BAKU, Azerbaijan, April 16. Azerbaijan is set to adopt a new law “On Financial Leasing,” aimed at strengthening the legal framework and supporting market development, particularly by improving access to financing for small and medium-sized enterprises, Trend reports.
The draft law was discussed at a meeting of the Economic Policy, Industry and Entrepreneurship Committee of the Azerbaijani Parliament. It introduces key changes, including replacing the term “leasing” with “financial leasing” to ensure terminological consistency and better reflect the nature of the service in line with international practice.
Currently, leasing-related provisions are dispersed across different legal acts, including the Civil Code and Tax Code. The new legislation seeks to unify terminology, enhance legal clarity, and emphasize that financial leasing represents a rental relationship rather than a credit mechanism.
The draft outlines the organizational, legal, and economic foundations of financial leasing activities, including the regulation of relations between parties, contract procedures, and state oversight mechanisms. It also introduces prudential requirements, which have so far been lacking, limiting the sector’s ability to attract additional financial resources.
Under the proposed law, only legal entities and individual entrepreneurs will be eligible as lessees, while leasing providers must be legal entities registered with the Central Bank. The regulator will set minimum capital requirements and financial thresholds for lessors.
The legislation also defines rights and obligations of all parties, establishes rules for contract execution, and introduces mechanisms such as subleasing and sale-and-leaseback arrangements. Additionally, leasing companies will be required to submit credit history data to credit bureaus to enhance transparency and risk assessment in financial markets.
Accounting and reporting will be conducted in accordance with the law “On Accounting,” with financial statements prepared under international standards and submitted to the Central Bank (CBA).
The draft further specifies criteria under which a lease is classified as financial leasing, including ownership transfer options, lease duration relative to asset life, residual value thresholds, and payment structures.
Overall, the new law is expected to strengthen the institutional and legal environment of the financial leasing market, contributing to increased economic activity and improved access to finance. It is set to enter into force six months after its official publication.
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