The Equipment Leasing Act 2015, is essentially aimed at promoting the business of leasing in Nigeria by among other things, creating clarity, certainty and sanity in the practice of leasing and ensuring protective mechanism, for both the lessor and lessee.
The memorandum of the Act states that “This Act seeks to regulate the business of equipment leasing in Nigerian so that the relationship between the lessor and the lessee and other third parties is identified and protected”. The Act also seeks to establish a regulatory authority to provide for the registration of all equipment lease agreements and equipment lessors”.
Protective Mechanism under Equipment Leasing Act
i. Termination after giving appropriate notice as specified in the Act (s,37) if default in payments of rental
ii. An exparte application to Federal High Court for repossession for non-payment of rental(s.39)
iii. The lessee shall be responsible for the immediate payment of all rentals due at the time of repossession
iv. Repossession shall not prejudice the right of the lessor to other remedies
v. For breach other than non-payment, the lessor can commence legal proceedings in court
vi. The lessee shall not remove the leased asset from Nigeria without the written consent of the lessor
vii. The lessee shall be liable for repairs to damage caused by his act, agent or servant or any third party to a leased equipment (s,24)
viii. Lessor is generally not liable for any defect in fitness for purpose of leased asset, except the lessee suffers loss as a result of reliance on the lessor’s skill or judgment in the selection of leased equipment (S 31,32,33)
viii. Right of inspection of the leased asset and obligation to provide information on the leased asset (s,26 & 27)
ix. Ownership is not impaired by mere fixation of leased asset to land or building(s19)
x. The implied legal ownership of lessor shall prevail at all times, except against a person in a non-registered lease(s19 &21)
xi. Prohibition against sale and transfer of the leased asset or any act inconsistent with ownership right of the lessor
xii. Registration of lease constitute constructive notice(s 16)
xiii. Fixation of lessors name to the leased asset(s 19)
Compliance Issues Checklist
i. Lessors shall be a limited liability company with its (MEMAT) having express provision to engage in equipment leasing business
ii. Registration with the Registration Authority.
iii. Registration of leased equipment within 14 days or 3 months for a lease made before commencement of the Act.
iv. Delivery of lease agreement within 14 days.
v. Provision of not less than 15 days notice in default for non-payment of rental in required form and other notices are required.
vi. Adherence to other legal proceedings for termination and repossession