New Regulation of Crowdfunding in Russia

Roman Buzko
Sep 3 · 4 min read

The new law regulating crowdfunding in Russia will enter into force on January 1, 2020. Existing platforms must comply by July 1, 2020.

Regulation of Crowdfunding in Russia

Federal Law №259-FZ “On Investments Through Investment Platforms and Certain Amendments to Other Laws of the Russian Federation” dated August 2, 2019.

1. Platform Operators

The new law introduces a number of requirements for operators of investment platforms. Below we describe the principal requirements.

a. Minimum Capital

An investment platform must have at least RUB 5 million in capital (own funds), regardless of the type of investment instruments offered and volume of deals.

b. Management team

The operators of investment platforms, persons controlling them and members of the executive or supervisory bodies cannot be individuals:

  • included in the list of persons with respect to whom there is information about their involvement in extremist activities, terrorism or the dissemination of weapons of mass destruction;

Additionally, an individual holding the positions of general director or member of a collegial executive or supervisory authority must have a higher education degree. Powers of the sole executive body may not be delegated to management companies (corporate directors).

c.Combination with other activities

Platform operators may not concurrently engage in other regulated financial activities, except for those specifically provided in the law:

  • settlement of trade;

d. Restrictions on owners

The following persons may not control 10% or more of votes in the operator of the investment platform:

  • legal entities registered in offshore zones; or

e. Internal documentation

The operator of the investment platform must develop and publish its rules. The law sets an exhaustive list of mandatory provisions to be incorporated into such rules. Any amendments to the rules become effective 5 days after their announcement.

Further, the operator of the investment platform is required to develop and approve policies on managing conflicts of interest in accordance with the mandatory recommendations set by the Central Bank.

2. Investors

As a general rule, an individual can invest no more than RUB 600,000 (USD 9,000) within one calendar year using one or more investment platforms. This limitation does not apply to:

  • individual entrepreneurs;

The operator must continuously confirm whether a particular individual stays within the set limit when investing through the platform maintained by that operator. If the limit is exceeded, the operator has an obligation to repurchase the investments at the request of the specified individual.

The operator may rely on representations made by an individual in respect of investments made by that individual on other platforms. Thus, if the investor provides false representation, the operator is not responsible.

The law provides a helpful clarification that investing by means of investment platforms is not an entrepreneurial activity and, thus, does not require registration of an individual as an individual entrepreneur.

3. Investment instruments

The law sets a list of investment methods:

  • loans;

Missing are participation shares in LLCs that are the primary vehicle for small and medium-sized businesses in Russia.

4. Investment Disclosure Requirements

The law requires platform operators to disclose a broad scope of information on their websites with respect to both the platform’s governance and operations and investment proposals.

With respect to investment proposals, the following information must be disclosed:

  • project goals, main risks (including those associated with the loss of investment, the inability to sell property acquired during investment);

Platform operators must publish annual reports with the results of their activities. Such reports must include:

  • information on the structure and composition of the management bodies;

5. Liability Standards

Platform operators are not liable for debts and obligations of companies raising investments with the use of their platforms. The law sets three distinct cases where platform operators are liable for damages:

  • disclosure of inaccurate, incomplete or misleading information about the investment platform and the operator of the investment platform;


The legal framework for crowdfunding in Russia was long-awaited. The new law, however, focuses mainly on protecting retail investors rather than simplifying the investment process and eliminating barriers. In our view, this may limit the potential for crowdfunding as an alternative to traditional sources of capital for businesses.

Unlike in the US, where investments under Regulation Crowdfunding have reached impressive figures in just three years, we expect crowdfunding in Russia to take more time to mature.

This note was prepared by Roman Buzko and Mariam Gordiashvili from Buzko Legal, where they advise on all legal issues related to FinTech in Russia.

Buzko Legal

Команда юристов по праву России и США

Roman Buzko

Written by

Buzko Legal

Команда юристов по праву России и США

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