Softening of state regulation for international companies. Amendments to the Federal Law No. 290 'On International Companies and International Funds'

From April 14, 2023, a bill has been submitted to the State Duma proposing new provisions regarding the activities of international companies. Against the backdrop of sanctions imposed on the Russian Federation by unfriendly countries, the bill aims to adjust the provisions of the existing Federal Law No. 290 "On International Companies and International Funds" (hereinafter referred to as the Law) in terms of easing and softening the state regulation of international organizations.Read more

Dividend payout selling shares companies and real estate en kons

Paying dividends, selling shares and real estate by owners and shareholders from the states recognized by Russian authorities as unfriendly

Decree No. 618 introduced a restriction on transactions with shares of Russian LLCs owned directly or indirectly by unfriendly residents, entailing directly and (or) indirectly the establishment, change or termination of the rights of ownership, use and (or) disposal of shares in authorized capitals of limited liability companies (with the exception of credit institutions and non-credit financial institutions) or other rights that make it possible to determine the conditions for managing such limited liability companies and (or) the conditions for their entrepreneurial activities. The list of unfriendly states was approved by Decree No. 430-р. Permit to make transactions specified in Decree 618 shall be issued by the Government Commission for Control of Foreign Investments in the Russian Federation in accordance with the Rules approved by Decree No. 295 of the Government of the Russian Federation dated March 06, 2022.

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Llcjsc oooao general meetings shareholders deadlines ru konsu ou

LLC/JSC (OOO/АО) general meetings of shareholders: deadlines, procedures, notarization, resolutions and penalties

Federal laws on LLC (OOO) and on JSC (AO) require LLC and JSC to hold annual general meetings of shareholders to approve their annual results. The following matters are resolved at the annual general meeting:

  • Election of the company’s board of directors, audit commission (internal auditor);
  • Approval of the company’s internal auditor;
  • Approval of annual reports, annual financial statements, including the company’s profit and loss statements/income statements (unless JSC charter assigns this matter to the competence of the board of directors);
  • Distribution of profits and payment of dividends;
  • Other issues brought up to the general meeting by OOO shareholders.

Deadlines for holding general meetings

  • No earlier than March 1 and no later than April 30 for LLC (OOO) as set out in OOO charter;
  • No earlier than March 1 and no later than June 30 for JSC (AO).

In 2020, the deadlines for holding LLC (OOO) and JSC (AO) general meetings of shareholders were extended until September 30.

The usual deadlines for LLC (OOO) annual general meetings apply in 2021, i.e. they must be held by April 30, 2021 at the latest (Article 34(2) Law No. 14).

Adoption of resolutions at general meetings

Resolutions at LLC (OOO) general meetings are adopted by a show of hands (open ballot) by default. OOO charter may provide for another procedure for adopting resolutions.

In addition to mandatory issues, other matters may be included by shareholders in the agenda of annual general meetings.

Adoption of resolutions by absentee ballot in 2020-2021

From March 7, 2021, LLC (ООО) have been temporary allowed to hold annual general meetings of shareholders by absentee vote (Article 3(2) Federal Law No. 17-FZ dated February 24, 2021). The provisions of Article 50(2) Federal Law On LLC have been suspended until December 31, 2021, and all resolutions on issues considered by the general meeting may be adopted by absentee vote including:

  • Election of board of directors (supervisory board);
  • Election of audit commission;
  • Approval of auditor;
  • Approval of annual report, annual financial statements (unless the company charter assigns this function to the board of directors (supervisory board)).

So, general meetings of shareholders may be held by absentee ballot in 2021 like in 2020.

27.03.2023 Requirements for holding remote LLC (JSC) annual shareholder meetings

Confirming resolutions under Article 67.1 of the Russian Civil Code

Article 67.1(3) of the Russian Civil Code provides that the composition of shareholders that have voted in person, and the resolutions adopted by vote in person must be confirmed as follows:

  • For PJSC (PAO) – by the person keeping the register of shareholders and fulfilling the function of counting commission;
  • For NPJSC (NAO) – the same as for NPJSC (NAO)   or certified by a notary;
  • For LLC (ООО) – certified by a notary, or in any other way provided for in LLC (OOO) charter.

This requirement also applies to companies with a sole shareholder.

What documents are needed to confirm the decisions?

Resolutions adopted by general meetings are documented as follows:

  • By drawing up minutes;
  • By sole shareholder resolution.

The adoption of resolutions by general meetings of shareholders and the composition of the shareholders in attendance for adoption of resolutions are confirmed as follows:

  • For PJSC (PAO) – by the person keeping the register of shareholders and fulfilling the function of counting commission;
  • For NPJSC (NAO) – by notarization or certification by the person keeping the register of shareholders and fulfilling the function of counting commission;
  • For LLC (OOO):
    1. By notarization unless another way (signing of minutes by all or some shareholders; using technical means that make it possible to reliably establish the adoption of resolution; any other way that is not contrary to the law) is provided by the company charter; or
    2. By a notarized resolution of the general meeting of shareholders adopted by the company’s shareholders unanimously, or by notarization of sole shareholder resolution.

