Company Law in Azerbaijan: A Guide to Businesses in Azerbaijan

Vigo Visa
4 days ago
3 min read

Company Law in Azerbaijan: A Guide to Businesses in Azerbaijan

Azerbaijan provides a clear legal environment for establishing and managing companies, with modern regulations that support both local and foreign investment. In this guide, you will find everything you need to know about company law and its types, with a special focus on micro, small, medium, and large enterprises.

Company law in Azerbaijan is considered one of the fundamental legal systems that regulate commercial activities and define the legal framework that companies must adhere to. This law includes a set of rules and regulations aimed at facilitating the establishment and management of companies, as well as protecting the rights of investors and shareholders.

Company Law in Azerbaijan: A Guide to Businesses in Azerbaijan

The Legal Framework for Company Formation in Azerbaijan

Basic Law: The Law on Companies No. 499-IQ (1994) regulates the establishment and management of companies in Azerbaijan, along with tax, labor, and investment laws in Azerbaijan.
Registration Authority: The Ministry of Taxes is responsible for registering companies within Azerbaijan.
Establishment Duration: A company can be established within a few days through advanced electronic systems.

Types of Companies in Azerbaijan

Limited Liability Company (LLC):
- Most common; suitable for individuals and small to medium-sized enterprises.
- Low minimum capital; liability is limited to the partner's share.
Closed Joint Stock Company (CJSC):
- Its shares are not traded on the stock market; suitable for family businesses or a limited number of partners.
Open Joint Stock Company (OJSC):
- Its shares can be publicly traded; suitable for large companies looking to raise capital from the market.
General/Limited Partnership:
- Less common; relies on personal partnership and unlimited liability in some cases.
Branch or Representative Office:
- For foreign companies wishing to operate without establishing a separate entity.

Classification of Companies in Azerbaijan by Size

Micro Companies in Azerbaijan:
- Typically have fewer than 10 employees; annual revenue is low (around 200,000 manats or less).
- Simplified procedures; reduced taxes; government support in certain sectors.
Medium Companies in Azerbaijan:
- Employ between 10 and 100 people; revenues range from 200,000 to 1.25 million manats.
- Subject to more detailed accounting and tax procedures; easier access to financing and support.
Large Companies in Azerbaijan:
- More than 100 employees or revenues exceeding 1.25 million manats annually.
- Strict accounting and legal obligations; subject to annual audits; broader opportunities for foreign investment.

Company Formation Procedures in Azerbaijan

Select the type of company.
Submit an electronic application to the Ministry of Taxes.
Pay the fees and submit the necessary documents (passport, founding contract, etc.).
Receive the certificate of incorporation and tax identification number.

Responsibilities and Rights of Companies in Azerbaijan

Obligation to submit tax and financial reports.
Ability to open bank accounts in local and foreign currencies.
Freedom to hire employees and enter into contracts.
Compliance with transparency standards and anti-money laundering regulations.

Liquidation or Transformation of Companies in Azerbaijan

A company can be liquidated voluntarily or based on a court decision.
Transformation of the legal form of the company is possible through formal procedures.

Frequently Asked Questions About Company Law in Azerbaijan

Here are the most common questions regarding company law in Azerbaijan:

1. What is the most suitable type for foreigners or startups in Azerbaijan?

Answer: A Limited Liability Company (LLC) is the most common and suitable choice for foreigners due to the ease of establishment and low minimum capital requirement.

2. Can a foreigner own a company 100% in Azerbaijan?

Answer: Yes, there is no requirement for a local partner, and a foreigner can fully own the company.

3. What are the tax obligations for micro companies in Azerbaijan?

Answer: Micro companies are subject to a simplified tax regime and sometimes receive exemptions or government support in certain sectors.

4. Can a company be transformed from one type to another in Azerbaijan?

Answer: Yes, the law allows for the transformation of the legal form of the company through formal procedures with the relevant authorities.

5. What are the minimum capital requirements for each type?

Answer: For LLCs, the minimum is moderate (often 30,000 USD if residency is requested, and there is no minimum without residency), while joint-stock companies require higher capital.