SHELF COMPANY: A WAY OF ESTABLISHING AND RUNNING A BUSINESS IN RUSSIA REMOTELY

Russia has been attracting investors and businesses from all over the World. And just recently, entire process of business migration and entry has changed. The reason – global pandemic. Such uncertain situation forced businesses to seek remote ways to enter and establish businesses in Russian market. By nature of reaction to the current economic challenges and pandemic, many wondered if it would impact administrative procedures of setting up and managing their business, as the movement was limited due to the lock-down and cancelation of international flights.

Luckily, the Russian legal system is created so to regulate various company structures and ways of establishing and operating businesses. Among them – so called SHELF COMPANY.

Many wonder what is a shelf company then? A shelf company is a company that is already registered but has never traded or conducted business and holds no assets or liabilities. Essentially, the company is registered to sit on a ‘shelf’, waiting for someone to buy it. As an established company, shelf company is considered as ready-made company and mostly meant for investors who are planning to start their business activities instantly or who are not able to visit certain jurisdiction in person due to various obstacles (example: limitation of travel due to pandemic).

Many are direct benefits of purchasing a ready-made company, but among them, these are the ones that make the ease of doing business with Russia:

  • Purchasing a shelf company saves time compared to forming from scratch
  • Shelf company has already set-up business account and other necessary registrations and administrative requirements, which make the company operations work smoothly
  • Allows the businesses to do interrupted business with Russia remotely
  • Companies can start their business immediately and get into contracts faster
  • All this can be done remotely.

Such model of shelf companies is present in many jurisdictions around the World. Depending on the need, the future company owner usually has two options:

1. – To acquire an already existing company registered in Russia. In this situation as soon as the transfer agreement is signed, the company can be transferred to new owner.

2. – To engage an advisory company that will set-up a new company as a sole director and shareholder. That advisory company must hold its shares for 4 months. After 4 months the shares are transferred to the actual owner in the capacity of 100%.

Independent for which of these two options investors decides, usually advisory companies continue providing further management support to the new owner of the mentioned shelf-company in terms of nominee services.

Existing global situation forced us all to think about new ways of doing business. And as every global shake-up, this one has positive and negative impacts. If we would be taking on the positive ones, that means that legal entities are about to optimize their businesses to be functional in the times of pandemic, by redefining their strategic directions and operations – and start thinking remotely. As seen in the praxis, many are seeking to be able to have no obligation to visit certain jurisdiction to set-up companies and operations, but before preferably to have a trusted legal representative and advisory to drive entire processes for them. In this manner, the shelf-company structure is one of the greatest solutions for the Russian markets and internationally operating businesses.

Interested in purchasing a Shelf company in Russia? Get in touch with us!

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Authors:

Bojana Minic/ Business Development Manager

Viktor Malyshev/ General Counsel and Senior Jurist

Philipp Rowe/ Managing Director

Rufil Russia Consulting, Moscow, Russia

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