LAW OF UKRAINE

of December 16, 1997 No. 723/97-BP

About financial leasing

This Law determines general legal and economic basis of financial leasing.

Article 1. Determination of financial leasing

1. Financial leasing (further - leasing) is type of the civil relations arising from the agreement of financial leasing.

2. Under the agreement of financial leasing (further - the agreement of leasing) the lessor shall acquire in property thing at the seller (supplier) according to the specifications and conditions established by the leasing recipient and to transfer her to use to the leasing recipient for certain term at least one year for the established payment (leasing payments).

Article 2. Legislation on financial leasing

1. The relations arising in connection with the agreement of financial leasing are regulated by regulations of the Civil code of Ukraine on leasing, hiring (lease), purchase and sale, delivery taking into account features which are established by this Law.

2. The relations arising in case of acquisition of right of economic maintaining regarding the agreement of leasing are regulated by the rules established for regulation of the relations arising in case of acquisition of property right regarding the agreement of leasing except the order right by leasing subject.

Article 3. Leasing subject

1. (Further - leasing subject) the non-consuming thing determined by individual signs and carried according to the legislation to fixed assets can be the subject of the agreement of leasing.

2. The parcels of land and other natural objects, single property complexes of the companies and their isolated structural divisions (branches, shops, sites) cannot be leasing subject.

3. The property which is in the state-owned or municipal property and concerning which there is no prohibition of transfer to use and/or ownership can be leased according to the procedure, established by this Law.

Article 4. Subjects of leasing

Can be subjects of leasing:

the lessor - the legal entity who transfers right of possession and uses of leasing subject to the leasing recipient;

the leasing recipient - physical person or legal entity which acquires right of possession and uses of leasing subject from the lessor;

the seller (supplier) - physical person or legal entity at which the lessor acquires thing which will be transferred further as leasing subject to the leasing recipient;

other legal entities or physical persons which are the parties of the multi-lateral agreement of leasing.

Article 5. Subleasing

1. Subleasing is type of subhiring of subject of leasing according to which the leasing recipient under the agreement of leasing gives to the third parties (to leasing recipients under the agreement of subleasing) to use for a fee for agreed time frame in accordance with the terms of the agreement of subleasing the leasing subject got earlier from the lessor under the agreement of leasing.

By transfer of subject of leasing to subleasing the right to claim against the seller (supplier) passes to the leasing recipient under the agreement of subleasing.

2. By transfer of subject of leasing to subleasing the compulsory provision of the agreement of subleasing is the consent of the lessor under the agreement of leasing which is provided in writing.

3. Regulations on the agreement of leasing are applied to the agreement of subleasing if other is not provided by the agreement of leasing.

Article 6. Agreement of leasing

1. The agreement of leasing shall be signed in writing.

2. Essential terms of the contract of leasing are:

leasing subject;

the term for which the leasing recipient is granted right to use by leasing subject (leasing term);

size of leasing payments;

other conditions on which according to the statement at least the agreement shall be reached by one of the parties.

3. The term of leasing is determined by leasing agreement parties according to requirements of this Law.

Article 7. Refusal of the agreement of leasing

1. The leasing recipient has the right to refuse the agreement of leasing unilaterally, having in writing notified on it the lessor if the delay of transfer of subject of leasing constitutes more than 30 days provided that the agreement of leasing does not provide other term.

The leasing recipient has the right to require indemnification, including return of payments which were paid to the lessor before such refusal.

2. The lessor has the right to refuse the agreement of leasing and to demand return of subject of leasing from the leasing recipient in indisputable procedure based on executive text of the notary if the leasing recipient did not pay leasing payment partially or in full and the unpaid amount constitutes more than 30 days.

Collection on executive text of the notary is made according to the procedure, established by the Law of Ukraine "About enforcement proceeding".

3. The refusal of the agreement of leasing is committed since the moment when other party learned or could learn about such refusal.

Article 8. The property right regarding leasing. Procedure of payments upon transition of the property right to the leasing recipient

1. Upon transition of the property right regarding leasing from the lessor to other person the appropriate rights and obligations of the lessor under the agreement of leasing pass to the new owner of subject of leasing.

2. If agreement parties of leasing signed the purchase and sale agreement of subject of leasing, then the property right regarding leasing passes to the leasing recipient in case of and from the moment of payment of the price determined by the agreement it if the agreement does not provide other.

3. The subject of leasing cannot be confiscated, cannot be seized it in connection with any actions or failure to act of the leasing recipient.

Article 9. Protection of the rights of the leasing recipient regarding leasing

Protection of its rights regarding leasing on an equal basis with the protection established by the legislation on protection of the rights of the owner is provided to the leasing recipient (subleasing recipient).

2. The leasing recipient (subleasing recipient) has the right to require including from the lessor, elimination of any violations of its rights regarding leasing.

Article 10. Rights and obligations of the lessor

1. The lessor has the right:

To invest 1) on acquisition of subject of leasing both own, and raised and loan funds;

2) to perform checks of observance by the leasing recipient of conditions of use of subject of leasing and its content;

3) to refuse the agreement of leasing in the cases provided by the agreement of leasing or the law;

4) to demand agreement cancelation and return of subject of leasing in the cases provided by the law and the agreement;

To collect 5) from the leasing recipient overdue debt in indisputable procedure based on executive text of the notary;

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