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O? (D6liJ. CONTENTS
p~ ~1'C (!~r./lv.tj ').~. Proclamation No.1 03/1998
rl11;:J--A b,p 11./..." '}"l,f: P' I... Capital Goods Leasing Business
1\tp~ 1X" i Proclamation.. Page 71
.Uv1<U UlI>ULUllUIl1S,
'Jo:f f..,.",.t\- If~ID- '1t\no1'f:1-ID-: WHEREAS, the existing laws concerning capital g
ing business are found incomplete;
L.Tf"A'.r L.~t..I\~ ~quh/..II Pip .I.rollh h 1I..Tr\\lT "T'UDDDDADD :- J n.'LL A nO' . ,
1~ '!..~~,;t..,J!..t..A ".~k1' .~",f'J <~'I'C"6% ft}.t.} r;'1.4'1 !Iff:! q.9". Federal Negarit Gazeta - No. 27 51hMarch, 1998-Pagc 70X
Hi' ult.u'~11 fO?f,":fA ia"''''~'''''' 117/\""U,"h..,h4C.~~'" 11) "Non-cancelable Agreement" means' a lease
m",.. Uia"''''~'''' 11:F I1AI'~ Uia.,..,.C It.uo~1I agreement that is cancelable only by the operatiO'n
fO?f,-:'''.Afb.t-f, ia"''''~'''' ~~; of the law or by mutual agreement; ,
I~' Ult~" 117/\""f.,.4C.-rc- ltm- tDf,'r Ulh.., flt~~"" 12) "Person" means any natural or juridical person;
oP11"" f.,.ltm~ hl1A ~~} 13) "Ministry" meansMinistry of Trade and Industry;
PART TWO
If "OI/.tia1:C" 117/\""f"''''~ It."'~ia""~ OI/.tia1:C~~;
Licensing, Featuresof Lease Agreements (lnd
hti:A v-/\..,. Rights and Obligationsof tbe Contracting
Parties
f 4C.ft'~ hltllJ-rt fh.~.f, ia'r"'~"" 'ltJ~I""'I f.,."CP f,
3. Issuance of License
m1 'i":f oP11""" ..,~:J-"":f
4.:J' ~ ia/\ oP iam"" 1) capitalgoods leasingbusiness shall be operated Qnly
f'
by a lessor licensed by the Ministry. '
Ii' fl11:7A iJft' b.t." ..,..,~ rt. fOl/.I1~~~hOl/.t
2) The Ministry shall issue dire~ives concerning the
ia1:? 4C.ft' ~ U.,.ltm~ hht.f,'11:F ~~==
criteria to be fulfilled to obtain leasing license.
~. fhht.f,~"" ~~ 1\117"'1"" oP."I\"" 1/\'l=f~'" 4. GeneralFeaturesof Lease Agreements
oPia".C-f":f UOI/.oDI\h..,.O?tia1:? oPoP~.r fmllJlA::
Any lease agreement shall, among other things, contain:
!!. fb.t." ia"''r~-f":f hmft'l\f, 'ltJ~I""
1) a.statementof the type of leasing; .
