In Azerbaijan, only joint-stock companies will be permitted to act as project owners for equity-based crowdfunding, according to a new draft law currently under review.
As reported by the Operative Information Center-OMM, this provision was discussed during a session of the Milli Majlis (National Assembly) Committee on Economic Policy, Industry, and Entrepreneurship.
Under the proposed legislation, project owners may increase their authorized capital through equity-based crowdfunding solely by issuing additional shares. Furthermore, a project owner is restricted to financing a maximum of two equity-based crowdfunding projects within any 12-month period.
For debt-based crowdfunding, the process must be conducted exclusively through the issuance of bonds, with a maturity period not exceeding five years. Similar to equity-based projects, a project owner is limited to two debt-based crowdfunding initiatives per year.
The draft law outlines specific operational timelines: once a crowdfunding campaign concludes, the operator must initiate the placement of securities within three business days. This placement process itself must be completed within three business days from the start date. Securities placement will adhere to the "delivery versus payment" principle, as established by the Law on the Securities Market.
Additionally, securities holders are required to maintain a depository account. These accounts will be opened by the operator—or another member of the National Depository Center—authorized to perform such functions. Once the placement is finalized and the project owner submits the approved report on the emission and public offering of securities (excluding bonds), the operator is mandated to transfer the collected funds to the project owner's account within one business day.
Matters concerning the issuance, placement, reporting, and circulation of these securities will be governed by existing securities market legislation, unless otherwise specified by the new law. This regulatory framework is part of Azerbaijan's broader strategy to diversify its financial markets and create a more transparent, accessible environment for startups and small-to-medium enterprises to secure capital.
