About Leasing

Leasing is timed recompensable ownership and use of the property, land and other natural resources

Relationships in connection with leasing are governed by the present Law, Land Code and other juridical acts of Azerbaijan Republic

Leasing is allowed in all branches of economy and can be used in connection with all kinds of property and ownership

Spheres and kinds of property that cannot be objects of leasing relationships are determined by legislation of Azerbaijan Republic

Owners, bodies, organisations and physical persons authorised by the owner to let property on lease, and also legal entities that receive the property for full economic activity or operative management have the right of letting the property out

Leasing of objects of state and municipal property to legal entities and citizens of foreign countries takes place only on agreement with the owner

Any legal entities and physical persons might be easeholders

Leaseholders have the right to establish voluntarily associations, unions and other organisations, to finance their activity and leave said organisations freely according to By-Laws

1. Leasing agreement is the main document controlling relationships of the owner and leaseholder

2. Leasing agreement envisages: nomenclature and cost of property to be let on lease, amount of rent, term of rent, possibility of subleasing of the property, distribution of obligations as per complete restoration and repair of rented property, obligations of the owner in connection with state of the property to be let on lease, obligations of leaseholder in connection with use of the property according to terms of agreement, timely rental payments and return of the property to the owner after termination of term of agreement in a state stipulated by said agreement

3. Leasing agreement might include other obligations of the Parties

4. Cost of the property being let on lease is determined in agreement based on estimation of this property at the moment of its leasing accounting for actual wear

5. For nonfulfilment of inadequate fulfilment of obligations in connection with leasing agreement, including changes or annulment of agreement by one Party the Parties will bear responsibility according to legislation of Azerbaijan Republic and agreement

1. Amount of rental payment and procedure of payments are stipulated in agreement Amount of rental payment is determined based on cost and condition of main funds being taken on lease, prospects of development of the enterprise and other factors, and also minimum profit that shall be obtained as a result of exploitation of leased property

Rental payment will include depreciation deductions from the cost of rented property, if not specified otherwise by leasing agreement In cases, when leaseholder reproduces rented property in full amount, depreciation deductions are not given to the owner and belong exclusively to the owner

2. When unprofitable and low-profitable enterprises change to leasing relationships agreement might envisage amount of subsidy, with progressive decrease thereof, obligations as per liquidation of unprofitability, improvement of profitability, date of beginning of rental payments

3. One of the Parties might demand changing the sum of rental payment in case of change of state controlled prices, tariffs, payments or depreciation standards, sharp increase of inflation rate and also in other cases envisaged by legislative acts of Azerbaijan Republic

4. The leaseholder has the right for request of decrease of rental payment if the terms of use of property, stipulated by agreement, or condition of the property worsened significantly as a result of circumstances that the leaseholder is not responsible for

5. Besides rent leaseholder pays taxes and other sums envisaged by legislation of Azerbaijan Republic if this is not responsibility of the owner

6. On mutual agreement between the Parties sum of rent might be established in natural, money or mixed form

1. Leasing of the property does not result in transfer of rights for this property

2. Products and profits obtained by leaseholder as a result of use of rented property and also property acquired at the expense of profits obtained from rented property are property of leaseholder

3. Buildings and structures installed at the rented territory using money of leaseholder and upon the owner consent that cannot be moved belong to leaseholder if not specified otherwise in the agreement After expiration of the term of agreement or cancellation thereof the owner is obliged to compensate to leaseholder market cost of these buildings and structures

4. Buildings and structures installed at the rented territory without consent of the owner that cannot be moved belong to the owner Should the owner request to pull down said buildings and structures leaseholder shall have to do so at his own expense or compensate expenses in connection with such demolition

5. If, upon the owner’ consent rented property has been improved, then after expiration of the term of agreement or on cancellation thereof leaseholder shall have the right for request of compensation of all necessary expenditures if not specified otherwise in the Laws or in the agreement

6. Improvements (changes) made without the owner’ consent and inseparable from rented property without damage thereto, after expiration of term of the agreement or on annulment thereof become the property of the owner

7. Improvements (changes) made without the owner’ consent and inseparable from rented property without damage thereto might be taken by leaseholder if the owner doesn’t agree to compensate their cost

Leaseholder, upon owner’ consent might completely or partially redeem rented property in accordance with legislation of Azerbaijan Republic concerning privatisation

