Baku: A draft law titled "On Crowdfunding" was discussed today at a meeting of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship, APA reports. The proposed legislation aims to establish a comprehensive legal framework for both equity-based and debt-based crowdfunding within the Republic of Azerbaijan. Comprising 7 chapters and 23 articles, the draft law sets out the legal, organizational, and economic foundations critical for the implementation of crowdfunding activities, detailing the operational requirements for platform operators and the scope of state regulation and supervision.

According to Azeri-Press News Agency, the primary objective of the new law is to facilitate convenient access to alternative financing channels for economic entities, including startups and micro, small, and medium-sized enterprises. These channels will utilize information resources and systems, along with opportunities provided by the capital market, to boost business activity while safeguarding the rights of investors involved in financing. The law aims to provide a structured environment for debt-based crowdfunding, where funds are raised through the issuance of debt investment securities by project owners, and equity-based crowdfunding, which involves investors purchasing shares in a project owner.

The draft law further clarifies the concepts and mechanisms of crowdfunding, outlining the roles of crowdfunding platforms, campaigns, and agreements between investors and project owners. It specifies that state-established legal entities and their subsidiaries, intended to implement the state's investment policy, will not fall under the law's jurisdiction. Additionally, the Alat Free Economic Zone will follow its own set of regulations concerning crowdfunding activities as per the Law on the Alat Free Economic Zone.