New Regulation of Crowdfunding in Russia

Roman Buzko
Sep 3, 2019 · 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.

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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

a. Minimum Capital

b. Management team

  • 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;
  • with a criminal record for crimes in the field of economics, against state power, against the interests of public service, against service in local government; or
  • against whom administrative punishment in the form of disqualification has been imposed.

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

  • settlement of trade;
  • certain clearing activities;
  • brokerage;
  • dealer activities;
  • management of securities, as well as maintaining a register of securities owners; and
  • custody business.

d. Restrictions on owners

  • legal entities registered in offshore zones; or
  • legal entities deprived of a license to operate as a credit institution or non-credit financial institution;

e. Internal documentation

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

  • individual entrepreneurs;
  • legal entities;
  • qualified investors; and
  • individuals acquiring utility rights from a public joint stock company under an investment agreement.

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

  • loans;
  • equity securities; and
  • utilitarian digital rights.

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

4. Investment Disclosure Requirements

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);
  • all information contained in a securities prospectus;
  • the presence or absence of the obligation of the person controlling the organization raising investments to redeem the property rights of the investor if such person ceases to control the company raising investments;
  • the presence or absence of the investor’s right of first refusal of the additional shares;
  • content of utilitarian rights (if any);
  • information on experts involved in monitoring and evaluating the activities of the person raising investments, as well as expert reports; and
  • current rating of the investment proposal (if any).

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;
  • number of investment proposals for which investments have already been raised and the average investment size per offer;
  • total investments made through the platform;
  • total number of investors that have executed investment contracts and the average amount of funds invested by each investor; and
  • information about investment contracts where a default has occurred.

5. Liability Standards

  • disclosure of inaccurate, incomplete or misleading information about the investment platform and the operator of the investment platform;
  • violation by the operator of the investment platform of the rules of the investment platform; or
  • violation of mandatory requirements for an investment platform.


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

Law firm advising on Russian and US law

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