Law on Crowdfunding adopted in Azerbaijan

The Law of the Republic of Azerbaijan on Crowdfunding (hereinafter referred to as the “Crowdfunding Law”), published on July 24, 2026, will enter into force on January 24, 2027.

Overview of the Crowdfunding Law

Comprising seven chapters –including General and Final Provisions – the Crowdfunding Law regulates the operations of crowdfunding platforms and their operators, the liabilities of project owners and operators toward investors, equity- and debt-based crowdfunding, and state oversight of these activities.

According to its preamble, the Crowdfunding Law aims to create alternative financing opportunities that boost business activity for economic entities and to protect the rights of investors participating in such financing.

Activity of the operator

The operator may be a limited liability company or a joint-stock company. Its primary activity consists of managing crowdfunding platforms, and it may commence this activity only after being entered into the relevant register of the Central Bank. The Crowdfunding law establishes requirements regarding the operators’ minimum authorized and aggregate capital, corporate governance, internal control systems, and the prevention of conflicts of interest, as well as requirements concerning holders of significant shareholdings and persons performing management functions.

Operation of the platform

Platforms must meet technical and security requirements and provide investors with full and clear information regarding the operator’s activities, service fees, risks, and the projects listed. At the same time, the operator is obliged to protect the interests of investors and project owners, ensure data confidentiality, maintain the platform’s secure and uninterrupted operation, and, in cases prescribed by Crowdfunding Law, suspend or cancel a campaign.

Project owner and investors

Under the Crowdfunding Law, the project owner bears responsibility to investors for the completeness and accuracy of the information posted on the platform, as well as for the implementation of the crowdfunding project. Listing the project on more than one platform simultaneously is prohibited.

A number of safeguards are also envisaged to protect the interests of individual investors. Specifically, investment limits for individual investors will be established by the Central Bank, and a seven-day “cooling-off” period will apply, allowing for the reconsideration of investment decisions. Furthermore, the return of funds collected from investors is guaranteed in the event of a failed campaign or in other circumstances stipulated by Crowdfunding Law.

Equity- and debt-based crowdfunding

The Crowdfunding Law regulates two types of crowdfunding: equity-based and debt-based. Equity-based crowdfunding may be conducted only by joint-stock companies through the issuance of additional shares, whereas debt-based crowdfunding is possible only through the issuance of bonds. In both cases, specific procedures have been established for conducting the campaign, placing the securities, and making investments.

State supervision

State regulation and supervision in the field of crowdfunding will be carried out by the Central Bank. The Central Bank will maintain a register of operators, oversee their activities, and establish regulatory requirements; it will also have the authority to issue mandatory directives upon the detection of violations, suspend platform operations, and remove operators from the register in cases prescribed by Crowdfunding Law.

State duty and fines

In connection with the adoption of the Crowdfunding Law, amendments have also been made to the Code of Administrative Offenses of the Republic of Azerbaijan and the Law of the Republic of Azerbaijan “On State Duty.”

A new Article 416-1, added to the Code of Administrative Offenses, establishes administrative liability for various violations in the field of crowdfunding. Specifically, administrative fines of varying amounts are prescribed for officials and legal entities in cases involving the failure of an operator to disclose required information; failure to submit required reports to the Central Bank or the submission of distorted information; and violations of rules regarding the retention of information and documents, the management of funds, and the conduct of crowdfunding campaigns. Furthermore, under an amendment to the Law of the Republic of Azerbaijan “On State Duty,” a state duty of 2,750 manats has been established for the inclusion of a legal entity in the Central Bank of the Republic of Azerbaijan’s registry for the activity of managing a crowdfunding platform. 

As a result, operators of crowdfunding platforms will be considered subjects of legislation on combating the legalization of property obtained through criminal means (money laundering) and the financing of terrorism.

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