The Leasing Law, Law 72(I) of 2016, was published in the official gazette and entered into force on 28 April 2016. 

The purpose of the Leasing Law is to regulate the provision of financial leasing services to the public and ensure the regulation and supervision of financial leasing services providers' activities, with the objective of providing consumers and businesses with alternative ways of financing, thus contributing to the growth of the leasing services sector and generally the financial sector and the economy as a whole. 

The new law provides that financial leasing services may be provided to the public by authorized credit institutions in Cyprus or other member states of the European Economic Area which are licensed to provide financial leasing services, and which provide such services through a branch or on a cross-border basis, by financial leasing companies which are subsidiaries of credit institutions established in EEA member states, and which provide such services in Cyprus through a branch or on a cross-border basis; and by a new category of regulated entity, namely financial leasing companies registered in Cyprus, licensed by the Central Bank of Cyprus to provide such services under new law.

The new law sets out the types of activities to be performed by those entities and defines the supervisory and regulatory powers of the Central Bank of Cyprus with respect to financial leasing companies, including the power to take enforcement measures and impose sanctions, and puts in place a comprehensive legal framework regulating financial leasing service providers and the provision of financial leasing services.

One of the intended benefits of the new law is to facilitate private debt restructuring by allowing mortgage loans to be converted into real estate leases through sale and lease-back transactions, so assisting in the resolution of non-performing loans. Financial leasing contracts that are a result of the settlement or restructuring of credit facilities are subject to terms and conditions determined by the Central Bank of Cyprus. In this respect, in relation to any leasehold described in the contract, the nominal and effective interest rate included in the rent, their calculation method and provisions for variation must be fully disclosed. 

The new law prescribes the procedures for simple financial leasing, sale and lease back, hire purchase and finance and operating leases in respect of domestic industrial and commercial premises, plant, machinery and movables. It excludes ships as these are covered by the Shipping Law. It sets out minimum disclosure standards for leasing documents, including a description of the leased property, its value, the start and end date of the lease, the total lease price, the amount and frequency of the rent and any grace period, the nominal and the effective interest rate and any provisions for variation, and any arrangements for early termination, renewal or purchase of the leased asset or in the event of the lessee's insolvency. Leases must clearly stipulate who is responsible for and who bears the cost of installation, maintenance or insurance of the leased property and the risks related to it. 

By providing for transparency in leases and effective regulation, the Leasing Law should be a positive step in developing the leasing sector in Cyprus.

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