Opinion of the European Central Bank of 26 June 2009 on the regulation of finance leasing and leasing companies’ activities (CON/2009/57)
Date: 2009-06-26
Institutions: European Central Bank
Subjects: Cyprus, financial stability, financial supervision, national law, rental business

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 June 2009 

on the regulation of finance leasing and leasing companies’ activities 

(CON/2009/57) 

Introduction and legal basis 

On  20  May  2009  the  European  Central  Bank  (ECB)  received  a  request  from  the  Cypriot  Ministry  of 

Finance for an opinion on a draft law regulating finance leasing and the activities of leasing companies 

(hereinafter the ‘draft law’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community and on the third and sixth indents of Article 2(1) of Council Decision 98/415/EC of 

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative  provisions1,  as  the  draft  law  relates  to  the  Central  Bank  of  Cyprus  (CBC)  and  to  rules 

applicable to financial institutions insofar as they materially influence the stability of financial institutions 

and  markets.  In  accordance  with  the  first  sentence  of  Article 17.5  of  the  Rules  of  Procedure  of  the 

European Central Bank, the Governing Council has adopted this opinion. 

1.  

Purpose and contents of the draft law 

1.1  The purpose of the draft law is to lay down a framework for the provision, to the public, of finance 

leasing  services  in  Cyprus  and  to  establish  a  prudential  supervision  regime  applicable  to  finance 
leasing  service  providers  (finance  leasing  companies2,  banks  and  cooperative  credit  institutions). 

Accordingly,  the  draft  law  governs  (i)  the  types  of  business  in  which  finance  lease  service 

providers  may  engage,  (ii)  eligible  lease  property,  (iii)  licensing  and  regulatory  requirements  for 

finance leasing service providers, (iv) the form and contents of a finance lease agreement, (v) the 

rights  and  obligations  of  the  parties  to  a  finance  lease  and  (vii)  enforcement  measures  and 

sanctions. 

1.2  As  stated  in  Article  3(2)  of  the  draft  law  and  reiterated  in  the  explanatory  memorandum 

accompanying  the  consultation  request,  the  draft  law  does  not  apply  to  finance  leasing  services 

where (i) they are not offered to the public in Cyprus or (ii) they relate to the sale and purchase of 

movable property where the sum total of the finance provided does not exceed EUR 5 000 per item 

1 
2  

OJ L 189, 3.7.1998, p. 42.  
Companies financing the purchase of tangible assets designated by the lessee in view of their subsequent lease to such 
lessee. 

 
 
 
 
                                                 
of movable property purchased or (iii) the credit period foreseen in the finance lease is inferior to 

three months. 

1.3  This opinion only covers the provisions of the draft law that directly relate to the CBC.  

2. 

New central bank tasks 

The  draft  law  entrusts  the  CBC  with  novel  licensing  and  supervision  tasks  in  connection  with  finance 
lease service providers other than cooperative credit institutions or their subsidiaries3. Significantly, the 

draft law recognises the CBC’s powers of entry and investigation, requiring additional expenditure and 

sufficient  human  and  material  resources.  For  the  CBC  to  be  in  a  position  to  perform  its  new  tasks  in 

parallel  with  its  Eurosystem-related  and  other  tasks  under  the  Laws  on  the  Central  Bank  of  Cyprus  of 
2002 to 20074, it is essential for the CBC to dispose of the abovementioned resources. The ECB notes, in 
this regard, that the draft law5 explicitly foresees the reimbursement of the CBC’s expenses arising from 

the performance of its newly assigned tasks. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 26 June 2009. 

The President of the ECB 

Jean-Claude TRICHET 

3  
4  
5  

See in particular Article 2. 
Law 138(I)/2002, Episimi Efimerida tis Dimokratias, Annex I(I), No 3624 of 19.07.2007. 
Article 13(5). 

2