Comments made by Mikhail Ilin to an article titled “Minimum amount of registered capital will remain unchanged”

23 April 2013
The minimum amount of capital for legal entities equal to 10 thousand rubles will remain unchanged. Earlier on, state officials suggested an increase of the registered capital amount up to 500 thousand rubles (and even up to 5 million rubles).

The current registration fee (the minimum required amount for registration of an entity) makes just 10 thousand rubles. Authors of the project developed by the President's Committee for Codification and Improvement of Civil Legislation, suggested to increase the registration fee to a significant amount of 500 thousand rubles (applicable to OOO) and 5 million rubles (applicable to joint-stock companies). According to Aleksandr Makovsky, vice-president of the committee, these innovations were mainly supported by the Ministry of Economic Development and Trade and several law firms lobbying the interests of big business. After numerous disputes arising between officials, lawyers and scientists, the provision related to the increase in the registration fee was simply deleted from a package of amendments to the RF Civil code.

According to experts, half a million may actually seem a bit too much to start a business; however, nowadays one just can open a snack-bar selling shaverma with this money. The most important thing is that nothing can prevent a novice businessman (probably with no capital at all) from registering as a self-employed entrepreneur.

Not prepared

Mikhail Ilyin from the law office “S&K Vertical” believes that even the smallest businesses are keen to establish an OOO just because the owner is not prepared to be held liable to the extent of their its personal assets. Interestingly, according to the approved road map (see an article by “DP” dated 18.03.2013), the government is planning to reduce the term by 6 times and to simplify the registration procedure for the new legal entities, in particular, to abandon mandatory preliminary deposit of a half of registered capital (i.e., 5 thousand rubles).

Creditors’ interests

As a result, the government de facto encourages existence of fly-by-night operations, i.e. not reliable businesses primarily interested in making a quick profit. “Legal entities should have big registered capitals, or there should be a real opportunity for the affected party to hold partners jointly liable,” said Evgenia Stanislavskaya, a lawyer working for one of the Rightmark Group companies. “Neither condition exists in Russia. As a result, creditors’ interests are completely unprotected”.

In developed economies, registration procedure for entities is quite simple, and the registration fee is rather low. For instance, the minimum capital of an Estonian partnership (analog of the Russian OOO) or of Finnish Oy (a sort of ZAO) makes only € 2500. “Yes, in many countries one can register a business in 30 minutes,” said Yury Tolstoy, professor of the St. Petersburg State University, a prominent expert in civil law. “However, very strict penalties are imposed on violators.”

Delovoy Peterburg, no. 069, April 23, 2013

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