Opportunities for foreign investors.

Foreign investors dispose of the following possibilities for operation on the territory of Russian Federation.
 
      Operation through representation offices of foreign firms and organisations.
 
      Foreign firms may open their representation offices on the territory of Russian Federation upon permit of the accrediting body; depending on the field of foreign company activity different state bodies of Russian Federation may act as accrediting bodies. The procedure of opening and activities of representation offices of foreign firms in Russian Federation is regulated by the Provisions on the Procedure of Opening and Activities in the USSR of Representation Offices of Foreign Firms, Banks and Organisations approved by the Resolution of the Council of Ministers of the USSR on 30 November 1989 ?1074 as amended as well as a number of other legislation.
 
      For accreditation of a representation office a fee is charged in the amount of 2000 US dollars which means permission for operation of a representation office for the period not exceeding three years from the date of accreditation. In the event that the purpose of opening a representation office is not achieved, permission may be prolonged - in this case it will be necessary to make another contribution in the amount of 1000 US dollars for prolongation of the period of accreditation for further three years.
 
      For the accrediting body to take a positive decision in regard to accreditation of a representation office it will be necessary to submit the following documents:

• Application of the foreign firm;
• Excerpt from the trade register;
• Articles of the foreign firm;
• A letter of reference from the bank regarding the solvency of the foreign firm;
• Letters of Russian partners of the foreign firm;
• Letter of Russian trade representation in the country of location of the foreign firm;
• Power of attorney for the Head of Representation;
• Power of attorney for the person representing the foreign firm in the process of accreditation of its representation office;
• Information on the place of location of representation office (if the mail address is already known) or contact phones of the attorney.

      In the event that for opening of a representation office under the laws of the foreign firm's location a special permit of the state bodies is required , a copy of such permission shall also be attached to the application.
         It is important to note that documents which have to be submitted to the accrediting body shall have to be duly legalized: notarized or certified by the consular department of the Russian Federation; in the event that they are prepared in a foreign language, they also must be legalized and translated into Russian language (the translation has to be certified by the consular department of the Russian Federation or Russian notary).
 
      Representation office of the foreign firm accredited on the territory of Russian Federation is a structural subdivision of the foreign firm that opened it. Representation office is not a juridical person and for organization of its activities shall be granted with the property of the firm that opened it. The management of a representation office shall be conducted by the Head of the Representation Office which acts by virtue of the Power of Attorney and Provisions on the Representation Office approved by the foreign firm. It is essential to know that in accordance with Russian legislation a representation office is authorised only to fulfill representation functions: representation and protection of the foreign firm's interests, advertising and marketing of its products, conducting on behalf of foreign firm deals and other legal acts. Under Russian legislation representation offices of foreign firms shall not conduct commercial activities - this fact also denotes simplified taxation of representation offices.
 
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      Operation through a separate juridical person and a branch - Commercial organisations with foreign investments and branches.
 
      Russian legislation stipulates possibility for foreign investors to conduct commercial activities on the territory of Russian Federation in the form of creation a separate juridical person - commercial organisation with foreign investments. Besides, the legislation also entitles foreign juridical persons to conduct commercial activities on the territory of Russian Federation by opening in Russian Federation a branch of a foreign juridical person, i.e. to operate without setting up a separate juridical person.
 
      The activities of commercial organisations with foreign investments and branches of foreign juridical persons are regulated by such laws as the Federal Law "On Foreign Investments in the Russian Federation" of 9 July 1999, the Law "On Investment Activities in RSFSR" of 26 June 1991 as amended, the Federal Law "On Joint Stock Companies" of 26 December 1995 as amended, the Federal Law "On Limited Liability Companies" of 8 February 1998 as amended and a number of other legislation.
 
      The legislation of the Russian Federation in the field of regulation of foreign investments determines basic guarantees to foreign investors, their rights for their investments and received on their basis profits, terms of entrepreneural activity of foreign investors on the territory of Russian Federation. The legal regime of foreign investors operation and use of the income received as the result of investments shall not be less favourable than the legal regime of activity and use of the income from investments of Russian investors with the exceptions established by Federal laws.
 
      Commercial organisations with foreign investments shall be created in any form not prohibited by the legislation of Russian Federation - in the form of commercial partnerships or companies. Russian legislation does not establish minimal amount of foreign investments on the territory of Russian Federation - in the event of creation of a juridical person in Russian Federation with respect to foreign investors shall be applied minimal amounts of charter capitals established by the legislation for respective organisational-legal forms (for instance, minimal amount of charter capital for limited liability companies at present is equal to 100 minimal wages).
 
      Juridical persons which are commercial organisations with foreign investments shall be subject to state registration in the bodies of justice (State Registration Chamber, in the city of Moscow - Moscow Registration Chamber) within one month from the date of presentation to the corresponding body of the following documents:

• Articles of the commercial organisations with foreign investments and founding agreement (in cases stipulated by civil legislation of the Russian Federation);
• Excerpt from the trade register of the state in which the foreign investor was founded or other document confirming the legal status of the foreign investor (when preparing this document the legalization requirements must be observed);
• Document on the solvency of foreign investor which is issued by the foreign investor's bank;
• Certificate on payment of a registration fee.

      Russian legislation establishes the notion of the "priority investment project" with realization of which the legislation links granting to foreign investors of a number of customs and tax benefits. In accordance with the Federal Law " On Foreign Investments in the Russian Federation" of 9 June 1999 under priority investment project shall be understood investment project, the total amount of foreign investments into which makes not less that 1 billion roubles (its equivalent in hard currency) or investment project in which the minimal contribution of foreign investors in the charter capital is not less than 100 million roubles (its equivalent in hard currency) included in the list approved by the Government of Russian Federation.
 
      State registration may be refused to commercial organisation with foreign investments for the purposes of protection of the basics of constitutional order, health, rights and legal interests of other persons, provision of the defence of the country and its security. Refusal to perform state registration may be appealed by the foreign investor to the court.
 
      Branch of a foreign juridical person is created for the purposes of conducting on the territory of Russian Federation of the activity which is conducted outside the territory of the Russian Federation by the foreign firm opening a branch and is liquidated by virtue of the decision of the foreign juridical person - head organisation.
 
      State control over creation, operation and liquidation of the branch of a foreign firm is conducted through its accreditation by the federal executive body within the procedure established by the Government of the Russian Federation.
 
      Head organisation submits to the federal executive body provisions on the branch and other documents (excerpt from the trade register, letter from the bank, etc.) It should be noted that in the Provisions on the branch of a foreign juridical person shall be indicated the name of the branch and the name of the foreign juridical person, organisational-legal form of the head organisation, location of the branch on the territory of the Russian Federation and legal address of its head organisation, the purposes of creation and types of activities of the branch, composition, volume and schedule of investment of the capital into the fixed assets of the branch, the procedure of the management of the branch. Into the Provisions on the branch of a foreign juridical person may be included other information reflecting the peculiarities of the activity of the branch on the territory of Russian Federation which do not contradict Russian legislation.
 
      The evaluation of the capital contribution into the fixed assets of the branch of a foreign juridical person shall be made by the head organisation on the basis of the internal prices or world prices. The evaluation of the capital contribution shall be made in the currency of the Russian Federation. The amount of the capital contribution into the fixed assets of the foreign juridical person shall be indicated in the Provisions on the branch of a foreign juridical person.
 
      The branch of a foreign juridical person shall be entitled to conduct commercial activity on the territory of Russian Federation from the date of its accreditation.
 
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