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There are numerous forms by which a legal entity/company can be incorporated in Azerbaijan. There are no specific rules for the incorporation of companies by foreigners apart from the standard legal and translation requirements. In general, foreign businesses tend to open representative offices/branches and register as a local company.

The new Law On State Registration of Legal Entities and State Register determined the timeframe of the entire process. The basic term for state registration is set at 5 working days. In case of failure of the Ministry of Justice to issue a certificate of registration within the statutorily prescribed term or to issue a letter refusing registration, a company shall be considered registered, in which case the Ministry of Justice is obliged to issue a registration certificate within the following 10 business days.

Azerbaijani law generally recognizes the following types of commercial legal entities (commercial legal entities are defined as those operating for profit):

  • General partnership
  • Limited partnership
  • Limited liability company ("LLC")
  • Joint-stock company (open type and close type)

Limited Liability Company

LLCs and joint stock companies are most popular choices of legal entities. A limited liability company ("LLC") is an entity established by one or more individuals and/or legal entities contributing their participatory interests to the charter capital. A LLC having only one participant may not be a sole participant of another LLC or any other company. The participants of a LLC are normally liable only to the extent of their contributions. A LLC is not normally responsible for the obligations of its participants to third parties.

Joint Stock Company

A JSC is a legal entity with charter capital divided into a certain number of shares. JSC shareholders are liable for the obligations of the JSC only to the extent of their shares’ par value. A single individual or legal entity may be the founder or the shareholder of a JSC. The charter capital of a JSC is divided into a fixed number of shares of a stated par value. A JSC has a Board of Directors comprising at least three individuals who are either shareholders or independent directors. The Supervisory Board is mandatory for JSCs with more than 50 shareholders. General Meeting of Shareholders (GMS) is the supreme body in JSC.

General Partnership

A general partnership is a legal entity comprised of at least two individuals and/or legal entities. An individual may participate in the creation of a GP only it such individual is registered as an entrepreneur. Individuals and/or legal entities may only participate in one GP. General partners are jointly subject to the partnership’s liabilities. To the extent that the partnership does not have sufficient assets to cover its obligations, the partners are then personally liable for such obligations.

Limited Partnership

A limited partnership ("LP") has one or more general partners and one or more limited partners, General partners are personally liable for the partnership’s obligations. Limited partners’ liability is limited to the amount of their contributions. A person may only participate as a general partner in one LP. Similarly, a partner of a GP may not participate as a general partner in a LP.