Azerbaijan offers interesting opportunities for investors focused on trade and on easily reaching out to other markets. The country can be seen as a significant foreign trade route, with important connections on the east-west route but also the south-north and the south-west routes.

Foreign direct investments in the country have been growing and not only in the transport or trade sector. The energy sector is also one that presents important investment opportunities, with the largest share attributed to the oil and gas sectors. Agriculture, transport, tourism and information and communication technology are all business sectors that have been the focus of the Government in order to attract more foreign investments.

Company formation in Azerbaijan is possible for foreign entrepreneurs, however, it is subject to a set of rules. A foreign investor may open a fully owned subsidiary or may enter into a joint venture with another Azerbaijani company or individual; alternatively, foreigners can also acquire shares in existing companies.
 

Types of legal entities in Azerbaijan

BridgeWest offers incorporation services for all of the types of companies that can be opened in Azerbaijan:
 
> Limited liability company (LLC)
This type of business entity is the most commonly used one and it is suitable for any commercial purposes. It can sustain small and medium-sized companies being established by at least one member. The LLC's participants contribute with their parts to the charter capital, which has no statutory minimum required. As the legal entity's name suggests, the liability of its members is limited to the amount of contribution made to the company, or to their interest. The participatory interests are not transferable freely. Remaining partners may purchase the withdrawing participants' interest.

A variant of the LLC is the additional liability company where the founders may take on further liability, in addition to their contributions to the capital.
 
> Open joint stock company (JSC)
This entity is designated for business at a larger scale and it can be formed by one or more founders, individuals, or legal entities. A JSC has a certain fund divided into shares, owned by shareholders that must be authorized through insurance. The open joint stock company may freely transfer shares and trade them to the public. The shareholders of a JSC are liable to the extent of their contributions to the company's debts and obligations. The JSC must include Board of Directors, Supervisory Council and Audit Commission elected at the General Meeting of Shareholders.
 
> Closed joint stock company (JSC)
The closed joint stock company functions mainly as an open one, being ruled by a Board of Directors, with a limited liability of the shareholders. It can also be established by one or more natural persons or legal entities, having a common capital divided into shares. The main difference between the two types of JSC is that a closed one cannot issue transferable shares, nor can it offer them to the public.

> General partnership (GP)
It is a type of partnership between two or more legal or natural persons where both founders are fully liable for the debts and obligations of the business.

> Limited partnership (LP)
Like the general partnership, it can be incorporated by two or more individuals or companies, however, not all of them will have unlimited liability (at least one will do). Those who are fully liable do not participate in the partnership’s entrepreneurial activities.

> Azeri Branch, Subsidiary or Representative Office 
The subsidiary is a legal entity owned by foreign investors that is registered as a local limited liability company (in most cases) or joint stock company. It is treated as a locally registered Azerbaijani company for all tax purposes even though its ownership may be foreign; the reporting principles are also the same as those normally applicable to resident companies.

The branch is only an extension of a foreign legal entity and it is subject to a registration fee in Azerbaijan. The branch is taxed on its Azerbaijan-source profits at it can channel profits into overseas accounts; a requirement is for these accounts to be registered with the relevant Azerbaijani authorities.

The representative office, like the branch, is a non-resident legal entity, however, unlike the branch, its activities are limited only to marketing, research or other promotional activities for its head office.

One of our offshore company formation agents who specialize in Azerbaijan incorporation can give you more details about the legal form under which a foreign corporation can expand its activities in this country.

In addition to the legal entities listed above, non-commercial legal entities in Azerbaijan include the public association (a non-profit organization for the purpose of engaging in common interests), the foundation (with charitable, cultural, educational, socially useful purposes) and the union of legal entities (established in order to promote the activities of a number of commercial and non-commercial entities).

The registration of a foreign company engaged in business activities in Azerbaijan is mandatory and without this proof, the legal entity will not be able to open a bank account, clear goods through customs or essentially perform the activities needed for the good functioning of the business. In an effort to simplify the incorporation and registration process and make the country attractive to foreign investors, the business reforms have made it easy to register a foreign business entity. Thus, businesses are required to register with the Ministry of Taxes and skip the procedures that would otherwise have asked for distinct registrations with several other Ministries. We recommend that you reach out to our offshore company setup agents to find out the exact requirements for foreign investor registration. 

Our BridgeWest agents can also offer ready-made companies in Azerbaijan. These can be suitable for those investors who need to use the company immediately and do not wish to wait until the company incorporation procedure is complete. The shelf company or ready-made company is advantageous in terms of trading commencement; however, our team will also provide the needed due diligence services because the company needs to be verified in terms of past business transactions: ideally, the shelf company is incorporated but has had no economic activity. Our agents will perform the necessary checkups in order to determine if the investment is a secure one.

Company incorporation services tailored to the needs of investors in Azerbaijan 

• drafting the Articles of Association (necessary for the company incorporation in Azerbaijan): The Articles of Association required to open a company in Azerbaijan can be signed through Power of Attorney (the same applies to Public Notary proceedings, a step required by the Azerbaijan law).
• drafting all other documents required for the incorporation of the Azerbaijan company: These documents include the specimen signatures, special forms provided by the Company Registration Office in Azerbaijan, passport copies etc.
• arranging Public Notary procedures: The procedures for incorporating a company in Azerbaijan have to be done through an Azerbaijan Public Notary.
• offering a Registered Office in Azerbaijan for your company (if required): The registered office may be any address where the Azerbaijan company declares to have its headquarters. The registered office will be public.
• setting up a bank account for opening a company in Azerbaijan: This refers both to an initial share capital account as well as a current bank account after the company is formed. 
• recommending an accountant in Azerbaijan: Accountancy services are recommended for any new business registration in Azerbaijan.