Types of companies

There are two types of Russian Joint-Stock Companies:

1. Open joint-stock company (Russian:Открытое акционерное общество(abbreviated OAO) is a legal entity where shares may be publicly traded without the permission of other shareholders. An OAO can distribute its shares to an unlimited number of shareholders and sell them without limitations. The statutory minimum charter capital is 100,000 Russian roubles.

2. A closed joint-stock company (Russian:Закрытое акционерное общество(abbreviated ZAO) is a legal entity whose shares are distributed among a limited number of shareholders - maximum 50. The statutory minimum charter capital is 10,000 Russian roubles.

Founders of a joint-stock company sign a written agreement for its formation. This agreement establishes procedures for creating the company, such as size of authorized capital, types and categories of shares, cost of shares, the order for settling payments and the rights and responsibilities of the founders. This agreement then becomes the organization charter, which contains information on the name of the company, the locations of offices, the type of company (OAO or ZAO), as well as other specific information on shares, capital, and so on. The company shares allotted upon founding the company must be fully paid within a year from the company's foundation, unless a shorter period is required by the founding contract. However, at least half of the shares must be paid within three months, starting from the state registration of the company. Though a share which has been paid does not necessarily give voting rights to its owner.

Joint-stock companies are required to register the issue of shares with the Russian Federal Securities Market Commission (FSMC), so that shares can be traded either publicly (for an OAO) or among a limited number of people (for a ZAO). For registration, a set of documents must be submitted to the FSMC, and the procedure usually takes 30 days to enact.

Value chain

The value chain is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.

A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value (AV) than the sum of the independent activities' values. A diamond cutter, as a profession, can be used to illustrate the difference of cost and the value chain. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business.

The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing & sales, service.