RULES OF BORROWING OF STATE-OWNED LEGAL ENTITIES HAVE BEEN APPROVED
President Ilham Aliyev signed a decree on approval of "Internal and external borrowing rules of state-owned entities". These rules regulate the relationship between the internal and external borrowing and the maximum borrowing rate of the legal entities owned by the state.
The state-owned entities are the entities, where 51% of shares directly or indirectly belongs to the state. These can be joint-stock companies, limited liability companies and commercial legal entities operating in other organizational and legal forms, non-commercial legal entities or public legal entities created by the state.
The borrowing under these rules means debt obligations arising from contracts concluded with residents and non-residents of the Republic of Azerbaijan by legal entities owned by the state, borrows on deals concerning securities, debts on warranties of third parties’ obligations, debts on leasing agreements, debts on goods, works and services.
According to the new rules, the state-owned legal entities must submit information to the Ministry of Finance on the debt intentions for the next year and the total amount of borrowings for the next year before June 1 of the current year.
It should be noted that the Ministry of Finance may request explanations and additional information on the documents submitted from the state-owned legal entity for the approval of borrowing. The Ministry of Finance must consider the application submitted by the legal entity owned by the state not later than 30 days, make a decision on borrowing, and send in writing to that legal entity. Reasons for refusal should be indicated in the report when refused to accept the intention on borrowing.
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