Establishing a legal presence in Russia (1)

Registration Authorities

Representative Offices

The accreditation of a representative office involves obtaining a permit from one of several federal accreditation agencies. Foreign companies wishing to open a representative office in Russia usually choose between the Chamber of Commerce and Industry of the Russian Federation, the State Registration Chamber (SRC) of the Russian Federation, or the Ministry of Foreign Economic Affairs of the Russian Federation. Accreditation with any of these agencies enables a representative office to operate at federal level irrespective of where the representative office is physically located.

In addition to federal accreditation, a representative office must be registered at the local level. This requires registration with the local tax inspectorate, the Russian Federation State Committee on Statistics and three employment-related funds, which collect mandatory contributions from the payrolls of all entities operating in Russia. Certain legal requirements that apply to the registration of a company (see below), such as procuring a guarantee of a legal address and the execution of a lease, also apply to a representative office and a branch.

If the federal accreditation was granted by an agency other than the SRC, the documents must also be filed with this agency, as the SRC maintains the register of representative offices of all foreign companies accredited in the Russian Federation. Representative offices should also open one or more bank accounts, and, for practical purposes, arrange to have a seal.

Companies

Pursuant to the Law on Registration of Legal Entities (the "Law on Registration") as of 1 July 2002 the State Tax Ministry of the Russian Federation is responsible for the registration of legal entities. The Law on Registration made substantial changes to the procedure for the registration and re-registration of legal entities (which was similar to the registration procedure for representative offices, described above) in that it transfers the function of registration to a single federal executive body – the State Tax Ministry.

The Law on Registration establishes a uniform procedure for the registration of legal entities regardless of their organisational and legal form and the kinds of economic activities pursued by them. Regional branches of the State Tax Ministry are required to carry out registration in accordance with centrally prescribed rules. In accordance with Article 1 of the Law on Registration, the registration process is governed by federal legislative acts. This provision is intended to restrict the legislative powers of the regions.

Further, on 23 December 2003 the Russian President signed into law amendments to the Law on Registration, which successfully completed the implementation of the "one-stop shop".

Registration Procedure

The Law on Registration provides for a "one-stop" registration avoiding the need for registration or notification with numerous other authorities as was required before.

State registration of legal entities should be made within 5 working days of the submission of the corresponding documents to the local branch of the Tax Ministry. A legal entity shall be deemed to be registered as soon as it is entered into the state register.

The application for registration and the requisite supporting documentation should be submitted to the local branch of the Tax Ministry in the administrative district stated in the application for state registration as the seat of its permanent executive body. The Law on Registration provides that the relevant documents can be submitted personally by the applicant, by its authorised representative, or can be sent by post. Upon receipt, the registration body is obliged to issue a receipt to the applicant. If the documents are sent by post the registration body is required to send the receipt to the address of the applicant by registered letter not later than the next day after the receipt of the documents and to obtain a confirmation of delivery.

All other authorities will be informed of the registration of a legal entity by the registration body and not by the applicant. The Tax Ministry shall, within five working days of state registration of a particular entity, provide registration data to employment-related funds of the Russian Federation, so that such Funds can effect their own registration of the entity (such as the Pension Fund, Social Security Fund and Medical Fund). The Tax Ministry shall be required to inform the employment-related funds not only of the fact of registration of a legal entity but also of all changes made to the data on such legal entity contained in the register.

In the next article read all about the Documents needed to register a Representative Office, a legal entity and an Open or Closed Joint Stock Company in Russia.

For further information please contact David Griston at:

[email protected]