5 Mitchell Street, Edinburgh, Scotland
info@katalatto.org

Guide to doing business in Azerbaijan — Legal Presence.

Guide to doing business in Azerbaijan — Legal Presence.

Foreign investments are generally defined as all types of tangible and intangible rights, including intellectual property rights, contributed by foreign investors to entrepreneurial and other types of activities for the purpose of making a profit. They include, among other things, participation interest and shareholding in Azerbaijani companies, acquisition of immovable property (except land plot), acquisition of securities and other assets liable for purchase by foreign investors under Azerbaijani law, and contractual agreements with Azerbaijani individuals and legal entities that provide for other forms of foreign investments.

In 2015, the stock of foreign direct investment (FDI) in the Azerbaijani economy amounted from $7-7.5 billion with investment in the oil and natural gas sector constituting 88.5% of the total amount. The World Bank reports on per capita FDI inflows rank Azerbaijan near the top among CIS and Eastern European countries.

The following entities and individuals may be considered as foreign investors in Azerbaijan:

  • Foreign legal persons;
  • Foreign citizens, stateless persons, and citizens of Azerbaijan with a permanent residence abroad subject to registration in their country of residence for engaging in economic activity;
  • Foreign states;
  • International organizations.

In order to boost economy with respect to foreign investment, state stays pledged to:

  • Guarantee against deterioration of legislation: a foreign investor is assured that the laws governing its investment will remain in force for a period of 10 years from the initial investment.
  • Guarantee against nationalization and requisition: foreign investors are guaranteed immediate, adequate and effective compensation in case of nationalization and requisition. Compensation should be commensurate to the amount of the investment at time of nationalization or requisition, payable in foreign currency and freely transferrable abroad.
  • Guarantee of compensation of damages: foreign investors are entitled to compensation for damages, including compensations for lost profits resulting the illegal acts of state authorities;
  • Guarantee of profit repatriation: foreign investors are entitled to repatriate profits derived from foreign investments subject to applicable taxes and duties. The government is expected to continue its policy of supporting privately held enterprises, including those with foreign capital and owned or operated by foreign nationals. There are no general trade barriers or embargoes for the import of goods to Azerbaijan. Exports are not subject to customs duties or restrictions. Regulations exist only for the export of strategic commodities such as electricity, petrol, cotton and non-ferrous metals.

All companies operating in Azerbaijan are required to be registered. Without formal registration, a company may neither do business nor maintain a bank account, clear goods through customs, etc. In Azerbaijan. As a part of the ongoing business law reforms, a “One Stop Shop” principle was introduced effective 1 January, 2008. The registration procedures involving several governmental bodies (Ministry of Justice, Ministry of Taxes, Social Insurance Fund and Statistics Committee) have been eliminated, obligating businesses to register only with the Ministry of Taxes. The established period for state registration with the Ministry is officially set at three days for commercial organizations. Registration of non-commercial legal entities is conducted by the Ministry of Justice. Starting a business in Azerbaijan takes 3 days and the due to be paid is equal to 11 manat (6.5 USD). Now, globally, Azerbaijan stands at 5 in the ranking of 190 economies on the ease of starting a business.

 

What reforms have consecutively been carried out way forward to stimulate business activity for last 3 consecutive years:

2014: Azerbaijan made starting a business easier by introducing free online registration services and eliminating preregistration formalities.

2015: Azerbaijan made starting a business easier by reducing the time to obtain an electronic signature for online tax registration.

2016: Azerbaijan made starting a business easier by abolishing the requirement to use a corporate seal.

Business partnerships and companies may be reorganized transformed into business partnerships and companies associations of a different form by a resolution of the general meeting of participants under the procedure specified by this Code.

General Partnership  — A partnership is a general partnership where the participants in such partnership (general partners) in accordance with the charter are engaged in entrepreneurial activities on behalf of the partnership and are liable for obligations of the partnership to the extent of their property. A person may be a participant in only one general partnership. The firm trade name of general partnership shall contain names of all participants therein and the words «general partnership», or name of one or more participants with the words «and partners» and «general partnership».

LP — A Limited Partnership means a partnership which consists, along with participants conducting business activities on behalf of the partnership and being responsible for obligations of the partnership with their property (general partners), of one or more participants — limited partners (commanditaires), who bear risk of losses related to the activities of the partnership to the extent of the amount of their contributions and do not take part in the business activities of the partnership.

LLC —  A Limited Liability Company means company established by one or more persons (natural persons and (or) legal entity), the charter capital of which is divided into shares, the sizes of which are specified by the charter. Participants in a limited liability company shall not be liable for its obligations and shall bear the risk of losses associated with the activity of the company to the extent of the value of their contributions. Company shall not bear responsibility for liabilities of its participants before third parties. Company can be established via foundation of new entity in accordance with the Code hereof and re-organization (merger, joining, division and transfer) with consideration of the rules and limitations established under the Code.

ALC  —  An Additional Liability Company means a company established by one or more persons, the charter capital of which is divided into shares of a size established by the charter. Participants of such company jointly bear a joint secondary liability for obligations of the company by their property in the amount equal for all of them and commensurate with the value of their contributions, and determined by the company’s charter. Upon bankruptcy of one of the participants, his liability for obligations of the company shall be divided among remaining participants in proportion to their contributions, provided that the company’s charter does not stipulate another procedure of distribution of liability.

JSC   —  A Joint Stock Company means a company the charter capital of which is divided into a certain number of shares. Only joint stock companies shall have the right to issue shares. Property of the Company is formed as a result of investment of its shares, its financial and economic activity as well as by other resources not prohibited by the Law. A company name of a joint stock company shall contain its name as well as the words «open joint stock company» or «closed Joint Stock Company».

  • Open joint stock company — shall be obliged to publish for being available to the public access its annual financial report and balance sheet.
  • Closed Joint Stock Company — A joint stock company, whose shares are distributed only among its founders or other predetermined persons, is deemed a closed joint stock company. Such company may not hold public subscription to shares it is issuing or otherwise offer them for acquisition by unlimited range of persons.

Leave a Reply

Your email address will not be published.