Company formation, Russia

Forms of legal entities in Russia

Forms of legal entities in Russia

When registering a company in Russia, the basic task lies in choosing a business legal structure. The Civil code stipulates such forms of legal entities in Russia: economic partnerships, economic societies, unitary enterprises and production cooperatives.

Speaking about economic partnerships

Economic partnerships represent a special legal structure of commercial organizations. Economic partnerships are divided into full or universal partnerships and limited or trust partnerships.

All members of full partnerships have equal rights. Being full partners, they are jointly and severally liable for partnership obligations. Both full and limited partners can be members of limited partnerships. The former are jointly and severally liable for partnership obligations. The latter are liable for partnership obligations only within the limits of inputs they provide.

Currently economic partnerships are practically non-existent in Russia. This is because it is difficult to distribute obligations among members when using this form of legal entity.

Types and advantages of economic societies   

Economic societies are commercial organizations whose charter capital is divided into shares. Economic societies are divided into limited liability companies, double liability companies and joint stock companies.

A limited liability company or LLC is a suitable and acceptable legal structure for foreign investors. The capital of LLC members is divided into shares. The liability of members is limited by the sizes of their shares. This undoubtedly reduces business risks.

A double liability company or DLC is a specific form of legal entity. The capital of DLC members is also divided into shares, and the liability of members is limited by the sizes of their inputs as well. However, DLC members bear subsidiary liability whose size cannot be less than the size established by the legislation in force. In other words, this legal status is less attractive.

Types and peculiarities of joint stock companies

Joint stock companies or JSC represent a specific type of economic societies. Joint stock companies are commercial organizations whose charter capital is divided into a definite number of shares or stocks. JSC members are not liable for company obligations. This is a significant advantage of this legal status. The members bear the risks of losses within the limits of their shares only.

Open and closed JSCs can be founded according to the legislation in force. Members of OJSCs are entitled to alienate their shares to other parties. Members of CJSCs can dispose their shares upon authorization of general shareholders meeting. In addition, other members of closed joint stock companies have the right of first refusal.

The number of members in a CJSC cannot exceed 50 persons. Otherwise, a closed joint stock company shall be reorganized into an open joint stock company.

Unitary enterprises as an exclusive right of the state

Unitary enterprises are enterprises whose owner is one person only. Currently there exist federal, state and municipal unitary enterprises in Russia. The registration of private unitary enterprises is not stipulated by the legislation in force.

Production cooperatives

Another legal structure is production cooperatives. Production cooperatives are commercial organizations founded by means of the voluntary association of citizens and/or legal entities with the purpose of accomplishing joint business activity.

The choice of a particular legal structure depends on a concrete situation. It is recommended to apply to professional companies, which always help customers choose the most appropriate forms of legal entities for registered enterprises.

Share this Story
  • Forms of legal entities in Russia
    Company formation Russia

    Forms of legal entities in Russia

    When registering a company in Russia, the basic task lies in choosing a business legal structure. The Civil code stipulates such ...
Load More Related Articles
Load More By Mauro Biasolo
Load More In Company formation

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Cyprus favourable tax regime over IP

On the 24th of May 2012, a package ...