The following text gives a concise summary of the bureaucratic and legal issues an entrepreneur faces when incorporating and registering a new company in Russian Federation. It looks at the process required when setting up a commercial or industrial company that has up to 50 employees and start-up capital of 10 times the economy’s per-capita gross national income (GNI).
1. Notarize foundation documents
A minimum of four copies of the listed documents must be notarized: copy of the charter, copy of the decision of setting up of the limited liability firm, copy of the foundation agreement. Also, the application for registration needs to be notarized.
2. Deposit capital in the bank and get proof thereof
Before company incorporation, a minimum of fifty per cent of the charter capital will be paid. In the 1st year of operation, the remaining balance needs to be paid. To facilitate opening of a bank account the listed documents are needed: (i) application form, notarized copy of the charter; (ii) notarized copy of the decision of setting up of the limited liability firm; and (iii) notarized copy of the foundation agreement. In order to deposit the capital, an accumulative bank account needs to be opened for the name of the entity which is not generated yet. Opening an account can take longer than one day, depending on the bank. This is due to bank’s client acceptance process.
3. Pay registration charge
It is a requirement that the registration charge be paid for the registration of the legal entity with the State Tax Inspectorate. The majority of applicants use Sberbank to pay the registration charge, because the tax authorities recognize the payment order issued by the Sberbank. In the case of the payment order been issued by other banks, the tax authorities may ask for extra confirmation that the payment actually took place. The registration charge of RUR 4,000 will then be sent to the account of the State Tax Inspectorate.
4. Register with the unified register at the Federal Tax Service on the local level, to receive the single number of state registration and the number of tax registration (identification number of taxpayer, INN); register with the State Pension Fund, the State
The state registration of legal entities is organized concurrently with tax registration and registration with the State Pension Fund, the State Fund of Social Insurance and the State Fund of Compulsory Medical Insurance (“Funds”) by the Federal Tax Service of the Russian Federation (former Ministry of Taxation) at the local level, since January 1, 2004. The coordination of the various registrations was given to the Federal Tax Service. The newly set up legal entity is allocated a main state registration number (OGRN) and the taxpayer’s identification number (INN) with the required certificates. The documents which authenticate the registration with the indicated Funds are sent to the newly set up legal entity by post. If for any reason the firm needs registration confirmation with the Funds straight after the state registration, it needs to directly apply to the Funds. Normally, it takes five days to complete tax and state registration and one / two days to receive registration documents with the Fund for an existing registered legal entity (if the application was completed in person by the founder), but mail delivery time might slow down the procedure by two / four weeks. Currently, tax authorities will only directly accept the documents for state registration when filed by person by one of the establishers of the firm, otherwise the authorities need them to be mailed. If the founder files the documents by person, it is possible to obtain a certificate of registration under the power of attorney. Alternatively, the certificates of registration are delivered to the address of the newly set up firm by regular mail, but this process takes longer./
Documents needed for registration:
As of 1 July 2009, the foundation agreement is replaced by an agreement with the founders of the firm which is not filed for the state registration.
Occasionally, the tax authorities put in place a number of prerequisites, and failure to follow these could lead to the application been rejected. Also, in recent times, the tax authorities stopped granting the original of the Charter (Articles of Association) which is filed for the state registration. Only a verified copy is granted. Consequently, if the firm has to file the copy of the Charter with any other state organizations, another copy of the Charter needs to be requested by the tax authorities on each occasion. The copy is normally granted within five working days and a fee of RUR 200 or RUR 400 is required.
5. Notarize Registration Certificate, Tax Payer Identification Number Certificate and Bank Signature Card The General director and Chief accountant normally have a signature right, for a limited liability firm with 50 employees.
Documents needed include:
6. Open the company bank account
Depending on certain bank requirements in terms of the client acceptance process, opening of the bank account can take between one to five working days. The bank might request documents that are relevant to the founders of the newly set up firm and scrutinize the history of the founder and their finances.
7. Inform Federal Tax Service of the company bank account number and receive a special letter of confirmation
This process can take between three to seven days and it must be fully finished ten days from the date of bank account opening.
8. Register the company with Moscow Center of Quotation of Work Places
Once the state registration has taken place, notification is required within thirty days. As of March 4, 2003 “On Approval of Regulation on Quotation of Work Places in the City of Moscow”, company registration with Moscow Center of Quotation of Work Places was implemented by the Resolution of the Moscow Government No. 125-PP. All firms and individual businesses employing personnel need to be registered with the Moscow Center of Quotation of Work Places having its local departments in every district of Moscow regardless of whether such firms are required to adhere to the quotas (if the staff represents more than 100 people) or not. This legislation comes under Resolution No. 125-PP
9. Register seal with the local Registration Chamber
The registration of a seal of the company / business is carried out by the State Unitary Enterprise “Mosregister” in Moscow.