Forms of business  

According to the Civil Code of the Republic of Azerbaijan, there are several forms of doing business in Azerbaijan, by establishing a legal entity or not establishing a legal entity (sole entrepreneurship). In fact, the laws stipulate the following types of commercial legal entities:

• General Partnership (GP) established by two or more individuals and/or legal persons. The Civil Code imposes “unlimited” liability to the owners of GP in terms of its obligations.
• Limited Partnership (LP) established by two or more individuals and/or legal persons, its distinction from GP is that apart from having at least one participant bearing unlimited liability for the obligations of the LP, there also must be one or more participants liable only in the amount of share they have in LP and are not participating in the activities of LP.
• Limited Liability Company (LLC) is the most widely-spread legal entity form in doing business in Azerbaijan due to flexible management, liability limits, simplified procedure for registration, etc. It is established by one or more individuals and/or legal persons and the charter capital is divided into authorized shares of its founders. In fact, the law doesn’t set any requirement regarding the minimum capital for establishing LLC. It is up to the discretion of the founders to determine the issued capital and required paid-up capital and its shareholders’ liability is limited to the amount of their shares in the LLC.
• Additional Liability Company (ALC) unlike to LLC, in ALC the participants of an ALC may assume liability in excess of their contributions.
• Joint-Stock Company (JSC) can be either “open” or “closed”. In an “open” JSC its shares can be offered to public, while in a “closed” JSC its shares can be offered only among its shareholders.

The following steps shall be observed for registering a legal entity, namely:

1. Collection and notarization of all necessary documents.
2. Submission of documents.
3. Obtaining a company seal and opening a bank account. According to the recent amendments to the Law on State Registration of Legal Entities adopted on 30 October 2018, application for state registration of legal entity shall be signed both by founder(s) and legal representative(s) of legal entity, or by the person(s) appointed by them. As per the new amendments, a commercial legal entity shall provide information on its legal address only.

Branches and Representative Offices – Foreign entities can also operate in Azerbaijan by merely establishing a branch or a representative office. Although under Civil Code they are not recognized as a separate legal entity, tax legislation of Azerbaijan treats a branch or representative office as a legal entity for the purposes of taxation. There is a distinction between a representative office and a branch office. While the former only represents interests of a legal entity, the latter may perform the commercial activities that the head office does. Registration requirements are identical for both a representative office and a branch.

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