Concept for regulating the alternative finance market in Russia prepared

One of the main purposes of the Concept is so that it may be used in the future to amend sector-specific legislation.

The RUSNANO Group Fund for Infrastructure and Educational Programs has prepared a ‘Concept for legal regulation of alternative finance methods’ in Russia.

Carried out by a team from law firm Dentons’ St. Petersburg offices, the Concept is based on the first major research in this area in Russia.

It involved analyzing ideas, regulatory approaches and solutions in the development of alternative finance in five jurisdictions: France, Germany, Japan, the United Kingdom and the United States, as well as sector-specific statutes of the European Union.

RUSNANO, the Russian state-controlled nanotechnology corporation, has long recognized the potential of alternative lending marketplaces, examples of which include crowdfunding, royalty-based financing, online lenders and P2P lending.

Deputy CEO for Strategy of the Fund for Infrastructure and Educational Programs Alexei Kachai said: “Individuals and companies have new opportunities to invest and raise funds using existing and new investment platforms—opportunities opened up by the adoption of Federal Law No. 259-FZ on Raising Investments via Investment Platforms and on Amendments to Certain Legislative Acts of the Russian Federation of August 2, 2019. Dentons’ research presents mechanisms based on the experience of leading economists for raising venture capital investment in the innovation sector that will facilitate further development of the sector and help to achieve long-term objectives in the Russian Federation.”

In addition to corporate, financing and tax tools prioritized in the Concept, it was also suggested that a new subject to a legal relationship be introduced – the digital person.

Says Victor Naumov, Managing Partner of Dentons’ St. Petersburg offices, “With no precedents in foreign law, the digital person will help to avoid uncertainty in the status of some participants in investment processes.”

The Concept does not touch on crowdfunding because there is already a special law regulating that alternative finance tool (Federal Law No. 259-FZ on Raising Investments via Investment Platforms and on Amendments to Certain Legislative Acts of the Russian Federation of August 2, 2019).