may conduct income generating activities, as long as this is established in their charters, and only to the extent that this serves the purposes for which they have been established, and corresponds to such purposes (Clause 4 of Article 50 of the CC of the RF).
1.2.3. Participation of the Russian Federation, its subjects and Municipalities in the Civil Legal Relations
State and municipal organs (being expressly authorized), participate in civil legal relations on behalf of the Russian Federation, its subjects, and the municipalities. State authorities can be legal entities (see, for instance, clause 15 of the Rules on the Ministry of Justice of the Russian Federation, approved by Decree No. 1313 of the Russian President, dated October 13, 2004).
The Russian Federation, its subjects, and municipalities do not exercise entrepreneurial activities.
2. Individual Entrepreneurs
2.1. Registration as an Individual Entrepreneur
The citizen conducting entrepreneurial activities must be registered as an individual entrepreneur (Clause 1 of Article 23 of the CC of the RF). The registration procedure is regulated by the Federal Law on Registration. The Federal Tax Service (hereinafter FTS) of Russia is the body carrying out the state registration of individual entrepreneurs. For the purposes of being registered, the citizen needs to inform the FTS of Russia of his/her place of residence (Clause 3 of Article 8 of the Federal Law on Registration). The set of documents required for submission to the territorial body of the FTS of Russia, is indicated in Clause 1 of Article 22.1 of the Federal Law on Registration.
The absence of state registration shall result in administrative or criminal liability for illegal entrepreneurship. Moreover, despite the absence of registration, entrepreneurial activities of the citizen can be regulated by the norms of the CC of the RF. These norms are also applicable to individual entrepreneurs and legal entities who are already registered (Clause 4 of Article 23 of the CC of the RF).
2.2. Status of an Individual Entrepreneur
The activities of individual entrepreneurs are regulated by the same norms which establish rights and duties for commercial organizations. A possible exception is in a case when the law states otherwise, or based on the nature of the individual entrepreneur.
2.3. The Responsibility of an Individual Entrepreneur
The individual entrepreneur is liable for his obligations with all of his/her property (Article 24 of the CC of the RF). In other words, for the repayment of the debt of the individual entrepreneur, anything belonging to him/her may be levied to repay the debt. An exception to this rule is contained in Article 446 of the Civil Procedure Code of the RF. The levy cannot be executed on certain property owned by the citizen, particularly:
i) living premises, if it is the only suitable permanent residence for the citizen and the members of his family for residing together (if such premises are not objects of mortgage);
ii) the land plot which such living premises are situated on;
iii) the objects of habitual household furniture and utensils, and items of personal use (except for jewelry and other items of luxury);
iv) the property necessary for professional occupation of the citizen being the debtor, except for items which cost 10,000 rubles or more;
v) foodstuffs and money to the total sum of not less than the living wage (around 10,000 rubles).
2.4. Employees of an Individual Entrepreneur
The individual entrepreneur has the right to hire employees as per the labor contracts. Features of the legal regulation of work of the employees hired by the individual entrepreneur are established by Chapter 48 of the Labor Code of the RF.
3. General Provisions on Legal Entities
3.1. Classification of Legal Entities
Legal entities can only be created in those organizational and legal forms which are listed in the CC of the RF. State corporations and state companies, which are not mentioned in the CC of the RF, are an exception to this rule.[26] In total, 22 organizational and legal forms of legal entities exist in Russia.
All legal entities are divided into:
i) profit and non-profit organizations;
ii) corporations and unitary legal entities.
All types of legal entities can be schematically displayed as followes:
Moreover, there is one more organizational-legal form – advocacy formations (being legal entities). Legal entities of this type are non-profit organizations, however in the CC of the RF, they are not assigned to either corporations or to unitary organizations. Obviously, this is an omission of the legislator. At the same time, the analysis of the legislation allows the claim that Bar Associations (variety of formations of advocates which are legal entities) are referred to corporations.
3.2. Profit Organizations and Non-Profit Organizations
There are 6 types of profit organizations and 16 types of non-profit organizations in Russia (see above).
3.2.1. Legal Status of Profit Organizations and Non-Profit Organizations
Organizations, which activities’ main purpose is to generate profit, are considered as profit organizations. Non-profit organizations can be created for social, charitable, cultural, educational, scientific, and managerial purposes, for the purposes of the health of citizens, the development of physical culture and sports, the satisfying of spiritual and other non-material needs of citizens, the protection of rights and legitimate interests of the citizens and organizations, the settlement of disputes and conflicts, providing legal aid, as well as other purposes aimed at the achievement of public benefits (Clause 2 of Article 2 of Federal Law on Non-Profit Organizations).[27]
As a general rule, profit organizations[28] have general legal capacity.[29] This means that they can be engaged in any activity, if this activity does not contradict with the legislation. Non-profit organizations, on the contrary, possess only special legal capacity. This means that they can be engaged only in the activities which correspond to the subject and purpose of the activities fixed in their charters.
3.3. Corporations and Unitary legal entities
The CC of the RF allocates 13 types of corporations and 8 types of unitary organizations.[30]
A corporation consists of members. Members of any corporation form the highest body of the management of the corporation, and due to this, have certain rights and duties in relation to the legal entity.
Basic rights of members are (Article 65.2 of the CC of the RF):
i) the right to manage a corporation;
ii) the right to receive information on the corporation’s activities. The principal duties of members are:
i) participation in the formation of the corporation’s property,
Commercial organization can be created for certain purposes which are listed in its charter. In such an event, it will have a limited legal capacity.
State and municipal unitary enterprises are given an exception to this rule.
As mentioned above, the CC of the RF does not contain any indication to which type of enterprises the advocates formations being legal entities, shall be referred to.
