Summer 1995 (3.2)
Doing Business in Azerbaijan
The Most Frequently Asked Questions
by Ilgar Valiyev
How do you set up business in Azerbaijan? Many companies ask the same question? Here are some of the most frequently asked questions relating to establishing and registering your company here.
Must I have a local company to do business in Azerbaijan?
No. But you must have some form of registered presence if you are conducting business in Azerbaijan. The tax laws require that you register a "permanent representation" within one month of commencing economic activity. A permanent representation may take the form of a local company, a joint venture, or a representative office. A representative office is considered a foreign legal entity, while other structures are treated as Azeri legal entities. You will need a registered presence of some kind to open a bank account, import goods in your own name, etc.
Where do I register my company?
It depends on the type of entity: a representative office should be registered in the Ministry of Foreign Economic Relations. A branch or joint venture should be registered in the Ministry of Finance after an official directive of the Ministry of Foreign Economic Relations determines the expediency of registration. A joint-stock company with foreign participation should be registered at the Ministry of Finance.
Which legislature regulates the procedure for registration?
The main laws and normative acts determining the procedure of registration of foreign invested entities are the Laws on the Protection of Foreign Investments, On Enterprises, On Joint-Stock Companies and the Statute On Rules for Opening Representation and Branches of Foreign Firms.
What is the difference between operating in one form or another?
The main difference is that a representative office should not conduct operations in its own name or receive money paid for goods or services provided into its own local bank account. Representative offices should only provide auxiliary and preparatory services for its head office. Local subsidiaries and joint-venture companies are treated as Azeri legal entities and may carry out full economic activity in Azerbaijan. There are some tax advantages, however, to being registered as a representative office.
Which documents are necessary for registering a foreign invested company?
Slightly different requirements for registration apply to the various forms of entity that can be established. Without going into details, among the documents required are (1) a bank reference letter for the parent company (or, in the case of a representative office, the company itself), (2) the Charter of the parent company (or, in the case of a representative office, the company itself), (3) a Certificate of Registration, (4) a feasibility study, and (5) a Power of Attorney for the representative in Azerbaijan. If the services of Ernst & Young's Company Registration Division are to be used, you'll need a Power of Attorney authorizing Ernst & Young to carry out the registration.
Is it necessary to submit Azeri or Russian translations of registration documents?
Yes. You should attach an Azeri or Russian translation to any original document in another language. All translations should be notarized as being true and complete copies of the original. Generally, it is easier to obtain Russian translations and these are currently accepted without difficulty.
Do I have to notarize the original documents?
Yes. You should notarize them in the home country of the company applying for registration. You also need to legalize the documents in the Azerbaijani Embassy where the parent company (or in the head office, for a representative office) is located.
What does "legalization" mean?
It means verifying the notarized document in the Consular Department of the Azerbaijan Embassy. Not all documents required for registration need to be legalized but the parent company Charter, the Certificate of Registration, and the Bank Reference should be.
How much is the registration fee?
Currently, there is a $2,000 fee for registering a representative office. It should be paid to the Ministry of Foreign Economic Relations. The registration fee for registering a subsidiary or a joint-venture is $150 and should be paid to the Ministry of Finance. The amounts should be paid in Manats converted at the official rate of the National Bank of Azerbaijan on the date of payment.
Is the period of registration limited in any way?
Representative office registrations are normally for two years. If the office is still required thereafter, the registration must be renewed.
How long should the registration process take?
It depends on the type of company you register and on the documentation. Generally, it takes 4 to 6 weeks. However, we've known the process to take only a few days or as long as six months.
What is the next step after registering the company?
You will need to obtain an official (registered) company seal. Then you must register the company with (1) the appropriate tax authorities, (2) Social Protection Fund and (3) the Employment Fund. The relevant Ministry registering your company will also give you a certificate to enable you to open a bank account.
Will the above registrations be enough for my export-import needs?
No. For this purpose, you should also register with the State Statistics Committee and the local customs office.
Ilgar Veliyev is head of Ernst & Young's Company Registration Division. Ernst & Young's Baku office is located at 11 Mardanov Qardashlari Street (formerly Gogol Street), Suite 32 (near the Visa and Registration Office). Tel: (99412) 98 33 85; 94 14 13; Fax: (99412) 98 33 85; 93 73 12; 98 64 82. e-mail: <firstname.lastname@example.org>.
Ernst & Young is the largest firm of professional advisers in the CIS. The Baku office, serving all your business needs, produces a regular Newsletter which is available free of charge to all clients.
From Azerbaijan International (3.2) Summer 1995.
© Azerbaijan International 1995. All rights reserved.