The Central Bank of Azerbaijan (CBA) will now require its formal approval for any entity or individual seeking to acquire a significant share in a crowdfunding platform operator. This regulatory measure is a key component of the draft law "On Crowdfunding," which was discussed during a recent session of the Milli Majlis (National Assembly) Committee on Economic Policy, Industries, and Entrepreneurship.
According to the Operative Information Center-OMM, the proposed legislation mandates that potential investors must apply for authorization from the CBA before finalizing any significant share acquisition. This move is designed to ensure the stability and transparency of the emerging alternative finance sector in Azerbaijan.
The draft law establishes rigorous criteria for applicants. Individuals or heads of legal entities seeking significant stakes must demonstrate a clean record, meaning they must not be subject to criminal proceedings, bankruptcy procedures, or insolvency. Furthermore, the source of funds for the acquisition must be transparent. The applicant must also not be a project owner or beneficial owner of a crowdfunding campaign that is currently active, ensuring a clear separation of interests to prevent conflicts and ensure prudent management.
The CBA is required to review applications and accompanying documentation within 60 calendar days. If the regulator does not provide a written response within this timeframe, the application is considered approved. Decisions regarding the granting or refusal of authorization will be communicated to the operator within two business days, either electronically or via registered mail.
The legislation also grants the CBA authority to revoke permissions if conditions are not met or if the acquisition is not completed within the specified timeframe. In cases of unauthorized share acquisition, the CBA may issue a written order to annul the transaction, and the voting rights associated with those shares will not be recognized in the operator's decision-making processes.
This regulatory framework aligns with broader efforts in Azerbaijan to modernize the financial sector and integrate digital financial tools into the national economy. By establishing clear oversight for crowdfunding, the government aims to foster a secure environment for both investors and project initiators, thereby encouraging sustainable growth in the alternative financing market.
