Investment Partnerships

Should equity funds investing in Russia actually be based in Russia is a provocative question. It leads to a myriad of hazy issues – only a small fraction of which are, in fact, legal - that make up the dazzling but evasive world of venture capital. Whether Russian law isn’t good enough or fund managers just prefer, for some other reason, to stay away from Russia’s shores, most if not all private equity funds here are set up under foreign law.

The new bill ‘On Investment Partnerships’, approved by the Council of the Federation and signed into law by the President, seeks to prepare the ground so that investors, both foreign and Russian, could at least start thinking about moving their offshore vehicles into the jurisdiction of local courts.

New business structure, called an investment partnership is a kind of limited partnership specifically for dealing with shares, bonds and derivate financial instruments. Investment partnerships are not, strictly speaking, legal entities and, unlike Russian general and limited partnerships, are fiscally transparent for investors.