Statutory Registration of Legal Entities: Procedure and Peculiarities

      In accordance with the current Russian laws a legal entity is subject to a statutory registration with the law enforcement agency. Refusal to effect a statutory registration, as well as evasion from such registration may be appealed in court. A legal entity is deemed organized as of the moment of its statutory registration.

      Hence, the statutory registration is a legal evidence of the right of the legal entity to make any civil transactions.

      Currently the statutory registration of legal entities is governed by the Decree of the President of RF dated 8 June 1994 On Regulation of the Statutory Registration of Enterprise and Entrepreneurs on the Territory of the Russian Federation, which approved the Statute of the Procedure of Statutory Registration of Business Subjects, as well as by Art. 51 of the Civil Code of RF. The Presidential Decree has defined the list of the documents required for the statutory registration, the requirements to these documents, and the periods of registration. In practice the registration authorities expand the above list significantly and thus complicate the procedure considerably. It should be noted that the procedure of the statutory registration changes like in a kaleidoscope. It would be hard for the person who has no sufficient experience and skills in registration to keep track of the changes in powers of the registration authorities and the registration procedure.

      This article focuses on the procedure of the statutory registration (stage by stage) of limited liability companies and open (closed) joint-stock companies in Moscow, together with the list of the documents required and the peculiarities arising in the course of registration. We will not dwell on the procedure of the statutory registration of companies with foreign investments intentionally, since this topic, being voluminal, requires a special approach.

      1st Stage

      Checking and reservation of the Companys name in the Register of names of commercial entities. The Register concerned is kept by the Moscow Registration Chamber (hereinafter the MRC). The MRC requires that the certificate of checking and reservation of the Companys name be submitted when the documents for the statutory registration are filed.

      2nd Stage

      Drafting of the constituent documents, i.e.:
-      the Charter;
-      Articles of Incorporation (for joint-stock companies the JSC) or Foundation Agreement (for limited liability companies the LLC) (if founded by more than 1 founder);
-      Resolution of the Founder (shareholder) for companies with 1 founder (shareholder);
-      Minutes of the General Meeting of the Founders (Shareholders) at which the following resolutions are passed:

  •       on incorporation of the Company;
  •       on approval of the Companys Charter;
  •       on approval of the authorized capital amount and the amount (number) of interest (shares) of the founders (shareholders);
  •       on the name and location of the Company;
  •       on approval of the Companys seal sketch;
  •       on approval of the evaluation of the non-pecuniary contributions of the founders (in case the sum of the contribution to be made does not exceed 200 minimal labor remuneration rates).

          This stage is the most important, because the provisions of the constituent documents will significantly influence the relations arising in the course of the Companys activities (e.g. the most material and disputable issues are the provisions pertaining to the procedure of withdrawal from the Company, on separation of authorities of the Companys governing bodies, on the dividends amount, on the procedure for convention and conduct of the general meetings, on the procedure of consummation of material transactions and transactions with interested parties, etc.). Our recommendation is to hire the lawyers to draft the constituent documents, because a stable business of a company depends on the contents of its constituent documents.

          3rd Stage

          Signing of the Companys constituent documents. In case the Company is founded by individuals, or the constituent documents are signed on behalf of a legal entity-founder by an individual acting by the Power of Attorney, the signatures on all the constituent documents and on the Minutes must be notarized. The constituent documents on which the individuals signatures have not been notarized are filed with the registering authorities in the presence of all the founders. The constituent documents signed on behalf of the founders (shareholders) of legal entities by their heads are affixed with respective seals; in this case no notarization is required.

           4th Stage

          Preparation of a set of the constituent and other documents necessary for the statutory registration of the Company.

          The set of the documents for the statutory registration of limited liability and open (closed) joint-stock companies must comprise:

          1.  The Charter approved by the founder(s) or shareholder(s) an original and a notarized copy;
          2.  The Foundation Agreement (in case there are more than 1 founder) - an original and a notarized copy;
          2.1. For the JSC Articles of Incorporation;
          3.  The Minutes of the General Meeting of founders (shareholders) (for those companies wherein the founders are more than 1) - a notarized copy;
          4.  The Resolution of the founder (shareholder) (in case the Company is founded by 1 person) a notarized copy;
          5.  Opinions of respective experts (the Ministry of Fuels and Power, the Ministry of Antimonopoly Policy and Business Support, etc.) in cases stipulated by Russian laws an original or a notarized copy;
          6.  Founders documents:

          For legal entities:
    -      the Charter (a notarized copy);
    -      a certificate of registration (a notarized copy).
    -      For every individual a photocopy of his/her passport.

          7.  A document attesting formation of the authorized capital in compliance with the time limits set forth by Russian law, namely: 50% of the authorized capital must be paid up by the founder(s) by the statutory registration, the balance within 1 year following registration:
    -      a certificate from the bank confirming deposition of funds (an original or a notarized copy);
    -      a certificate of transfer of property or property rights contributed to the authorized capital (an original or a notarized copy) to the balance (in case the cost of the property exceeds 200 minimal labor remuneration rates).
          8.  Forms No. 6 and 7 (provided by the MRC).
          9.  The document attesting location of the Company (a contract of lease, sublease).
          10.  A certificate of checking and reservation of the Companys name.
          11.  A Power of Attorney given to the person authorized to handle the statutory registration of the Company (in case the person responsible for handling the registration is not the Head of the Company) an original or a notarized copy.
          12.  For open (closed) joint-stock companies it is necessary to submit a document confirming that an application to register the issue of the Companys shares has been forwarded to the Federal Commission of Capital Market.
          13.  A photocopy of the passport of the person who files the documents, as well as the photocopies of passports of founders-individuals.
          14.  A receipt confirming the registration fee and statutory duty payment an original.

          It should be noted that depending on every particular case other documents may be requested, as well (e.g. when a property or property rights are contributed to the authorized capital, a report of an independent appraiser on the evaluation of the contribution should be submitted, etc.).

          The issue of the seal should be resolved, as well. Currently the seal of a newly incorporated company is subject to registration with the MRC, and a respective registration number is assigned to the seal. The seal is executed in the following manner:

          1.  A sketch is made on a special form approved by the MRC.
          2.  The form with the sketch is signed by the General Director of the Company and filed with the specialized branch of the MRC responsible for assignment of a registration number to the seals and approval of the sketches of such seals. If the sketch has been executed by the time the documents are filed for the statutory registration, it should be attached to the set of the documents.
          3.  The sketch is approved by the MRC.
          4.  A number in the Seal Register is assigned to the seal.
          5.  Based on the approved sketch, which contains a seal registration number, the seal is manufactured by a company having a respective license.

          5th Stage

          Filing of the documents for the statutory registration. As a rule, no disputable questions arise in the course of filing the documents, except for individual cases which have not been duly settled (e.g. huge queues due to insufficiently regulated order of legal entities registration).

          6th Stage

          Receipt of the documents registered. In confirmation of the Companys registration as a legal entity, the registration authorities issue a certificate of the statutory registration and assign a number in the Register of Legal Entities to the legal entity concerned. This stage is final, and as of the moment of such registration the Company is acknowledged as a legal entity organized under the current laws of Russia.

          It should be noted, though it is not a question of registration, that the company must be registered with the State Tax Inspectorate and the Social Security Fund within ten days following the statutory registration. In case of a default, a fine will be imposed in the amount of up to 5,000 minimal labor remuneration rates.

  • Maxim Yu. Kryzhansky,
    Expert, associate lawyer