Legal alerts

ADOPTION OF A NEW LAW "ON FINANCIAL LEASING"

On February 04, 2021 the Verkhovna Rada of Ukraine adopted the new Law of Ukraine "On Financial Leasing".

If the President of Ukraine signs the new Law, leasing relations will be changed significantly and become closer to international standards of non-bank financing, which is a very important step in the development of the leasing market of Ukraine and national economy.

Important innovations in the new Law are as follows:

The financial leasing contract will not be subject to notarization, except in cases established by law or by agreement of the parties. It is determined separately that the contract of financial leasing of a vehicle with the participation of an individual shall be subject to notarization at the request of one of the parties to the contract.

Lease payments paid by the lessee under the financial leasing contract prior to the date of the lessor's unilateral waiver of the financial leasing contract or termination thereof, shall not be refunded to the lessee, except when the unilateral waiver of the financial leasing contract or termination thereof is made prior to the transfer of the financial leasing object to the lessee.

In case of the lessor’s waiver of the financial leasing contract and failure by the lessee to return the financial leasing object within the period specified by the contract, the lessor will have the right to demand early payment of all future lease payments in terms of payment of the financial leasing object.

The financial leasing object shall not be included in the liquidation estate in case the lessee is declared bankrupt.

During the term of the financial leasing contract, provided that the terms and conditions of such contract are properly fulfilled, the lessee’s rights in respect of the financial leasing object will be protected.

The Law of Ukraine "On Financial Leasing" is a special law in relation to the provisions of the Civil and Economic Codes of Ukraine on the regulation of leasing relations.

The Civil Code of Ukraine is being amended. In particular, the consequences of recognizing a leasing contract as invalid or void are expressly provided. In this case, the lessee shall be obliged to immediately return to the lessor the subject of the leasing contract in the same condition it was received, taking into account a normal wear and tear or in the condition specified in the contract. In such a case, lease payments paid at the time of recognition of the leasing contract as invalid or void are not refundable.

We remind you that the current Law of Ukraine "On Financial Leasing" has been in force since 1997 and its provisions are essentially outdated. Ambiguous court practice on leasing legal relations has significantly reduced the amount of lease financing in Ukraine. Therefore, the players of the leasing market and economic turnover of Ukraine as a whole are eagerly awaiting when the new Law is signed by the President.

 

Igor Kalitventsev

Managing Partner

KPD Consulting

 

 

Should you have any questions with respect to above or require any additional information, please do not hesitate to contact Mr. Igor Kalitventsev (i.kalitventsev@kpdconsulting.com.ua). We will be pleased to assist You. The information contained in this overview is not intended to provide legal advice and should not be relied on or treated as a substitute for specific advice concerning individual situations.

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