May 10 , 2025
Selecting a Trusted Service Provider for Directorship and Nominee Services in Russia
Establishing a legal entity in Russia requires careful consideration of corporate governance, legal compliance, and ownership structure. One area that often warrants close attention is the use of directorship services, particularly nominee directors and nominee shareholders, which can offer strategic advantages in privacy, compliance, and management delegation. This blog provides a detailed exploration of these services within the Russian legal and business framework.
Corporate Directorship in Russia
Under Russian law, a company must appoint at least one director (General Director) who is responsible for the day-to-day operations of the business. The General Director serves as the legal representative of the entity and has broad authority, unless limited by the company’s charter or internal policies.
Legal Basis
- Governed by the Civil Code of the Russian Federation and Federal Law No. 14-FZ on Limited Liability Companies.
- The director must act in the interests of the company and is subject to fiduciary duties and liability for non-compliance or harm caused through mismanagement.
Nominee Director Services
A nominee director is a third party appointed to appear as the director of a company in official registries and to fulfill statutory obligations. Although often used to facilitate foreign investment, such appointments must be carefully structured to comply with Russian laws and ensure that real decision-making power remains with the beneficial parties.
Functions and Scope
- Representation in front of Russian authorities, including tax and regulatory bodies.
- Oversight of administrative tasks, such as submitting financial reports and maintaining company records.
- Acting as a signatory for contractual obligations, within a pre-agreed framework.
Limitations and Risk Mitigation
- Use of nominee directors must not conceal illegal activities, such as tax evasion or fraud, which are subject to criminal prosecution.
- Clear Nominee Service Agreements and Powers of Attorney are typically used to limit the nominee’s authority and transfer decision-making rights to the beneficial owners.
Nominee Shareholder Services
Nominee shareholder arrangements involve registering shares in the name of a third party while the actual ownership and control rest with the beneficial owner. This is often implemented to enhance confidentiality or meet certain administrative requirements.
Advantages
- Confidentiality: Protects the identity of the ultimate beneficial owner (UBO) in jurisdictions where shareholder details are publicly accessible.
- Simplified Transactions: Facilitates corporate transactions without revealing changes in actual ownership.
- Succession Planning: Supports estate and wealth planning by allowing flexible transfer of interests.
Legal Structure
Such arrangements should be governed by a Declaration of Trust or Custody Agreement, clearly stating the nominee’s role, duties, and limitations. These documents must comply with both Russian corporate law and international standards for transparency and anti-money laundering (AML).
Regulatory and Compliance Considerations
While nominee structures are not illegal in Russia, they must be transparently documented and should not be used to violate laws regarding:
- Ultimate Beneficial Ownership (UBO) disclosure, especially under anti-money laundering and counter-terrorist financing regulations.
- Tax compliance, both domestically and in accordance with international treaties (e.g., OECD Common Reporting Standard, FATCA).
Since 2022, Russian regulators have increased scrutiny over nominee arrangements, especially those used by non-resident investors. Financial institutions and tax authorities now routinely request UBO declarations during due diligence processes.
Service Provider Selection Criteria
When engaging nominee directorship or shareholder services in Russia, it is essential to work with a licensed, reputable provider. Key factors to assess include:
- Proven track record in the Russian legal and regulatory environment.
- Comprehensive understanding of corporate governance and fiduciary responsibilities.
- Legal infrastructure for drafting enforceable nominee agreements and ensuring AML compliance.
- Data protection and confidentiality policies aligned with both Russian and international standards.
How We Can Help?
- Nominee Director Appointment: Provision of experienced, compliant nominee directors to represent the company before Russian authorities while preserving actual control with the beneficial owner.
- Nominee Shareholder Services: Secure structuring of nominee shareholder arrangements with supporting legal documentation, including Declarations of Trust.
- Company Formation Support: End-to-end assistance in setting up Russian legal entities, including drafting charters, registration, and opening bank accounts.
- Regulatory Compliance: Guidance and support in meeting Russian corporate, tax, and AML requirements, including UBO disclosures.
- Legal Documentation: Preparation of tailored service agreements, powers of attorney, and confidentiality clauses to protect client interests.
- Ongoing Corporate Maintenance: Management of statutory filings, annual reporting, and board resolutions to keep the company in good standing.
- Confidentiality and Data Security: Adherence to strict confidentiality protocols and data protection standards across all services.
Conclusion
Directorship and nominee shareholder services are legitimate corporate structuring tools in Russia when used appropriately and transparently. These services support strategic objectives such as legal compliance, operational continuity, and investor confidentiality. However, misuse or inadequate structuring can result in significant legal risks. A robust legal framework, professional advice, and full regulatory compliance are essential to ensure the effective and lawful use of nominee arrangements in the Russian corporate environment.
For more information or queries, please email us at
enquiries@chandrawatpartners.com
Key Contact
Surendra Singh Chandrawat
Managing Partner
