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  • Legal entities in Russia
    Thinking about entering the Russian market and setting up the business here? So you may consider the following options:

    Direct sales;
    Distributorship contract;
    Representative office or branch;
    Russian subsidiary.

    Direct sales: in case you have already established company with unique products or technologies with good demand and would like to sell it to Russia. Your presence here is not required. You can just find as many Russian based buyers as you can, who will buy your products and sell them to a final customer.

    Distributorship contract: you can choose one or few respectful partners, who will represent your company and it’s products or services in Russia. In this case all the clients and orders have to go through your distributors.

    Representative office or branch: you can choose to establish a representative office (RO) or branch in Russia. An RO or a branch is not a Russian legal entity, but is a legal part of the foreign legal entity, and, therefore, the head office bears full responsibility for the obligations and actions of the RO or branch.

    An RO is authorized to conduct certain "preparatory and auxiliary” activities for its head office. A branch, on the other hand, is able to conduct all activities that the head office itself performs, including the execution ofsales contracts. Depending on the exact scope and nature of activities, both ROs and branches have the right to create a taxable presence in Russia for their headquarter company.

    Subsidiary: another option is to set up here Russian subsidiary. The most common business structures in Russia are Limited Liability Companies (LLC) and Joint Stock Companies (JSC). In an LLC (Russian abbreviation – ООО), the participation units attributable to shareholders (participants) are not considered as securities under Russian securities legislation. Shares in a JSC are considered to be securities and are subject to registration with the Federal Financial Markets Services. A JSC can be either ‘open’ (OJSC), meaning publicly held (Russian abbreviation – OAO), or ‘closed’ (CJSC), meaning privately held (Russian abbreviation – ZAO).

    Foreign companies often use LLCs to conduct wholly-owned businesses in Russia. The LLC law provides for many similar provisions to those in the JSC Law. However, there are certain distinctions. Generally, one participant (individual or legal entity), has the right to establish an LLC or JSC. However, another solely owned legal entity cannot establish an LLC or JSC as a one-man company (i.e. 100 percent owned).
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