Following the results of 2016, the number of liquidated companies in Russia goes beyond newly established by record 282,3 th. According to the Federal Tax Service (FTS), this significant amount was recorded for the first time throughout data collection in EGRUL.

In 2016 781 th legal entities ceased operation, and 498,6 th were established (see Picture 1). Total amount of liquidated companies exceeded the data of 2015 in 2,4 times.

More or less it is about almost all sectors of economic activities. The number of liquidated companies in some sectors exceeded newly established in two or three times. The majority of liquidated companies were engaged in retail and wholesale.

Picture 1. The number of registered, established and liquidated legal entities, dynamics

Total number of companies reduced to the five-years-ago level: as of January 1, 2017, there are 4,55 mln registered companies that is almost equal to 2012 with about 4,54 mln active companies.

According to the FTS, the jump of liquidated companies is caused not so much by economic reasons as by removing inactive, “abandoned” and fly-by-night companies from the register.

The main reason of ceasing the activity is liquidation of legal entities due to the decision of registering authority to remove bogus companies from the EGRUL: 655,9 th cases in 2016 and 181,8 th in 2015, i.e. increase in 3,6 times (see Picture 2).

Picture 2. Number of legal entities liquidated due to removal from EGRUL after the decision of registering authority

Liquidation for bankruptcy in the past year reduced to 10,1 cases in comparison with 11,2 th in 2015 (see Picture 3).

Picture 3. Number of legal entities liquidated due to other reasons, after reorganization and bankruptcies

The majority of companies is registered in Moscow – 950,3 th, Saint-Petersburg – 349,2 th and Moscow region – 235,1 th. 33,8% of all companies in Russia accounts for these regions. The share of first ten regions is 52,7%.

The table 1 contains regions by relative increase (decrease) in the number of companies registered in 2016.

In relative terms the number of legal entities decreased most of all in Murmansk region –16,9%, Republic of Kalmykia –15,5% and Moscow –14,4%. After recalculation of absolute figures Moscow demonstrated the most negative dynamics: 160,3 th companies ceased operations in the past year.

22 of 85 RF subjects demonstrate positive dynamics and the number of registered companies is increased. Two new regions, Sevastopol and the Republic of Crimea, with increase in companies for the year by 11,4% and 11,2% respectively are in the lead. Vologda region with lowlier 4,1% closes the top three.

According to the results of 2016, the significant reduction in the number of active companies in most cases took place not due to bankruptcy, but upon the decision of registering authority on removing the “abandoned” companies from EGRUL. This should be considered as a benefit: business is in need of periodical elimination of bogus companies acting on paper only (do not provide financial accounts, with no accounts activity).

Anyway, decrease in entrepreneurial activity is out of question, because in 2016 the number of established companies was only by 1,1% lower than in 2015.