In accordance with leasing agreement leaseholder independently determines routes of economic activity and exercises control over products and obtained profits

In his economic activity leaseholder is restricted only by terms of leasing agreement

Term of leasing is determined by agreement Lease of land, other natural resources, enterprises, buildings, structures as a rule should be long-term Accounting for type (nature) of the property and aims of leasing the agreement might be short-term

1. Change of terms of leasing agreement, its annulment, termination are allowed on the Parties’ consent At request of one of the Parties, in case if the other Party violates terms of agreement, leasing agreement might be annulled on decision of Court of Arbitration or Law Court

2. Leasing agreement is regarded as annulled if the leasing object has been submitted to privatisation In this case investments of leaseholder to leasing object are to be compensated at market rates

3. Reorganisation of the organisation-owner that lets the property on lease and also change of the owner of rented property shall not constitute the grounds for change of terms or annulment of agreement

4. On expiration of term of the agreement leaseholder has the right for renewal of agreement

5 If neither Party has submitted application about termination or change of agreement before expiration of its term said agreement is regarded as prolongated for the same term and on same terms as those envisaged by agreement In case when the agreement is prolongated its terms might be changed on mutual agreement of the Parties

6. On termination of agreement with leaseholder -citizen members of his family who lived and worked with him will have priority right for conclusion of leasing agreement

In case of leaseholder’ death his rights in connection with leasing agreement pass to one of members of his family who lived and worked with him if said person agrees to become leaseholder

The owner cannot refuse such person in participation in the agreement during time period remaining as per existing agreement except cases when conclusion of agreement was stipulated by personal properties of leaseholder

Any disputes arising during conclusion, execution, change and annulment of leasing agreement are to be considered in the Court of Arbitration or Law Court within the limits of their authority

1. Leaseholder is granted protection of his rights on equal grounds with protection of rights of the owner He has the right to demand return of leased property from any illegal possession, elimination of obstacles in using thereof and compensation of damage caused to the property by all persons including the owner

2. Imposition of penalties as per debts of leaseholder in connection with leased property is not permitted

3. Property of leaseholder might be taken from him only upon decision of Law Court or Court of Arbitration

1. Working collective of state and municipal enterprise has the right to establish organisation of leaseholders as independent legal entity for establishment of leasing enterprise on its basis

Decision about establishment of organisation of leaseholders and its control bodies is taken at General meeting of working collective by at least two thirds of votes

Organisation of leaseholders together with trade union committee prepares draft of leasing agreement and submits it to the owner of the enterprise and body authorised by the owner to let on lease state and municipal enterprises They must consider the draft of agreement within 30 days from the date of submission Any disagreements that might arise are to be settled in accordance with Clause 14 of the present Law

After signing of the Agreement organisation of leaseholders acquires the status of leasing enterprise

2. Leasing enterprise acts on the basis of By-Laws that is approved by General meeting of its working collective Leasing enterprise acquires rights of legal entity from the date of its state registration in the bodies of executive power at the place of location of said enterprise

1. Working relationships of members of working collective of leasing enterprise are controlled by labour legislation, taking into account specificities determined by the present Law

2. The state provides social protection of employees of leasing enterprises according to existing legislation

3. Leasing enterprise pays to state fund of social insurance deductions from its profits in an order and in amount stipulated by existing legislation

1. One citizen or group of citizens might take on lease productive facilities (equipment) and other property necessary for accomplishment of economic activity

2. Persons exercising working activity on terms of individual or group leasing have the right for social insurance and social protection on equal grounds with workers and office personnel Leaseholders pay to state fund of social insurance deductions from their profits in an order and in amount stipulated by existing legislation Term of working activity of leaseholders during which insurance payments were made is included into length of service

3. With individual or group leasing leaseholders independently dispose of produced commodities, accomplish work and render services at prices and tariffs established on agreement with the customer or independently Produced commodities are being sold at the territory of Republic Export of products outside the Republic is carried out in accordance with regulations of legislation

4. On agreement with the owner leaseholder has the right to build necessary productive and non-productive premises on rented site including living premises following general regulations concerning construction

Buildings and structures built by leaseholder on the rented land site at the expense of his own or borrowed money are his property if not specified otherwise by leasing agreement

5. Leaseholder disposes of finances obtained from sale of products (work, services) after payment of rent, taxes and bank loans independently

6. Material-technical supply, transport services, repair works and other services rendered to leaseholders in agriculture are carried out based on agreements

