The Russian LLC (OOO) Explained

The limited liability company, known in Russia as OOO, is the standard vehicle for doing business in the country. It is governed by the Civil Code and the Federal Law "On Limited Liability Companies". Participants risk only their contributions, the company may have up to fifty participants, and a single founder is allowed, including a foreign company or a foreign individual.

Attorney Elena Petrova advises foreign investors on setting up, running and leaving Russian LLCs. This guide walks through the life cycle of the company and the points where disputes usually start.

Setting Up an OOO: Documents and Registration

An LLC is registered by the tax service. The founders sign a decision on establishment, approve the charter or choose a model charter, and appoint a general director. The minimum charter capital is 10,000 roubles, and it must be paid in within four months after registration.

A foreign founder needs an apostilled extract from the home register, certified translations and a Russian address for the company. Refusals most often follow from errors in the application form or a doubtful legal address.

Participants and Their Shares

Each participant holds a share of the charter capital. The share defines voting power and the right to profit, unless the charter sets a different rule.

A share can be sold to another participant freely. A sale to an outsider triggers a pre-emptive right of the remaining participants and, as a rule, requires a notarized contract. Many investors also sign a corporate agreement that sets voting arrangements, deadlock rules and exit terms.

How the Company Is Managed

The general meeting of participants is the supreme body. Some matters require unanimity, others a qualified or simple majority.

Day-to-day management belongs to the sole executive body, usually the general director. The charter can add a board of directors or transfer management to a managing company. Resolutions of the general meeting must be certified by a notary or by another method fixed in the charter, such as signatures of all participants.

Who Answers for the Company's Debts

The company is liable with all its property. Participants are not liable for its obligations, which is the core idea of the form. That protection has limits.

A director who acted in bad faith or unreasonably must compensate losses caused to the company. In bankruptcy, controlling persons may face subsidiary liability for debts that the company cannot pay. The same applies when a company is struck off the register with unpaid debts and the creditor proves bad faith of those in control.

Leaving the Company and Expelling a Partner

A participant can withdraw only if the charter expressly allows it. The company then pays the actual value of the share, calculated from the latest accounts. Where withdrawal is not allowed, the exit route is a sale of the share.

Expulsion is decided by a court. Participants holding at least ten percent together may sue to exclude a partner who grossly breaches duties or makes the work of the company impossible.

Typical Conflicts Between Participants

Disputes arise over dividends, access to documents and deals of the director with related parties. Challenges to meeting resolutions have short limitation periods, so delay is costly.

Corporate disputes are heard by arbitrazh courts, even when a participant is an individual.

Practical Steps for Foreign Owners

Keep the charter and the corporate agreement consistent. Check the state register regularly, since changes can be filed without the owner's knowledge.

We review charters, draft corporate agreements and represent participants in arbitrazh disputes.

The main channel of communication with the attorney is email: attorneypetrova1@gmail.com.