Despite of difficulties the Russian businesses face today, the number of companies registered in the Unified State Register of Legal Entities (EGRUL) maintained by the Federal Tax Service is showing a positive trend.
As of July 1, 2016, the number of companies with the status “active” were 4,800,000 (0,5% growth compared to 2015). Russia is listed in the Top-10 countries selected on this criterion: 24,500,000 companies are registered in the USA; over 9,100,000 in Great Britain; 8,300,000 in Brazil; 7,700,000 in France; 4,100,000 in Japan; 3,700,000 in Italy and 3,300,000 in Germany.
For the past 6 years over 389,000 legal entities (new companies or restructured entities, for example as results of mergers or other re-organizations) were registered in Russia. The most of them manufacture finished products or render services, pay taxes to the state budget and provide new jobs (see picture 1). Unfortunately there are always fraudulent companies amongst newly established entities. Therefore it is imperative to always check buyers, suppliers and business partners especially given the current economic situation.
Picture 1. Number and dynamics of legal entities registered in Russia
The most popular legal form (82,4 %) is limited liability company (LLC). As of July 1, 2016, over 3,900,000 companies are registered as LLCs. The popularity can be explained by the simplicity of registration procedure and a lower risk of shareholders as their liability is limited to the amount unpaid on their shares.
Non-profit organizations (14%) are ranked second: state and municipal institutions – 254,000; political parties, public associations, religious organizations, departments of international organizations – 217,500, consumer cooperatives – 89,600; other non-profit organizations – 106,000.
Picture 2. Structure of legal entities registered in Russia according – legal form, as of 1 July 2016
The majority of legal entities (35,4 %) is traditionally registered in three Russian regions: Moscow (City) about 1,100.000; St. Petersburg – about 370,000, the Moscow oblast – over 235,000. 7 federal regions (Sverdlovsk, Krasnodar, Novosibirsk regions, Republic of Tatarstan, Chelyabinsk, Samara, Nizhni Novgorod regions) increased this share up to 54,1%. This indicates significant uneven entrepreneurial activity geographically due to the population allocation in part due to the implemented state budget policy which is causing migration of human and financial flows to some key regions while a large number of subsidized areas remain depressed.
The number of companies registered in Moscow declined by 4,800 since July 2015, in St. Petersburg, by contrast, registrations increased by 10,500: the “Northern capital” demonstrates a maximum growth rate of the number of companies in Russia in general.
The opposite situation is observed in 39 federal regions. The Republic of Kalmykia is heading the list of declining regions (9,1 % decrease).
Large number of registered companies does not yet indicate the changes in the quality of processes taking place in Russia. What is not visible at this juncture is their contribution to stable economic growth, sufficient job offers and high social standards of life. Clear rules of the game, such a market oriented regulations governing business activities, still need to be established and sources for long-term funding or loans are need to foster continued growth.
Source: Credinform Russia http://www.credinform.ru/en-US