Types of business entity in Russia

There are three types of business entity in Russia. These are: limited liability companies (LLCs), Joint-Stock Companies (JSCs) and partnerships. The first two are (in that they are owned by their shareholders) and have limited liability (the shareholders are only liable for the company's debts to the face value of the shares).

There are two types of Russian Joint-Stock Companies, open and close. Founders of a joint-stock company sign a written agreement for its formation. This agreement establishes procedures for creating the company, such as size of authorized capital, types and categories of shares, cost of shares, the order for settling payments and the rights and responsibilities of the founders. This agreement then becomes the organization charter, which contains information on the name of the company, the locations of offices, the type of company (OAO or ZAO), as well as other specific information on shares, capital, and so on. The company shares allotted upon founding the company must be fully paid within a year from the company's foundation, unless a shorter period is required by the founding contract. However, at least half of the shares must be paid within three months, starting from the state registration of the company. Though a share which has been paid does not necessarily give voting rights to its owner.

Joint-stock companies are required to register the issue of shares with the Russian Federal Securities Market Commission (FSMC), so that shares can be traded either publicly (for an OAO) or among a limited number of people (for a ZAO). For registration, a set of documents must be submitted to the FSMC, and the procedure usually takes 30 days to enact.

Since 1 September 2014 there some changes have been done in the Russian Civil Code. Joint-stock can be public and nonpublic, but not Closed or Open. Public Joint-stock is like an OAO (shares are publicly traded). Moreover, it is important to have the word "public" in the Name of the Company (ПAO). All companies which were ЗАО become OOO and have to correct the type of Company in their founding documents (charter). The statutory minimum charter capital is 5000 Russian minimum wage rates (in 2014 1 minimum wage rate is 5554 roubles)

Open joint-stock company (Russian: (abbreviated OAO) is a legal entity where shares may be publicly traded without the permission of other shareholders. An OAO can distribute its shares to an unlimited number of shareholders and sell them without limitations. The statutory minimum charter capital is 100,000 Russian roubles.

Closed joint-stock company (Russian: (abbreviated ZAO) is a legal entity whose shares are distributed among a limited number of shareholders - maximum 50. The statutory minimum charter capital is 10,000 Russian roubles.

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