General meeting resolutions are documented by drawing up minutes (sole shareholder decision). Companies must keep these documents in their archives and ensure that shareholders and other persons provided by law have access to them.

Notarization of resolutions

Please note that according to the Review of Court Practice on Certain Issues of Law Application on Business Entities (Items 2 and 3) and Supreme Court Ruling N 306-ЭС19-25147 dated December 30, 2019 in case N А72-7041/2018, general meeting resolutions providing for an alternative way to confirm corporate decisions must be notarized.

General meeting resolutions and sole shareholder decisions adopted after December 25, 2019 must be notarized.

As mentioned above, this requirement also extends to single participant decisions, which now require notarization. Besides, the requirement also applies to the decisions of the sole shareholder (letter of the Federal Notary Chamber from January 15, 2020).

Further difficulties arise for the companies where the sole participant holds 100% of the shares in the charter capital (or 100% of the shares, if the question is about JSC). Corporate decisions (appointment of the CEO and/or board of directors, charter amendments, approval of the previous financial year results, etc.) hence must be certified by a notary.

If the only participant (shareholder) is a foreign company, along with certifying decision by a foreign notary, an apostille (and therefore its subsequent notarized translation) will be required.

How to avoid the necessity to notarize every resolution of the annual meeting?

To obviate a necessity to notarize every decision of the LLC sole member (or the sole shareholder of the JSC), it is necessary to make appropriate changes to the company’s Charter (except companies with a sole member).

What are the penalties for failing to comply with legal requirements?

Unlawfully failing or avoiding convening a general meeting as well as violating the requirements of federal laws for convening, preparing, and holding general meetings of shareholders results in:

  • The imposition of an administrative fine from RUB 20,000 to RUB 30,000, or disqualification of CEO (official representative) for up to 1 year;
  • The imposition of an administrative fine from RUB 500,000 to RUB 700,000 on the offending legal entity (Article 15.23.1 Russian Code of Administrative Offenses).

Failure to comply with document storage requirements results in:

  • The imposition of a fine from RUB 2,500 to RUB 5,000 on company officers (CEO);
  • The imposition of a fine from RUB 200,000 to RUB 300,000 on the offending legal entity.

Our support

Our lawyers are ready to provide a full range of services on preparation, holding and registration of general meetings of LLCs and JSCs.

Remote annual general meetings for llcs and jscs en konsu outsou

Remote annual general meetings for LLCs and JSCs: conditions, procedures, and features

For two years now, legislation has granted joint-stock companies and limited liability companies the right to hold meetings of participants remotely. With this method of holding meetings, the presence of all participants (shareholders) of the company at the meeting venue is not required; it is sufficient to connect with electronic or technical means at the appointed time.
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Choosing name for business russia en konsu outsourcing consultin

Choosing a name for business in Russia

Main requirements

Each commercial company has a corporate name that will distinguish it from other legal entities. The law contains certain requirements for a company name.
The company name shall contain an indication of its legal form (for example, "limited liability company") and the actual name of the company, which at the same time cannot consist only of words denoting the type of activity.
A company is allowed to have one abbreviated name, as well as full and abbreviated names in any foreign language or the language of the peoples of Russia. At the same time, the possibility of having an abbreviated company name both in any language of the peoples of Russia and in a foreign language is not conditional upon the simultaneous presence of an abbreviated company name in Russian.
The name of the company may include a foreign word in Russian transcription, with the exception of terms and abbreviations that reflect the legal form of the company.
Such names shall be indicated in the articles of association of the company and are subject to entry into the Unified State Register of Legal Entities as information about the legal entity.

What cannot be included in a company name

It is possible to use the word "Russian" in the name, as well as derivatives and abbreviations from it, for example, "rus-".
It is forbidden to include in the name the official name of the Russian Federation or Russia, as well as words derived from this name, for example, it is impossible to use the name "RF" and "Russia", including the word "Russian" (and derivatives from it) both in the Russian language, and in foreign languages in Russian transcription. It is not the set of letters itself that is prohibited, but giving it the meaning of "Russia", etc. – it is not prohibited to name the company "Rosa", since in this case the meaning doesn't imply "Russia".

The inclusion of such words in the corporate name of the company is allowed by permission issued in the manner approved by Decree No. 52 of the Government of the Russian Federation dated February 03, 2010. May 20, 2021 Example – Decree of the Government  which allows the use of "Russia" in the name of one of the NPOs. To obtain a permit, the following criteria shall be met:

  • The company has branches and (or) representative offices on the territory of more than half of the constituent entities of the Russian Federation;
  • The company is a major taxpayer;
  • More than 25% of the voting shares of a JSC or more than 25% of the authorized capital of an LLC are owned by the Russian Federation or an organization established by the Russian Federation on the basis of a special law, the name of which includes the name "Russia" or "Russian Federation".

Companies that do not meet these criteria may not obtain the permit and use the words "Russia" and "Russian Federation" in the name.

Procedure for obtaining the permit

The following documents shall be submitted to the territorial department of the Ministry of Justice:

  • Statement of intent to include the words “Russian Federation” or “Russia” and their derivatives in the company name;
  • Copies of constituent documents;
  • Decision of the member(s) to apply to the Ministry of Justice;
  • Evidence of eligibility, such as a copy of the company's tax registration notice as a major taxpayer.

