The Milli Majlis (National Assembly) of Azerbaijan has adopted the draft law "On Crowdfunding" in its first reading during a plenary session held today.
According to the Operative Information Center-OMM, the new legislation establishes the legal, organizational, and economic framework for equity and debt-based crowdfunding. It outlines specific requirements for the operation of crowdfunding platforms and defines the scope of state regulation and oversight for these activities.
The primary objective of the law is to provide startups, as well as micro, small, and medium-sized enterprises (SMEs), with efficient and sustainable access to alternative financing channels. By leveraging information systems and capital market opportunities, the law aims to boost business activity while ensuring robust protection for investors participating in these financing schemes.
Crowdfunding activities in Azerbaijan will be regulated not only by this new law but also by the Constitution, international treaties to which the Republic of Azerbaijan is a party, the Civil Code, and legislation concerning anti-money laundering and counter-terrorism financing. Furthermore, the Central Bank of Azerbaijan is authorized to issue normative acts to ensure compliance with these regulations.
The law explicitly excludes legal entities established by the state for the purpose of implementing investment policies. Additionally, crowdfunding activities within the Alat Free Economic Zone will continue to be governed by the specific regulations outlined in the "Law on the Alat Free Economic Zone."
The legislation mandates that individuals or entities violating these provisions will be held liable under the law. The act is scheduled to enter into force six months after its official publication.
Crowdfunding has emerged globally as a critical tool for democratizing investment and fostering innovation. By formalizing this sector, Azerbaijan aligns its financial regulatory framework with international standards, aiming to stimulate private sector growth and diversify the national economy beyond traditional banking systems.