O?"'~~'" fh.t." ia"''''~'''' n.nia fOl/.h.,.I\-""",
2) a description of the capital ,goods, sufficient to
"f,tIA:
identifyit, a statment of the full price of the capital
Ii' fb.t.f, ~"~1:'" oP"'I\65A; goods and the total leaserentpayable under the lease
~. fl11:.+A iJ:J'~'" I\oPI\f"" fOl/.lia":f1AU-t oP..,I\65At agreement;
fl11:7A iJft'~.., 00-1\- cP;J~'h'l Ub.t.f, ia"''''~1: 3) the amount of each rent,the period within which the
oPuol."" fOl/.h4C.I\~'" m:"1\1\ b.t.,,; total rent, is to. by paid, the date or the mode of
f' f'h.r..,.';..,~ b.t." oPm"'t 1n:"1\"~ b.t.f, fOl/.h4C. det~rminingthe date on w~ich each installment is
AU"" 1.11.'1'hn.';"'~ fb.I..f, ht;:.r fOl/.~~"'U"" .,..., payable and a statementthat the lessee shall pay the
mf,,.. .,..,. 'fOl/.mlt..,u..,.1I~; "'ht.(!. U~I\- oPuol."" rent on the agreed date;
U"'mlt~~ .,..., b.t.".., fOl/.ht;:A oPl'''''''; 4) a provision showing the responsibility of th~ lessee
!!. ia,..,..}1: ~"'-f UOI/..fof,U""1.lt~ia-r "ia"'~ m1'i":f
, . . for repairing damagescaused to,the capital goods by
UI11::J-A iJ:J'~ I\f, 1'.';"" n.l1.C,,"U"" "'ht." third parties during the time the agreement is in
fO?uot."" ~I\L~"" .rl\U"" oPl1''''''' fOl/..ritf, ~"';J'&.; force;, -
?;. "'ht.(!. fl11::J-A iJ:J'm. n.,.I\I\4C.I\""1.,l.h11A..,1\"-1:.., 5) a provision showing the right of the lessee to
fOl/..,...,ia l' ~/\ T l1\n"" 11''i 1111~ ia"''''~1:''' , terminat~ the agreeII;lentand return the leased capital
h*C(I1 fl11:7A iJft'm-'" foPoPI\ia oP11"" .rl\m- goods to the lessor, where, at the time of its transfer
ia/\oPl1'''' fOl/..ritf, ~.., ;J1.; to him, the capital goods is found to have a defect
~. Uhht."'1 UI11::J'A iJft' h:"t-n.m-.oPl1hA h"'~ which diminishes its usefulness to the lessee;
l.1m. f7i.r6J.1' meA fOl/.oP~'b oP..,1-f":f..,'I -r:"qo":f.., 6) a statement that the lessor undertak~s to transfer to
I\,,'ht." I\O?ia.,.I\I\t;:hht." f1qm- ft'A; the lessee the rights and benefits deriving from the
1:' "'h~." fl11:7A iJ:J' b.t.f, ia"''''~1: ~"'-f UOI/..fo sales contract between the lessor and the supplier of
f,U"" 1.,1. V-I\- Uia"''''~1: U"'1/\~~ v-~:J- U.,.h the capital go~ds; ,
t.fm- fl11::J-A iJft' I\f, v-h..,. fO?f,~~"'U"" ff)I\ 7) a statement that the lessee ~hall have the right to
"":""'''' oP11"".rl\m- oPl''''''' fO?..rit" :J'IAI enjoy quiet possession of the leased capital goods
~. "'ht.(!. UI11::J-A iJft'm- It.m'''''' U"ia"'~ m1'i":f dur~ng the, ~ntire period of the lease as provided in
the agreement;
1\" I\OI/.~Cia'fP""t fhl1A 1'.';"" m",.. f"'11~""1'.';""i
8) a statement that the lessor may not, in his capacity as
hht.(!. 'h"'~hht."~": ~I\k~"" f"'I\U"" oPl1'.,.i
a lessor, be liable for death, personal injury or
f"t.ritf, ft'A::
damage to the property of third parties caused during
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the use of the capital goods by the lessee.