The Ministry of Justice shall, within 30 days from the date of receipt of the documents, issue an order to include the words "Russian Federation" or "Russia" and their derivatives in the corporate name of the company or provide a reasonable refuse.

If in the future the company no longer meets the described requirements, the Ministry of Justice shall issue an order to revoke the permit. At the same time, the company shall exclude the words "Russian Federation" or "Russia" and their derivatives from its corporate name within three months.

May the variant "Раша" (the Russian transcription of the English word "Russia") be used in the name without official permission?

According to Decree No. 10 of the Plenum of the Supreme Court of the Russian Federation dated April 23, 2019, words derived from the official name "Russian Federation" or "Russia" should also include, among other things, the word “Russian” (and derivatives from it) both in Russian and in foreign languages in Russian transcription. Thus, the word "Раша" also may not be used as a Russian transcription of the word "Russia".

What if we already use "Раша" in the name?

Since the Decree of the Plenum of the Supreme Court of the Russian Federation is not an amendment to the law, but only comments on how this law should be used, this rule applies to already existing companies with this name. Registration authorities have the right to go to court with a request to rename the company. Today, there is no judicial practice on the requirement to exclude the word "Раша" from the company name, but there is a practice on the requirement to exclude the words "Russia", "Ros", etc. from the name.

At the moment, there are more than five hundred operating companies with the word "Раша" in the name. Considering that the registration authorities may oblige to rename the company at any time, such companies can protect themselves by making a change in advance, excluding the prohibited words. If you do this in advance, then you can carefully prepare all the documents in a calm mode, sign the decision and agree on the new articles of association with the members, notify the counterparties of the change. If, however, the company is renamed according to the instructions of state bodies, then due to urgency, errors and problems in the accounting department may occur (for example, if it prepares reports, and suddenly you have to additionally resolve the issue of renaming).

Other restrictions

What else should not be present in the company name:

  1. full or abbreviated official names of foreign states, as well as words derived from them.
  2. full or abbreviated names of interstate unions, such as "Commonwealth of Independent States", "CIS", "Eurasian Economic Union", "EAEU", "EurAsEC".
  3. full or abbreviated official names of federal state authorities, state authorities of the constituent entities of Russia and local governments.
  4. full or abbreviated names of public associations, such as "association", "union", "assembly".

The tax authority expresses its position that two legal forms in the name may mislead participants in civil circulation about the type of company's activities. In this case, it doesn't matter whether the second form is enclosed in quotation marks or not.

  1. designations that are contrary to the public interest, as well as the principles of humanity and morality.

Procedure for changing the company name

To do this, it is required to proceed as follows:

  1. Hold a general meeting of members or execute the decision of the sole member of the company to rename the company and make appropriate changes to the articles of association;
  2. Prepare amendments to the articles of association or create restated articles of association;
  3. Notarize and submit an application as per form p13001 to the registration authorities;
  4. Upon receipt of a record sheet with a new name, make a new company seal (if any);
  5. Change the sample signatures and seal card in banks;
  6. Notify all counterparties of the name change.

This is an indicative list of actions that is mandatory for all organizations. In each case, other actions may be necessary, so we recommend contacting specialists.

How to pay dividends konsu legal financial consulting russia kazakhstan cis

How to pay dividends: requirements, procedures and documents

One of the main goals of creating a legal entity is to make a profit from its activities. However, in order to receive income in the form of dividends, it is not enough to have positive financial results, it is also necessary to resolve correctly the issue of formalizing their payment. In practice, quite often there are disputes concerning the procedure, timing and grounds for paying dividends. The most common of them are discussed in this article.Read more

Vat on electronic services provided by foreign companies to russian customers konsu consulting

VAT on electronic services provided by foreign companies to Russian customers

Electronic services provided by foreign companies in Russia are subject to VAT. In order to exercise tax control over such transactions, the tax legislation provides for the obligation to tax register foreign organizations that are providers of electronic services or intermediaries involved in settlements.Read more

Overview sanctions and other restrictions well en konsu outsourc (2)

Overview of Sanctions and Other Restrictions, as well as Legislative Easements and Measures of State Support for Business in Russia

In 2022, the conditions for doing business in Russia have changed significantly. A multitude of sanctions, restrictions, relaxations, and measures of state support are being implemented. The lawyers and tax consultants at Konsu have prepared an overview of the main changes. We constantly monitor the situation and add information about the changes as the relevant documents are adopted and come into force.
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Clarifications of the Federal Tax Service on the reflection of information on a sole shareholder in the Unified State Register of Legal Entities

The Federal Tax Service of Russia has clarified that starting from April 26, 2021 in respect of a joint-stock company established by one person or a joint-stock company which, both before and after that date, began to consist of one person, information on the sole shareholder must be entered in the Unified State Register of Legal Entities.Read more

Choosing a business structure in Russia

What options do we have to set up a legal entity in Russia?

Foreign companies may choose among the following 4 options:

  1. Joint-stock company
  2. Limited liability company
  3. Representative office
  4. Branch office

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