Decreasing number of companies in the unified state register of legal entities (EGRUL)

newsletter 02/02/2017

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.

The number of registered, established and liquidated legal entities, dynamicsPicture 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).

Number of legal entities liquidated due to removal from EGRUL after the decision of registering authorityPicture 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).

Number of legal entities liquidated due to other reasons, after reorganization and bankruptciesPicture 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.

Table 1. Regions with the highest relative increase and decrease in the number of registered legal entities (LE).
  Region Increase/decrease in the number of registered LE for the year, % Number of registered LE as of 01.01.2016 Number of registered LE as of 01.01.2017
1 Sevastopol 11,4 9 352 10 418
2 Republic of Crimea 11,2 28 506 31 704
3 Vologda region 4,1 43 424 45 204
4 Chechen Republic 4,0 9 904 10 296
5 Voronezh region 3,7 56 278 58 374
6 Republic of Tatarstan 3,2 122 410 126 350
7 Tula region 2,6 34 994 35 901
8 Ryazan region 2,6 30 889 31 677
9 Nizhniy Novgorod region 2,2 99 017 101 160
10 Republic of Dagestan 1,7 33 492 34 066
...
76 Republic of Ingushetia -7,2 5 245 4 867
77 Kursk region -7,5 23 750 21 977
78 Arkhangelsk region (with autonomous districts) -7,7 24 907 22 981
78 Kirov region -8,3 38 364 35 198
80 Volgograd region -9,5 52 993 47 983
81 Chelyabinsk region -9,6 111 852 101 081
82 Novosibirsk region -11,4 140 469 124 430
83 Moscow -14,4 1 110 510 950 255
84 Republic of Kalmykia -15,5 5 258 4 445
85 Murmansk region -16,9 21 863 18 160

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.