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In the News

Azerbaijan Central Bank, IFC, and USAID detail bill on secured transactions


August 27, 2013

Baku, Fineko/ The Central Bank of Azerbaijan, the International Finance Corporation (IFC), acting through its project Azerbaijan-Central Asia Financial Markets Infrastructure (ACAFI), and the U.S. Agency for International Development (USAID) are detailing the bill on secured transactions.

ACAFI manager in Azerbaijan Teymur Heybatov informs that USAID consultant, working over the draft law, visited the country in August and conducted an exchange of views with the CBA.

"We expect that our consultant will also arrive in Baku in September, and we’ll be able to carry out the detailed elaboration of the bill on secured transactions," Heybatov said.

Today, the parties are engaged in routine work on polishing the concept of the bill, aligning its future positions.

In spring CBA general director Rashad Orujev pointed out that the Bank needed additional international examination of the bill as the document is sufficiently complicated and contains an approach which is new for the legal system of Azerbaijan.

The complexity of the draft law on secured transactions relates to the fact that it envisages change of a large number of laws and standard acts.

The CBA expected the results on primary version of the bill by the end of 2013.

The bill proposes introduction of a fundamentally new mechanism of secured transactions for the country. The CBA is currently consulted on the matter by the U.S. Agency for International Development (USAID).

A range of related legal issues (for example, establishment of a new mechanism for sale of the mortgaged movable property) will also be solved in the course of its review. With this purpose, ACAFI experts analyze the current legal framework and prepare proposals for necessary amendments and additions to the legislation to be offered to the country’s government in a package with the bill on secured transactions.

The first public hearings of the bill were conducted in Baku on 4 December. It was pointed out many related legal issues and the need to justify the cost-effectiveness of the new legislative regime.

The bill was drafted on the basis the CBA previously approved concept of organization and conducting of secured transactions in the country.

ACDI VOCA, acting with the support of the U.S. Agency for International Development (USAID), is responsible for drafting amendments to related laws and legal & standard acts, such as the Civil Code or the bankruptcy law.

Within the concept it was defined a mechanism of introduction and implementation of this financial instrument, including recommendations on improvement of the regulatory framework.

Today, it is assumed that the register of movable property to be created in accord with the law of unsecured transactions will operate under any public body, although in the world there applied private and personal property registries. However, final decisions will be made after the approval of the bill.

Earlier it was expected that Movable Estate registry to operate on online platform and not to charge payment for provided information can be founded under State Real Property Registry Service of State Committee for Property Affairs or under the Central Bank.

Thanks to personal estate Registry the people having no real property for securitization, can get access to credit resources.

As early as in 2008 ACDI VOCA organization operating under USAID’s support developed personal property bill in Azerbaijan. The matter did not move further than submitting the bill to Presidential Administration of Azerbaijan.

In case the bill is passed it will become possible to create Movable Estate Register in the country to contain information on the right of property mortgage without identification number.

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