Company formation in Azerbaijan or registering a branch/representative office is a crucial first step toward establishing a successful business. Starting a business involves planning, making key financial decisions, and completing a series of legal activities. Our experience and deep understanding of the Azerbaijan business environment ensure that you receive expert guidance at every step.

To register a company, you need to prepare constituent documents, select a legal address and register the company with the tax service. Having received a taxpayer identification number (TIN), you will be officially registered as an entrepreneur.

If you want to open a company in Azerbaijan and need information in order to simplify the process of making a decision, you can send your questions to us. We can also offer the necessary support once you decide on a business form and start the incorporation procedure of the selected business form on your behalf based on a power of attorney.

Alibi Law Firm assists its clients in establishing the optimal business structure in Azerbaijan. There are several ways of doing business in Azerbaijan; the most popular ones are limited liability company and joint stock company. Foreign legal entities may also opt to set up a branch or representative office.

The following types of companies are available for registration in Azerbaijan:

• limited liability companies,

• joint stock companies,

• limited partnership,

• general partnership.

Foreign enterprisers can also establish  individual entrepreneur (sole traders) in Azerbaijan, while foreign companies can open branch or representative offices.

A preferred business entity that is used for commercial purposes worldwide is the limited liability company (LLC), also available in Azerbaijan. An LLC in Azerbaijan can be established by at least one member and it is not subject to minimum share capital.

It should be mentioned that in an LLC in Azerbaijan, the liability of the founders is limited to the amount of financial involvement in the company. When registering an LLC in Azerbaijan, all documents must be translated into the Azerbaijani language. Upon request we can provide assistance and complete information.

Legislation in Azerbaijan provides another type of LLC, the additional liability company, which has the same characteristics as the LLC, the main difference being that the investors can assume their personal liability above the value of the participation at the company’s capital.

A joint stock company (JSC) in Azerbaijan can be settled in two forms: open and closed. An open JSC in Azerbaijan can be registered by one or more persons or even companies. Open joint stock companies can transfer their shares to the public, while closed companies may only transfer shares between its shareholders. 

In an open joint stock company in Azerbaijan, the stockholders are responsible for the obligations and debts of the company. As for a closed joint stock company in Azerbaijan, this can be set up in the same manner as an open JSC. The mutual capital in a closed JSC is divided into stocks, but the difference is that these are not transferable.

The minimum share capital in case of joint stock companies is 2000 manats for closed companies and 4000 manats for open ones. The capital is divided into shares which will be registered with the National Depository Center.

The establishment of an individual entrepreneur (sole trader) is simple and specialists such as accountants, for example, can manage their own professional activities without registration of a legal entity in the form of a private limited liability company.  

The documents required for this purpose are the ID or passport (and residence permit in the case of foreigners) of the owner and a power of attorney for the representative completing the registration. The individual entrepreneur carries out activities person on his own behalf.

It must be emphasized that the Azerbaijani individual entrepreneur / sole proprietorship has sole and extended responsibility for the obligations of the business he runs. This means that in the case of debts, the entrepreneur will pay with his personal assets.

Business persons might be interested in opening a general or a limited partnership in Azerbaijan. In a limited partnership formed by two entrepreneurs, one has limited responsibilities and must deal with the firms’ future investments. The second partner is in charge of most responsibilities of the partnership, including debts and obligations.

In general partnerships in Azerbaijan, all partners have the same rights and liabilities including for the debts and obligations. Please request assistance for more details about the company formation in Azerbaijan and the requirements when registering them.

It is also possible for foreign businessmen to open branch offices or representative offices in Azerbaijan. These two are not independent legal entities and considered to be sub-divisions of the parent company. It must be underlined that representative office, in general, cannot conduct activities directly aimed at generating profit. The functions of a representative office are limited by law to the framework of representing the interests of the parent company, conducting negotiations, and ensuring work with contractors. Also, one should not confuse a representative office with a Permanent Establishment (PE), since a PE may conduct activities aimed at generating profit.

There are 3 main types structures that can be used to carry out operations in Azerbaijan:

• the subsidiary;

• the branch office;

• the representative or liaison office.

The main difference between them resides in the degree of dependence on the parent company and the activities they can undertake.

The subsidiary is a totally independent type of company that can be created by foreign companies interested in expanding their operations in Azerbaijan by adapting its services or products to the local market. This implies the subsidiary to be treated as a domestic business with the foreign company acting as a sole shareholder. In this case, the liability of the business will fall entirely on the subsidiary without affecting the foreign mother company.

The opposite of the subsidiary is the branch office which depends entirely on the parent company. A branch office will be created as a satellite business that is restricted to completing the same activities as the parent company. In this case, the entire responsibility in case of debts or other obligations will fall on the parent company. In most cases, the branches are used by companies in the banking and insurance sectors which are very well regulated.

The representative or liaison office is the simplest form under which a foreign company can prospect the Azerbaijani market in order to establish if it suits the expansion requirements of the overseas enterprise. Through the liaison office, the parent company can start the preparations to set up commercial operations in Azerbaijan. A representative office is not considered a legal entity, which is why it can be set up in just a matter of days, just like the branch office.

Businessmen interested in company formation in Azerbaijan should also be aware of the fact that the commercial legislation applicable in this country provides the right of starting a local business with 100% foreign ownership. Foreign investors are also allowed to establish joint ventures with almost no restrictions regarding the rights of the company’s founders, shareholders, financing methods, and other important matters that can be of interest for those seeking to expand on a foreign market.