Fintech Market Overview

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Several legal forms can be used for the purposes of collective investment in Russia, ranging from purely contractual ones, such as “investment partnership agreements,” to corporate ones, such as joint-stock companies or joint-stock investment funds. At the same time, the existing organizational and legal forms are not very suitable for the modern purposes of crowd investment. The main barriers are high registration costs, restrictions on the transfer of investment interests or other onerous requirements.¹

The standard choice for a large-scale collective investment scheme remains the "unit investment fund". This legal form is successfully used in the field of collective investment in real estate. The fund must be managed by a professional investment management company.¹

Another option suitable for smaller collective investments is the typical limited liability company (LLC). In this case, investment opportunities are sold on an online platform, and real transactions take place offline, because the transfer of a share in an LLC is subject to notarization. The total number of LLC members is limited to 50.¹

The law regulating crowdfunding and crowd-lending (or peer-to-peer lending) in Russia entered into force on 1 January 2020. The law determines the definition of an investment platform; establishes requirements for operators (be in the register of the Central Bank; draw up annual reports on the results of their activities; have a capital of at least 5 million rubles), investors (for unqualified investors - no more than 600,000 rubles of investments per year) and persons attracting investments; and introduces a limit on the total amount of investments attracted by one person (no more than 1 billion rubles per year). Crowdfunding and crowdlending in Russia are not subject to licensing or consumer lending regulations.¹

Banking in Russia

Fintech in Russia

Fintech in other countries

Notes

1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/russia