Ii' f4-f,,,..,ia b.t.f, ia"''''~''''''' UOI/.oPI\h"";
5. Specific Features ?lLeas~ Agreements
U) "'ht." fb.t.f, ia"''''~-I: ~"'-f UOI/..fo"U-f1.11.0-1\- I) In the case of a tinanciallease agreement:
, ,
1\) i\?9"'''': w'A f"'1'Hl-1- 00-1\' ~;J nh.t..e (b) the agreement shall be a full pay-out and non-
.Hl'':I\'' fO?i'i&."}U'}''i'' I\.IPl1' fO'/.e"fA cancelable agreement;
il9"9"~'}- f.lfel'A: (c) the lessee may, by mutual agreement, have an
eh) fil9"9~-I: 'I.IL (U'U.'" 11-1\-1:tD1tf".f h.,.ilO'/oo- option to buy or return the capital goods to the
'H1&.f. fit'C:h~\ 6."'w'") f(/D""':" 9"C6l>1. lessor on the termination of the lease agreement
I\. (:'ltD' f.")"'I\A: I1A,,'ilO'/oo, '''ht.f. fit'C:t"A (d) a statement that the lessee undertakes to insure
6,"'w,") I\1\hl..f. f,(/DAltA: and maintain the capital goods.
(/D) 'H1&.f. I\it'C:"A 6."'w' (/Df:") f(/D"'fl-1-'i"
2) In the case of an operating lease agreement:
"'10.W'"} ~Y.lt ftll/.r:l"l ;~I\&.~;" .fl\n:" (/D"'''' (a) the capital goods leased shall remain the property
t'/P11\;r .etfCn:"A:: of the lessor to whom the lessee shall return on
!{. f1\6f.b(: 'I.IL (/Dm.,.O'/..f h,I..f. il99"~""") nO'/.(/D the termination of the agreement\ unless
I\h:": otherwise the parties agree that the lease be
0) 'H1&.f. f'''hl..fW' fit'C:"A 6.'" f1\hl..f. "}o(}l"" further renewed or the leased capital good be
If(: fO?/i.f.'i" fil9"9"~-I: 1.fL 't.fn.'" u-I\-I: purchased by the lessee;
w1tf:f. nO'/.ilO'/oo'n-1- (/DlPl-1- il9"9"~-I: (b) the lessee or the lessor shall have the right to
~"}.e.1'i" ~"}~.I.,"9 wf.9" 'H1&.f. fit'C:J-A cancel the agreement provided that. the party
6,"'w'") ~"}~.11' itA'''ilO'/oo, nil.,..,.C 'H1&.f. causing dam~ge to the other by early ter-
fit1::t"A 6."'W'"} I\1\hl..f. fD'l.(/DA(tw, .erf'i"A: mination of the agreement shall pay compen-
1\) il9"9"H: 1\I\1.lLw' U(/D9:lm- 9t11.f-1- Ui\.I\m- sation;
OJ1"} I\.e 1'~"" .f'.l(tw, W1"} I\Y.l(tW'1.~-1- itlt (c) a statement that the lessor undertakes to insure
fO'/.htt:A If(:': 'H1&..e9" In 1\hl..f. il9"9"~-I:"} and maintain the capital goods.
ft'/P,(tl1' (/D...1-1'.e(:, 1..;t:~A: 3) In the case of a hire-purchase agreement:
eh) M1&." I\it'C:"A 6:J>W' no,r.:"} f(/D"I'I-1-'i" (a) an equal percentage ofthe ownership, with each
"..,o,w'"} "Y.1t ftll/,r:l'" ~I\&,~"" .fl\n"" (/DIn. installment payment, shall be transferred to the
e/p"I\K' f.tfcn:"A:: lessee and, upon effecting of the .last payment,
J:' f p,.n, ..,.,,: il9"9"~;"") nO'/.(/DI\h-1-1 the ownership of the capital goods shall
0) ".f"}P'"},~ fh.I...e hr.:.r O"'&'?\(/D 4:"'C I\htt:J'm- automatically be transferred to the lessee;
".(/DtI}tI}:~ Ulf~ uP.y.;-l Ah ffH\o.'}'~'}- (/D...l-1- (b) the p~rties shall provide, in the agreement, for
,,"})tu-9" f(/D(J.1.l7im- fh.t,f. hr':.f ~") ".,. the manner by which ownership rights and
&,?(/D w~..fW'~. fit-r.:"A 6."'w' (10'1\' fl}I\o. c1aims arising form the agreement shall be
;,.~,}. (/D...l"" I\'H1&.f. fO'/..,.I\I\tt:I\"" .erf'i"&\= settled between the lessor and the lessee in case
1\) il99~'f: nO'/'i":t:w'9" tD1"} nl\1.fLW' 00'/.9: l of early termination of the lease agreement by
fD'l.(/D"6f.b ffl1\n.-1-~-1- either party;
'I'U"" 'UL hil99"~":
t'/p'O'f:.f'i" 't'.fc,:sp'.r. ',Afl-1- fO?..f11"n-1-"} u-~:t" (c) a statement that the lessee undertakes to insure
and-maintain the capital goods.
