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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