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Thread: New Companies Act

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    New Companies Act

    I have been granted the sole mandate to distribute the total production of a certain mineral in the Russian Federation worldwide, except in Russia. Now I have decided to register a Russian Company specifically for taxation purposes as I refuse to subsidize the Ferrari's of the politically connected in this country.

    I studied company law in 1985. Then it still was Act 61 of 1973 if I remember correctly. My lawyer in Moscow is now working on the equivalent of the Articles of Incorporation as I knew it. (It will have another name there, but that is irrelevant.) My problem is that I cannot recall what is to be contained in these company documents.

    I attach his note to me:

    Dear XXXXX,
    I want us to explain everything to each other before I can go ahead with the handling of Company Registration and Presentation at the Ministry for registration of Contract between your firm and YYYYYY Company for granting of Mandate to represent the Company interest. Please go through all this fact and let me know your decision before I fully begin the Company Registration, all what written below would be used to prepare the Company Memorandum and would be the binding laws, rules and regulations upon which Company would be established and run all the activities.

    Laws for registration of Legal Entities in Russia Federation Territory.
    The authorized Capital base for a LLC is not less than 100 times of the current minimum wage instructed by the Russian Federation. (Minimum wage is about R1950 per month. (this my note))

    Each Participant/Shareholder of the Company have equal right and entitle to the benefits of the Company according to interest percentage that each shareholder have in the Company.

    Authorized capital is divided into shares which represent rights and obligations of a shareholder in accordance with their participations in the authorized capital.

    All the documents for registration must be translate, legalize and certify by Notary.
    Each share holders have a legal right to withdraw from the Company at any time without cause, irrespective of the consent of other shareholders of the Company. The Company must refund the participant in case the shareholder decides to withdraw and the amount must be equal to actual value of its participation interest in the Company Charter Capital.

    Any shareholder that has at least 10% of authorized Capital base of the Company may apply to court to seek exclusion of another shareholder of the Company. An exclusion order will be granted only if applicant shareholder prove that the actions of the Participant Constitute gross violation of its duties, if as a result of such violation the conduct of the Company business becomes impossible or substantially more difficult. In such cases for obvious reasons it is unattractive to a foreign investor considering a joint with a Russian Partner.

    Many decision of a company may be taken only by unanimous vote of all Company Shareholders. While this may be favorable for a minority shareholder, it is unattractive to a majority shareholder.

    For any decision that might be raise by the Company, the decision can be adopted by no less than two-third of majority votes.

    The management structure shall consist of the board of directors and the executive body. Board of Directors effects general supervision of the company’s business activities. Executive body of a company may be represented by both an individual and collegial body.

    Companies shall file accounting and tax reports with the tax authorities on a quarterly basis. Reports on VAT shall be filed every month.

    All the Participants/Shareholders must agree with the laws of Russian Federation and have fully understanding and translation of the Laws by a qualified attorney prior to the time of registration of the legal entity.
    Dave, you are the expert here and no doubt have worked with these company documents before. My experience thus far tells me that the acts that govern the same aspects in different countries are materially the same. (I think we will be allowed to change these founding documents by having shareholder meetings and noting the decisions taken.)

    What must I look out for? Please advise.

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    Site Caretaker Dave A's Avatar
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    I happen to know someone who provided audit and accounting services in Russia for about 5 years. I'll contact him and see if he is willing to advise you.
    The trouble with opportunity is it normally comes dressed up as work.

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    Quote Originally Posted by Dave A View Post
    I happen to know someone who provided audit and accounting services in Russia for about 5 years. I'll contact him and see if he is willing to advise you.
    That will be great Dave. Does he speak English, OK?

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by apprepcen View Post
    Does he speak English, OK?


    (I understand the concern, though ).

    I'm going to an event this weekend and there's a chance he'll be there. If I don't bump into him over the weekend I'll try to track him down on Monday.
    The trouble with opportunity is it normally comes dressed up as work.

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    Quote Originally Posted by Dave A View Post


    (I understand the concern, though ).

    I'm going to an event this weekend and there's a chance he'll be there. If I don't bump into him over the weekend I'll try to track him down on Monday.
    It is a nightmare phoning Moscow and the only words I understand at this stage is Dobri den. It seems that the Embassy personnel here in Pretoria was only appointed for their English ability and not their efficiency in other matters. At one stage I felt that if I was their boss, I'll send the whole bunch to Siberia in shorts and T shirts. Fortunately I have 2 gorgeous partners in Russia who are fully bilingual.

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    Site Caretaker Dave A's Avatar
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    Well, PM sent with contact details.

    For the record, based on the short chat I had with Charles I think it's safe to say that forming a company in Russia is a very different deal to forming and operating a company in South Africa.
    The trouble with opportunity is it normally comes dressed up as work.

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    My views on New COmpanies Act

    I had gone through the site. The topic discussed is very inspiring and reasonable to discuss about it. The new legislation seeks to replace the half-a -century-old-Companies Act, 1956, and modernise corporate practices in line with the developments taking place across the globe. The Bill will introduce new rules, covering areas such as corporate social responsibility, class action suits and a fixed term for independent directors. I t also proposes to tighten laws for raising money from the public. Not only these, There are many more new alignments and important changes involved in it. I hope that it would be successful and the Companies will assure of it.

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