(1.1\'1: w1tf'.)'. nil9"9.,-I: .fit-1-:t-I\':
(/Df;") f(/D"Ifl-1-'i"
eh) 'H1&.f. I\it'C:"A 6 m- 6. Defaults in Payment of Rent and Others
(/Drf.,.
"",O,ID'"} ~.e.lt ftll/,r:l'" ~l\k.,-1- .fl\n-1- I) Where the lessee defaults in the payment of the rent,
(/D.,I\;r .etfcn:"A:: or commits another fault which may breach the
~. h,t.f,") ill\I\t'/Pht,A'i" /\.i\"':;' ",~~.y.".'f agreement, the lessor shall grant him a period of 30
'H1&.f. h.1..f."} uw;'f>.f: fl.ehtt:&\ OJ.e9" il9"9"~-I:"} days for remedying the d~fault so far as the default
Ii'
fO?:I'il /\.1\ ",~.}. n,&.?\'9" "'ht.f. f t,?\(/Dm- 't'~-1- may be remedied.
1\.(1J",f: fO?::;'A tun Oil9"9"~-I: (/DlPl-1- ~"})t 2) Where the lessee does not remedy the default within
t,?\'9" 1\hl..f. f~~ "") '1.IL I\.(tmw, .e1fIA:: the period specified in sub-Article (1) of this Article,
~. "'hl..f. (ULUt,"}",?\' "}o.il 1\"}.,.;r (Ii) (}of.tD(t"OJ'1.fL
the lessor may rescind the agreement, repossess the
(D'il'l' 'I'ck':") '1.filw",.r.: M1&.f. il9"9"~-I:"} (/D,vl1': leased capital goods and claim related damages.
3) Where the lessee defaults in the payment of the rent,
fit'C:"A 6."'w,") w.e. f,fl:"W' (/D(/DI\il'i" I\"l(tn-1-
".p,:,. '1'''1 t'/Pmf;'f> f.',}"I\A:: the lessor may recover accrued unpaid rent together
with interest and damages, whether the default is
I:' 'H1&.f. ttl.,f.") nw;'f>.,: .fAht.I\ ,,"}'.In 't'~-I:
f.,.tW,Y. OJf.9 .rA,,'w1Y. f1.rf"}9" ~"}\\ 1\ht..e remedied or not.
w'1,4."} h.I.,f. hwl\,r:ej it..., ;JC O?ilht,&\ .e".'fl\&\:: 7. Defects on the Leased Capital Good
~, (1-I'hl..fOJ. fit1::t-A 6,'" I\.e ill\I\' ~f;I\.y.".'f I) The lessor may not warrant against a defect which
OJ;'f>-1-n.,.ht.f. I\:t"w'" was made known to the lessee on the making of the
Ii' il99.,.,: U''''.l1n.)-
fit.C:"&\ 6.'" 1.,f:I\'}' 1\hl..f. ~I\t.~.}. fl\n-1-9":: agreement.
1K' "i/I.Hi t..1.I..A .,;Jt.-1- ;Jti"l +'1'C ~ fili:'-" ?;'%.,., n!1 q.S/". Federal Negarit Gazet~ - No. 27 5[hMarch, I 998-Page 711