Foreign companies often ask us to support them in creating a business presence in Russia. Their initial questions usually revolve around the form of the legal establishment/office for their operations in Russia. Should it be a representative office, a branch, or an LLC (OOO in Russian)?
We usually ask these companies to pause for a moment, reflect and answer the following questions:
- Why do you need a legal entity in Russia?
- Is this really necessary from the business point of view?
- Are there other, more efficient ways of creating a business presence in Russia?
Having an office in Russia can be complex and requires investment of money, time and energy and there are other ways to be present and active in Russia. Some of the possibilities are:
- Through an importer / distributor
- Through DDP-delivery logistic service providers
- Employing staff through payrolling service providers
- Using flexible office solutions.
Lighthouse Group consists of three companies. One of our companies is an operational management consulting business that supports foreign clients with their operational activities in Russia. This means that we have several OOO’s and representative offices under our management. We know what it takes to establish and operate an office in Russia and it is not always easy. Consequently, there are many companies whom we advise not to establish any office but choose another set-up for their business activities in Russia.
So, before you decide to set up your own office, make sure you ask the following questions:
- Why do we need an office in Russia from the business point of view?
- What is our vision of our business operations in Russia in 3-5 years?
- Who are your main customers? How much of your turnover comes from private companies and how much from state-owned companies?
- To what extent is / will your business be affected by the localization drive in Russia?
- Are your customers ready to pay in EUR abroad? Or do they require you to sell from a Russian legal entity in Rubles?
- Who will be your General Director?
- Do you have or plan to have employees in Russia?
- How will you control the company / accounts in Russia?
- How will you receive your profit?
- How will you close the office if you decide to leave the market?
- Are there easier and more cost effective ways to achieve your commercial aims on the Russian market?
We will be happy to guide and assist you in this process. And if you decide to establish an office we will gladly share our experience of cooperation with various law firms. Check also our comparative table that will provide you with the main differences between a Russian legal entity and representative or branch offices in Russia.
Feel free to call or email us.