NEW RULES FOR CROWDFUNDING IN RUSSIA
- Oct 03, 2019
On 1 January 2020 new Federal Law No. 259-FZ “On fundraising through the investment platforms and amendments to the other legal acts of the Russian Federation” will enter into force (Law on Crowdfunding)[1]
Subject matter of the Law on Crowdfunding – legal relations between the operator of the platform, the investor and the fundraiser within the investment platform in connection with issue and turnover of:
- The digital utility rights (the “tokens”); and
- The securities certifying tokens.
Token is a digital right to request:
- Transfer of property;
- Transfer of exclusive rights to intellectual property or use rights;
- Performance of works or rendering of services.
Tokens can be disposed of (including pledge setting) only on a special investment platform.
Tokens’ recording: tokens can be recorded by the operator of the investment platform or the depository.
Tokens can be certified by security – e.g. digital certificate issued by the depository.
Requirements to the members of the platform:
- Investors – legal entities and individuals. Investments of individuals within one year are limited to 600,000 Rubles. This applies to all platforms (excluding qualified investors and tokens issued by public joint stock companies);
- Fundraiser – any legal entity and individual entrepreneur, excluding bankrupts and convicted to crime;
- Operator – Russian legal entity and included in the register of investment platform operators maintained by the Bank of Russia. Law on Crowdfunding establishes special requirements to the operators, i.e. the amount of the charter capital, shareholding structure and governing bodies.
Structure of relations: fundraiser and investor enter into the services agreement with the operator, which grants them access to the investment platform for their interactions. After that, they enter into the investment agreement regulating fundraising.
Standard crowdfunding process:
- fundraiser places an investment offer on the investment platform;
- Investor accepts such offer and transfers the funds to the operator;
- The operator accumulates the funds on the separate nominal account and transfers them to the fundraiser.
Types of investments using investments platforms:
- Allocation of loans;
- Acquisition of the securities allocated on the investment platform; and
- Acquisition of tokens
Limitations on the fundraising: the maximum amount for fundraising within one year is 1 billion Rubles per person (excluding public joint stock companies conducting fundraising through tokens sale).