definite number of shares; participants of the JSC (shareholders) are not liable for the company but share in the profits and loss, connected with the activities of the company according to the shares that belong to them.
Open Joint-Stock Company is a company, whose participants might sell their shares to third parties without permission of the other shareholders. Such a joint-stock company is entitled to conduct an open subscription for the issuing of its shares and their free sale according to conditions specified by laws or other legal acts.
The minimum equity capital is equivalent to 1,000 minimum monthly wages, as stated by the federal law (100,000 RUB).
Closed joint-stock company is a company, whose shares are distributed exclusively among its founders or other earlier designated persons. Such a company is not entitled to conduct an open subscription for issuing of its shares or offer them in any other way to an unlimited number of people. The number of shareholders in a closed joint-stock company shall not exceed 50.
The minimum equity capital is 100 minimum monthly wages, as stated by the federal law (10, 000 RUB). 1
Limited Liability Company is a company, established by one or several people, whose equity capital is divided into shares, the size of share is defined by the articles of association; participants of the limited liability company are not liable for it and share the profit and loss connected with the activity of the company according to the amount of the contributions made.
The minimum equity capital is 100 minimum monthly wages, as stated by the federal law (10, 000 RUB).2
1 For regulations on joint stock company establishment and activities see: Russian Federal Civil Code, part 1, Federal Law of the RF No. 208-FЗ of 26.12.1995 "On joint stock companies".
2 For regulations on limited liability company establishment and activities see Russian Federal Civil Code, part 1, Federal Law of the RF No. 14-FЗ of 8.02.1998 "On limited liability companies".
