Establishment of the company with using foreign investments

Jan, 10 2024


Establishment of the company with using foreign capital is the important factor in economic development and in foreign investments attraction. This step will produce significant prospects and benefits both for the country, which start the opening process, and for foreign investors.

This article provides information which will help in Limited Liability Company process registration.

The inflow of foreign investments to Russian economy

Establishment of the company with using foreign investments will open new investment sources for countries. Foreign founders can invest heavily to different economic sectors that will help in development and in creation of new employment. Also, it helps to increase competition on international market and to attract additional investments.

The legal regulation bases of foreign investments to Russian economy I controlled by Federal Law №160 “About foreign investments in Russian Federation”. One of the articles states that foreign investments are every investment which made foreign investors in favor of Russian companies. Most important that all objects won’t be removed and won’t have any restrictions on turnover.   

Investor can provide money, stocks, property and other assets. Foreign investors can be foreign legal entity or individual.

It is essential to know that in getting the investments company become the commercial organization with foreign investors. This status will be after the date when foreign investor joining as a participant of committee. From that moment that company can use legal protection, guarantees and benefits. All of them are provided according to Russian Government laws. However filial or representative office doesn’t have that opportunity. If mother company has foreign investments and it is the base to subsidiary Limited Liability Company, filial will not be considered as company with foreign investments. This companies don’t receive foreign investments directly.

Up-to-date circumstances

The main positive aspects are:

  • Technological and knowledge transfer. Foreign investors usually contribute not only financial resources, but also disseminate advanced technologies and knowledge to local economy. Creation of enterprises with using foreign capital allows the country to get access to new production method and helps in intercultural experience exchange. It contributes to increase the level of technological equipment and of competitiveness of national businesses.
  • Cooperation on the international level. Establishment of the company with foreign capital contributes to development of cooperation and strengthen ties between countries. This type of companies will become the platform of experience, knowledge and sources exchange that contributes to development of foreign trade relations  and stimulate economic growth.

The creation process of the company with foreign capital

Creation of the companies with using foreign investments must be performed according to special steps and compliance of country registration laws and regulative requirements.

  • Step 1. Searching of market and business-planning.

The first step is searching of the market and assessment of business-idea potential. Analise of competitive environment is necessary for identification of target group and market needs. Also, the key role is development of detailed business-plan with growth and marketing strategies, financial forecasts.

  • Step 2. Searching of the foreign investments.

The next step is searching of the foreign investments, which will be interested in business-idea and stands ready to put money. It can be conclude searching of investment funds, international companies or privet investors. It is necessary to present business-plan and negotiate with potential investors.

  • Step 3. Legal registration.

After reach agreement with foreign investor significant procedure is the legal registration of company. Specific requirements and procedures can be different according to laws of the country where it is planed to create company. Usually, client have to register company according to local laws and provide special documents and registration forms.  

  • Step 4. Identification of the equity foreign interest.

In creation of the company with foreign capital it is necessary to identify its equity in the there. It requires to conclude a contract or agreement between founder and investor which specifies the amount of the investor equity and its rights and responsibilities.

  • Step 5. Obtaining special permissions and licenses.

Depends on sectors and business type it can be required different permissions and licenses. They should be done in special government institutions according to specification of the document.

What is necessary to understand in registration process?

There are many facts  which need to be considered in registration process:

  • Foreign investor can’t open the company himself. It is important to have the second founder who has Russian residence permit or citizenship.
  • Authorized capital must be formed in four months after company registration. Also, company should have two bank accounts – in rubles and in currency.
  • Documents of a foreign investor must be legalized according to Russian laws.

If there are problems in registering an LLC with foreign capital, it is important to seek professional help. VALEN specialists will help to collect and submit documents for registration, as well as legalize the status of a foreign investor in Russia.

Author of the article
Establishment of the company with using foreign investments
Valentina Khlavich
Managing Partner
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