Let’s say, you visited Azerbaijan one day and decided to open your business and stay in this beautiful country. Or after doing your thorough research, you realized that Azerbaijan is the best place for a prosperous business. What’s next? Below, we summarize the main aspects of business establishment and registration in Azerbaijan:
A business can be started by multiple vehicles: (i) establishing a local company, (ii) opening a branch or representative office of your company existing in another jurisdiction or (iii) registering as an individual entrepreneur.
Registering as a local legal entity is a very straightforward and most cost-effective way of establishing your business presence in Azerbaijan unless you need to open a branch office in order to maintain a foreign investor status or due to tax structuring reasons etc. Further, please note that a branch (representative) office does not have a status of a legal entity under the Azerbaijani law and it operates under the umbrella of the head office. The head office bears liability for the activities of its branch or representative office. In practice, there are no any considerable limitations on branch or representative office, however, we would suggest a branch office be preferred over a representative office as the law recognizes a branch office with broader authorities than a representative office.
Under Azerbaijani law, commercial (for-profit) legal entities include, inter alias, a limited liability company, an open (closed) join-stock company, partnerships, etc. Due to flexibility in management structure, minimum amount of charter capital, mandatory auditing and filing requirements, a limited liability company (“LLC”) is usually preferred over other forms of commercial legal entities.
We will mainly focus on registration requirements on an LLC and branch (representative) office. All commercial legal entities, including an LLC or branch office, are registered with the Ministry of Taxes of the Republic of Azerbaijan. Registration takes 2 business days upon submission of all required documents, but in practice, the Ministry of Taxes may request further time in order to process and evaluate the application more thoroughly.
The documents to be collected and submitted to the Ministry of Taxes for registration varies on the structure of shareholding entity: whether the entity is established by a natural person(s) or a legal entity. Further, the list of documents can be categorized as (i) documents produced in the founders’ country and (ii) documents collected locally in Azerbaijan (possibly, by the firm assisting with registration procedures). The following documents will be submitted to the Ministry of Taxes for registration:
– (a) copy of registration documents of the founder legal entity or head office (i.e., registration certificate, Articles of Association, excerpts from trade chambers, etc.) or (b) copy of the travel passport of the founder natural person (documents listed in (a) for the legal entities founded by companies and registration of branch (representative) office and (b) for a local LLC founded by a natural person);
– original resolution of the founder or head office on establishment of business;
– copy of the passport of the manager of the LLC or branch (representative) office;
– the document confirming the legal address of the LLC in Azerbaijan;
– document confirming contribution to the charter capital of the LLC (not required for branch (representative) office). No minimum amount required for an LLC;
– applications for registration;
– charter of the LLC or regulations of the branch (representative) office; and
– document confirming payment of the state registration fee (11 AZN for an LLC and 220 AZN for branch (representative) office).
The documents listed in (i), (ii) and (iii) are produced in the founder’s country. Other documents can be drafted and approved locally. Please bear in mind that there is a practical requirement that documents executed in foreign countries shall be (i) notarized and (ii) apostilled or, in certain countries, legalized, depending on the country of origin.
In relation to registering as an individual entrepreneur, please note that is also processed within 2 business day on the basis of the passport of the person.
NOTE: In order to obtain a temporary residence permit, an individual entrepreneur is required to employ at least 5 Azerbaijani nationals at the time of application and for the validity period of the temporary residence permit. However, these is no such requirement on legal entities or branch (representative) offices. Manager and deputy manager of an LLC or branch (representative) office established by a foreign person are exempt from work permit and may apply for temporary residence permit upon registration of the entity with the Ministry of Taxes and their appointment as the (deputy) manager. For the detailed requirements applicable to obtaining temporary residence permit, please click here.
Upon registering with the Ministry of Taxes, a registrant will obtain a registration certificate, which confirm the status of the registrant as a tax payer (legal entity, branch (representative) office or entrepreneur). The entity or an entrepreneur may start business operations upon registration, order its stamp, open bank accounts etc.
This article was published by the corporate law experts of Baku Attorneys & Consultants, an Azerbaijani law firm, which is strongly specialized in and rendering various services on corporate law to foreign and local business in Azerbaijan. Please, feel free to reach us via www.batco.az in case you have further questions or need advice on establishment, incorporation, merger and acquisition, liquidation or other aspects on Azerbaijani corporate law, as well as, provision of legal services on business, migration, employment, contracts and other related matters.