Russian company law overview
Russian law in general is based on statutes. Only laws and sublaws (so-called instructions issued by a relevant ministry on the basis of an authorization under a law) are regarded as source of law. Case law is not a source of law. In practice, however, judges use precedents or prior rulings on cases of a similar nature when considering their decisions. If certain situations are not regulated by laws and sublaws then the judge, when considering his ruling, normally refers to court practice. Nevertheless, when drafting adjudications he may refer only to laws and sublaws and not to case law on similar matters, with the exception of Constitutional Court rulings. Company law comes under the umbrella of civil law. The main source of company law is the Civil Code of the Russian Federation. Where appropriate, the Code makes references to statutes, most importantly to the Federal Law 208-FZ of December 26, 1995 'On Joint-Stock Companies' and to the Federal Law 14-FZ of February 8,1998 'On Limited Liability Companies'. The Civil Code, which was introduced by the Federal Laws 52-FZ of November 30, 1994, 15-FZ of January 26, 1996 and 147-FZ of November 26, 2001, 230-FZ of 18 December 2006 provides a complete list of legal entities in Russia. The Code distinguishes between commercial and non-commercial organizations. Commercial legal entities may take any of the following forms, which are collectively known as 'economic partnerships and corporations':
- public joint-stock company (otkrytoe akcionernoe obshchestvo, OAO)
- private joint-stock company (zakrytoe akcionernoe obshchestvo, ZAO)
- limited liability company (obshchestvo s ogranichennoj otvetstvennost'ju, OOO)
- additional liability company (obshchestvo s dopolnitel'noj otvetstvennostju)
- general partnership (polnoe tovarishchestvo)
- limited partnership (komanditnoe tovarishchestvo)
- industrial cooperative (proizvodstvenyj kooperativ)
- state and municipal unitary enterprise (gosudarstvennoe i municipal'noe unitarnoe predprijatie).
In addition to the above-mentioned legal entities, individuals, simple and silent partnerships (which are not considered legal entities) may engage in commercial activities. Non-profit organizations may take the form of institutions, public associations, consumers cooperatives, social funds and religious associations.
The most important forms of legal entities are the limited liability company, the private joint-stock company and the public joint-stock company. In all three cases, the liability of the shareholders, as far as company debts is concerned, is limited to the amount of their contribution to the nominal capital of the company.
Foreign investors may establish companies which are fully foreign owned in any form, with the exception of unitary enterprises.
Foreign companies may also register representative offices (for auxiliary and preparatory activity) or branch offices (for commercial activity). Please see recent changes to the procedures of registration of branch and representative offices.
Please refer to thetable comparing the most commonly used types of entities and offices.
The form of legal presence in Russia which your business takes will influence every aspect of the work that you do. Your choice of legal presence will have an impact on the deals you are capable of making and the tax consequences of those deals. It will affect your financial and tax accounting and reporting. It will affect what you are capable of doing as far as customs are concerned, currency control legislation, your ability to employ foreign nationals, the repatriation of income, the application of international treaties and a whole range of other aspects. Therefore, particular attention must be paid to Russian business modeling PRIOR to setting up a legal presence in Russia.