Russian business law: the essentials. Отсутствует
association of citizens (the citizens can conclude an agreement on the establishment of a peasant (farmer) economy, and carry out joint entrepreneurial activities without the formation of a legal entity),
ii) a legal entity.
4.1.4.1. The Peasant (Farmer) Economy as an Association of Citizens
The Federal Law on Peasant (Farmer) Economies determines a peasant (farmer) economy (or simply “farming”) solely as an association of citizens, and not as a legal entity. In accordance with Clause 1 of Article 1 of the aforementioned law, a peasant (farmer) economy includes “the citizens bound by the alliance and/or property, having property goods in common and jointly performing production and other economic activities (production, conversion, storage, transportation and implementation of agricultural products), based on their personal participation.” At the same time, the norms intended for the profit organizations are applied to the peasant economy, without the formation of a legal entity.
In accordance with Article 6 of the Federal Law on Peasant (Farmer) Economies, the property of the peasant economy may include a land plot, farm improvements, ameliorative and other constructions, productive and working cattle, birds, agricultural and other machinery and the equipment, vehicles, stock, and other property, necessary for the implementation of the economy’s activities. The property of the economy belongs to its members on the right of joint ownership, unless otherwise provided by an agreement between them. The shares of the economy’s members, in terms of share property, are established by an agreement between the economy members. Fruits, production, and incomes gained by the economy as a result of its property's use are considered as common property of all members.
4.1.4.2. The Peasant (Farmer) Economy as a Legal Entity
The CC of the RF establishes that the persons who have concluded an economy founding agreement have the right to create a legal entity. The property of such an economy is determined by the right to ownership. Members bear a subsidiary liability for the obligations of the economy.
The peasant economy is a highly unpopular form of entrepreneurial activities in Russia, due to the personal liability of its participants and undeveloped legislation.
4.1.5. Industrial Cooperative
An industrial cooperative is a legal entity created by its participants, for joint industrial and other economic activities, based on their personal labor and other participation. The participants of industrial cooperatives contribute shares to the organization's property. The number of participants cannot be less than five.
The profits of the industrial cooperative are divided among its participants based on the labor participation of each of them in the activities of the organization. The law and the charter can provide another order for profit division. Industrial cooperative members bear subsidiary liability for the obligations of the cooperative, in accordance with the Federal Law on Industrial Cooperatives.
The industrial cooperative is also an unpopular organizational-legal form of legal entity in Russia due to personal liability of its participants, and the need for their labor participation in the affairs of the legal entity.
4.2. The State and Municipal Unitary Enterprises
The state and municipal unitary enterprises (or simply “the unitary enterprises”) are legal entities, which may be founded only by a state[40] or the municipalities. Their property is respectively in a state or municipal ownership. The unitary enterprises have special rights to such property (see below).
There are two types of unitary enterprises:
i) a state enterprise
A state enterprise has the economic management rights of the property assigned to it. Generally, the right to economic management grants the state enterprise with an opportunity to independently dispose of the movable property. For the disposal of real estate, the consent of the owner shall be obtained (state or municipality).
ii) a treasury enterprise
A treasury enterprise has the operational management rights of the property assigned to it. This means that a treasury enterprise must obtain the owner’s consent for the disposition of any property. The production made by the treasury enterprise is an exception (it can independently dispose of it, unless otherwise provided by the legal acts).
The legal capacity of unitary enterprises is limited to the purposes of the activities stated in their charters.
Unitary enterprises are created mainly for rendering services to the population in those spheres where the activities of individual entrepreneurs are inadmissible or impossible (for example, public transportation, the production of goods being important for the state and society, etc.).
5. The Non-profit Organizations
A minimum amount of charter capital for non-profit organizations is not established, except for those organizations whose charter provides for a possibility of exercising activities which may generate income. The minimum amount of the charter capital for this kind of legal entity is 10,000 rubles (Clause 5 of Article 50 of the CC of the RF). In any case, private institutions have no restrictions set by the law on the size of the charter capital.
5.1. The Non-Profit Corporate Organizations
i) A consumer cooperative is a membership-based, voluntary association of citizens and legal entities, aimed at satisfying their material and other needs, being carried out by way of assembling their share contributions.
ii) A public organization is a voluntary association of citizens, who have united in the order stipulated by law on the basis of common interests, for the purposes of satisfying spiritual or other non-material needs, representing and protecting common interests and to achieve other purposes, which are not contradictory to the law.
iii) A public movement is a public association consisting of participants who are pursuing social, political and other socially useful purposes, supported by the participants of the public movement.
iv) An association (union) is an association of legal entities and/or citizens based on voluntary or, in the cases established by the law, on obligatory membership, and are created to represent and protect the common interests, including professional interests, to achieve socially useful purposes, as well as other purposes which are not contradictory with the law, and are of a non-commercial nature. Non-commercial partnerships are also referred to as associations (unions).
v) A fellowship of real estate owners is a voluntary association of real estate owners, created by them for the purposes of joint ownership, use, and within the limits set by law, disposal of the property, which by virtue of the law are under their common property or in common use, as well as the achievement of other goals which are not contradictory with the law.
vi) The Cossack communities are an association of citizens, entered in the state register of the Cossack societies in the Russian Federation, created to preserve a traditional way of life, and manage the culture of the Russian Cossacks, as well as for other purposes stipulated by law, with obligations of carrying out state or other services, as undertaken in accordance with the law.
vii) The communities of Aboriginal Smaller Peoples of the Russian Federation are voluntary associations of the citizens belonging to the Aboriginal Smaller Peoples of the Russian Federation, and are united by kinship and/or territorial and neighborhood principles, aiming at the protection of the primordial habitat, preservation and development of the traditional way of life, housekeeping, crafts and culture.
viii) The Chambers of Advocates are non-profit organizations based on obligatory membership, and are created in the form of the Chamber of Advocates of the Subject of the Russian Federation, or the Chamber of Advocates of the Russian Federation Federal, for the realization of the purposes provided by the legislation on advocacy.
ix) The advocacy formations, being legal entities[41] are non-profit organizations, created in accordance with the advocacy legislation aiming at the implementation of advocacy by the participants.
5.2.
In this case, both the Russian Federation and its subjects are considered as a state.
In the section on corporations, we consider advocacy formations that are legal entities.