Doing Business in Russia
Doing Business in Russia 11
be created by two or more persons
(both individuals and legal entities
can participate in a partnership). The
maximum number of participants in
an economic partnership is 50. If the
number of participants in an economic
partnership exceeds 50, it must be
reorganised as a JSC within a year.
The constitutive document of an
economic partnership is the Articles
of Association. In addition, when
establishing an economic partnership,
its participants should conclude a
special partnership management
agreement to govern the rights
and obligations of the participants,
management of the partnership, its
activities, etc. This agreement must be
certified and kept by a notary. The share
capital of the economic partnership is
divided into shares, with contributions
to the share capital being made in the
form of money, securities, property
rights or other rights with a monetary
value.
The partners have the right to
participate in managing the partnership
and also to allocate profits and
expenses. The allocation of profits and
expenses can be disproportionate to
the number of shares owned.
All shareholders, by unanimous
decision, elect the governing bodies
of the economic partnership. The
partnership must maintain a register
of participants and indicate the size
of their stakes in the partnership
capital, as well as list the equity stakes
belonging to the partnership itself.
If the economic partnership is
technically insolvent and the intellectual
property it owns is seized and sold, the
participants in the partnership are liable
for the partnership's obligations. These
can be met either by one participant
acting independently, a group of
participants, or all of them together.
The law that gives effect to economic
partnerships was passed on 1 July
2012. Since then, only a few economic
partnerships have been established
(registered) in Russia. Therefore, some
of the practical aspects of conducting
commercial activities and managing
economic partnerships remain unclear.
It is thus advisable to establish a
Russian subsidiary in one of the more
common legal forms - as either an LLC
or JSC.
Foreign investment law
Foreign investors are guaranteed
certain property rights to their
investments in the Russian Federation
and to the profits they earn in Russia.
Foreign investments are regulated
both on a Federal and regional level.
According to Federal foreign investment
law, the rights of foreign investors to
conduct business activities in Russia,
and their right to take their profits
gained in Russia, must be the same
as those of native Russian investors.
Certain limitations can be placed on
foreign investors, but only if these
limitations are required to protect
constitutional guarantees such as those
protecting the health, rights and lawful
interests of citizens, or are related to
state defence and security measures.
Foreign investors are generally subject
to the same treatment as Russian
investors. Licensing, notification and
permission requirements that may
restrict business activities apply to both
Russian and foreign legal entities.
Foreign investors are guaranteed the
full and unconditional protection of their
rights and interests. A foreign investor
is entitled to recover losses caused by
an unlawful action or omission by the
Federal or regional state authorities
in accordance with Russian civil
legislation.
The property of a foreign investor or
of a company with foreign participants
cannot be seized in order to be
requisitioned or nationalised, unless
stipulated by Russian Federal or
international laws.
If requisition occurs, the value of the
seized property must be reimbursed to
the foreign investor or company with
foreign participants. If nationalisation
takes place, the value of the
nationalised property and incurred
losses must be reimbursed.
The most common corporate
structures in Russia are Limited
Liability Companies (LLC) and
Joint Stock Companies (JSC).
Foreign companies often use
LLCs for their wholly-owned
businesses in Russia.
Krasnoyarsk
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