The regulatory framework for the development of leasing has been expanded in Belarus

June 16, Minsk / Liliya Krapivina - BELTA /. The regulatory framework for the development of leasing has been expanded in Belarus. This is the aim of the Council of Ministers' Resolution No. 865, which approved the Regulation on Leasing, as reported to BELTA correspondent by the Chairman of the Belarusian Leasing Association, Alexander Tsybulko, commenting on the document. The Regulation governs the general economic and legal conditions and procedure for carrying out activities related to the conclusion, execution, and termination of financial lease (leasing) agreements, including economic operations related to the execution of these agreements. Now, relations concerning the transfer of property under a lease agreement are regulated by the Civil Code of the Republic of Belarus, this Regulation, unless otherwise established by the President, and other legislation adopted in accordance with them. Previously effective documents concerning leasing have lost their force. The Regulation sets out the terms and definitions of leasing. Thus, the contract value of the leased asset is the value of the asset transferred under the lease, determined by agreement between the lessor and the lessee for the purpose of calculating lease payments, carrying out and reflecting economic operations during the execution of the lease agreement. It (the contract value) is reflected in primary accounting documents and includes, among other things, the lessor's expenses related to the acquisition of the goods that are the subject of the lease, including delivery, installation, and assembly. This asset must also be brought to a condition suitable for use by the lessee. Definitions of financial and operational leasing are provided. For the purpose of establishing the specifics of economic operations, leasing where payments during the lease term (at least 1 year) ensure reimbursement to the lessor of at least 75% of the contract value of the leased asset is defined as financial. Leasing where less than 75% of the contract value of the leased asset is reimbursed to the lessor is defined as operational. The government resolution also introduces new concepts: sale-and-leaseback and subleasing. The lessee may simultaneously act as the seller of the property being leased within the same agreement (sale-and-leaseback). With the consent of the lessor, the lessee may transfer to a third party for possession and use for a specified period for a fee the property received from the lessor under the lease agreement and constituting the leased asset, by concluding a sublease agreement with the third party (sublessee). The leased asset, rights to it, and/or the lease agreement, subject to state registration in accordance with the legislation, are registered by an authorized state organization upon application by the lessee. The lessor has the right to control the lessee's compliance with the terms of the lease agreement regarding the preservation of the leased asset and its maintenance in working condition. The lessor also has the right to early termination of the lease agreement and return of the leased asset. Unless otherwise stipulated by the agreement, the lessee bears all expenses related to the return of the leased asset to the lessor, including expenses for its dismantling and transportation, and also compensates the lessor for other losses related to the termination of the agreement. The term for which the leased asset is provided for possession and use under a sublease agreement cannot exceed the lease term under the lease agreement. The termination of the lease agreement entails the simultaneous termination of the sublease agreement. The lessor has the right to use the leased asset as collateral to secure obligations only under a loan agreement (borrowing agreement) concluded to pay for the leased asset, unless otherwise provided by the lease agreement. Risks and benefits associated with the transfer and ownership of the leased asset are transferred to the lessee. The resolution comes into force on July 1, 2010. The document does not apply to lease agreements concluded before its entry into force. These agreements are valid for the period specified in them and are not subject to bringing into compliance with the requirements of Resolution No. 865. However, by agreement of the parties, the provisions of this document may be applied to a lease agreement concluded before the resolution comes into force. -0-