Foreign investors who want to set up an investment fund in Russia can choose from retail funds and hedge funds, which are regulated by different rules. Our team of company formation specialists in Russia can offer an in-depth presentation on the main advantages of each fund and help investors to choose the most appropriate entity suitable to their needs.
Retail funds in Russia
Although the retail funds market is relatively young and less developed than in other countries, the regulatory framework is very solid.
The Russian legislation for this type of funds prescribes the following sub-categories:
• open-ended funds;
• closed-ended funds;
• exchange traded funds;
• interval funds.
The main regulation which controls the activities of such funds is the Federal Law on Investment Funds No. 156-FZ and all retail funds have to follow its requirements, which are closely verified by the Central Bank of Russia, one of the institutions that have created rules applicable under this law.
The Central Bank of Russia (CBR) is the regulatory body where investors should register the rules under which the new retail fund will carry its operations. The CBR regulates the activities of the fund, as well as of the persons who manage such funds.
A retail fund in Russia has to be managed by a trust manager, who must obtain an approval from the CBR; our team of company formation agents in Russia can offer detailed information on how to register as a trust manager.
Interested in a team of accountants in Russia? Our specialists can offer you the services you need to ensure that the company you own aligns with the requirements and legislation in force. You will benefit from such payroll services, bookkeeping, preparation and submission of annual financial statements, support for tax registration, tax advice, and compliance. You can also request audits and risk assessments and evaluations.
Authorization of retail funds in Russia
It is important to note that, in the case of retail funds, it does not require licensing or authorization in Russia. Here is other important information in this regard:
- • Retail funds must be registered with the Central Bank of Russia and must already have established their own rules.
- • A manager licensed and accepted by CBR can be appointed for a retail fund in Russia. The license is obtained if it is proved that there is sufficient equity capital and it has no expiration date.
- • There are no restrictions on the number of retail funds managed by a licensed person in the field.
We recommend those interested in opening an investment fund in Russia to contact our specialists. They can also help foreigners to open a company in Russia, taking care of procedures and formalities.
Who is in charge of promoting retail funds in Russia?
Units of retail funds in Russia can be promoted by the respective fund manager or by a dedicated agent appointed by the respective manager. Agents must be licensed brokers, custodians, or security depositories to promote retail funds in Russia, according to the legislation of this country. All of them can deal with sales, exchanges, or use various tools for a good promotion of the retail fund in question. We specify that these funds can be marketed to qualified investors, as they can be:
- • insurance companies,
- • clearing firms,
- • foreign financial institutions,
- • credit institutions,
- • management companies of retail funds in Russia or abroad.
We recommend contacting our specialists who can tell you more about investment funds in Russia. You have at your disposal all our support for starting a business in Russia in various fields of interest.
Reporting conditions for retail funds in Russia
There are reporting requirements, according to the Investment Funds Law in Russia, that you should take into account when opening an investment fund:
- • The Central Bank of Russia has established which are the reporting terms that must be respected.
- • It is also the financial institution that must receive documents and reports about the investment fund open and active in Russia.
- • The trust managers of retail funds in Russia are the ones who must report to the CBR everything related to the managed funds, either quarterly, monthly, or annually.
- • For reporting, a balance sheet of assets belonging to the retail fund in question is needed.
- • Both the losses and gains of the investment fund will be reported.
- • Quarterly accounts are necessary for correct reporting, and they must be presented by the fund manager.
- • In the case of annual reporting, an audit of accounts report is also required.
Hedge funds in Russia
A hedge fund is registered so that the investor can operate on the local and international stock markets. Such funds can own various assets, such as:
- • cash – in the form of the national and foreign currencies;
- • shares in foreign companies, as well as in local joint stock companies;
- • shares in investment funds or in listed foreign investment funds;
- • precious metals;
- • property interest.
The units of hedge funds are proposed for competent investors only. Plus, the units of a hedge fund in Russia cannot be held by custodians or registrars of a retail fund, as specified by the legislation.
Below are some statistics about investment funds in Russia:
- • Around RUB 5.35 trillion were the financial assets worth in Q1 of 2021.
- • Nearly RUB 40.5 billion was the value of the FDI directed to the financial and insurance sector in Russia during 2010-2021.
- • There were around 2.24 million active customers on the Russian stock market, according to the statistics for 2017-2021.
- • About RUB 27 trillion represented the investment in fixed capital assets in Russia during 2010 and 2022.
Investors who are interested to set up an investment fund in Russia can contact our team of company incorporation consultants in Russia for representation in this matter.