7. Farmers’ companies and other enterprises when carrying out productive activity might enter into cooperative relationships, establish procurement-trade, processing, repair, construction and other cooperatives and also economic associations, join into unions

8. Leaseholders have the right to open bank accounts for accomplishment of money operations They have the right to choose themselves banks for credit-settlement operations

9. On terms agreed with banks or owners leaseholders might obtain short-term and long-term loans for development of production

10. Local Councils of Peoples’ Deputies might allot finances to leaseholders for initial economic activity, development of production, melioration, road and housing construction on returnable and non-returnable basis

1. Intra-economy leasing contract as form of organisation and payment for work of individual employees, collectives, departments, groups of employees (hereinafter called leasing collectives) might be used at state, municipal and other enterprises

Unlike leasing intra-economy leasing contract envisages only leasing of property (without right of redemption)

2. On agreement with trade union committee enterprise approves regulations concerning intra-economy leasing contract, intra-economy settlement prices and tariffs for products (work, services), forms for accounting of material and other expenses by leasing collectives

3. Leasing collectives of state and municipal enterprise independently determine forms and systems of payment, working schedule, number of shifts, take decisions about summarised accounting of working time, establish procedure of optimum holiday table

Acceptance of new employees into leasing collective is carried out on consent of the collective

4. In agriculture leasing contract might envisage right of leasing collective to conclude, on behalf of the enterprise, agreements with citizens who are not members of leasing collective for accomplishment of specific works Work of such citizens is paid at the expense of money intended for payment to members of leasing collective

1. According to leasing contract leasing collective undertakes obligation to produce and to deliver to the enterprise or, at his request, to other enterprises or citizens commodities (work, services) specified in the contract (agreement)

Leasing collective has the right to dispose, at his own, of products (work, services) produced above amount indicated in agreement if not specified otherwise by legislative acts or agreement

2. In case of leasing contract enterprise accomplishes settlements with budget, bank and higher body according to established regulations based on results of economic activity of the enterprise as a whole It reserves with itself functions of planning of main nomenclature and volume of production (work, services) and also carries out common technical policy, accomplishes modernisation and reconstruction according to plans common for different enterprises, improves social sphere

Production program is worked out by leasing collective independently, accounting for obligations envisaged by leasing agreement

3. Amount and procedure of participation of leasing collective in expenditures and payments of the enterprise, including expenditures on development of production, science and technique and social needs are determined by leasing agreement

4. Leasing agreement specifies responsibility of Parties for non-fulfilment or inadequate fulfilment of their obligations as per agreement

5. Enterprise might grant the right to leasing collective to conclude collective agreements on behalf of the enterprise Such leasing collective has the right to open bank account Leasing collective bears obligations as per agreements with the property assigned to it Whenever the property is inadequate the enterprise-owner is responsible for obligations of leasing collective

6. Enterprise-owner might grant, on contractual basis, to leasing collectives of departments right of independent sale of produced commodities (work, services), use of obtained income for payment of wages, taxes and budgetary payments, payments for social insurance Such leasing collectives might open accounts in banks or other financial-accounting centres

7. In case of intra-economy leasing the owner might provide various privileges to leaseholder

8. Payment for the property assigned to leasing collective (rental payment) is established in leasing agreement Whenever prices and other economic conditions change amount of rent might be also changed on mutual agreement of the Parties

9. If sowings (crop), cattle and other rented property are insured by the enterprise and leasing collective fails to achieve production volumes specified in agreement due to natural calamity or other insurable cases rental payment (rent) decreases in proportion to sum of insurance compensation received by the enterprise

Leasing collective has the right to conclude on behalf of the enterprise, upon its consent, agreements on insurance of sowings, cattle and other property In this case amount of rent does not change in cases of natural calamity and other insurable cases

10. Profits of leasing collectives are formed at the expense of money obtained from rental payments, compensation of material expenditures, other deductions envisaged by agreement Profits remained with leasing collective are disposed of by the collective independently and cannot be withdrawn

1 Confiscation of the property assigned to leasing collective in accordance with leasing agreement by the enterprise is not permitted

2 Change or annulment of leasing agreement (contract) before expiration of its term is allowed only on mutual agreement between leasing collective and enterprise

3 Disagreements arising between leasing collective and enterprise in connection with execution, annulment or change of leasing agreement are to be settled in an order envisaged by labour legislation