The Milli Majlis (National Assembly) of the Republic of Azerbaijan has adopted a package of legislative amendments in the third reading, marking a significant step toward regulating the crowdfunding sector. The legislative package includes changes to the Civil Code, Criminal Code, Tax Code, Code of Administrative Offenses, and several key laws, including those on state duties, state registration of legal entities, the Central Bank of Azerbaijan, the securities market, and anti-money laundering measures.
According to the Operative Information Center-OMM, the new legislation establishes a comprehensive legal framework for crowdfunding activities in Azerbaijan. By amending 12 legislative acts, the government aims to create a transparent and secure environment for collective financing, ensuring that crowdfunding platforms operate under strict regulatory oversight.
Key provisions of the adopted legislation include:
- Regulatory Oversight: Crowdfunding platform operators will now fall under the supervision of the Central Bank of Azerbaijan. Operators are required to submit regular activity reports to the regulator.
- Registration and Fees: A state duty of 2,750 manats has been established for the registration of legal entities managing crowdfunding platforms within the Central Bank's registry.
- Compliance and Penalties: The law introduces strict administrative penalties for non-compliance. Failure to disclose information or publish required data will result in fines ranging from 3,000 to 4,000 manats for legal entities. Misrepresentation or failure to submit reports will incur fines between 2,000 and 3,000 manats, while violations of fund management rules carry penalties of 6,000 to 7,000 manats.
- Anti-Money Laundering: Crowdfunding platform operators are now designated as subjects of anti-money laundering and counter-terrorism financing legislation, requiring them to implement robust compliance protocols.
The new regulations also address foreign currency transfers and securities issuance within the crowdfunding framework. These legislative changes are set to come into force simultaneously with the new Law on Crowdfunding. This initiative is part of Azerbaijan's broader strategy to modernize its financial sector, foster innovation, and provide startups and small businesses with alternative avenues for capital raising while maintaining financial stability.
