Why Set Up Business in Azerbaijan?
Azerbaijan’s economy is currently among the most dynamic and rapidly growing in the region, mainly through the marketing of its huge natural resources. The nation’s healthy economic indices and constantly improving international credit rating is a result of the Government’s responsible fiscal policy and a long-term economic strategy. Openness to global trade and investment, supported by some improvements in regulatory efficiency, has aided Azerbaijan’s transition to a more market-based economic system.
There are numerous business opportunities in the nation’s oil & gas industry, while the financial services sector is also one of the most dynamic sectors of the economy, resulting in huge growth in banking, insurance, leasing and other areas. The banking sector is well placed to help the development of financial services within Azerbaijan.
Strong Business Opportunities
The Government is also investing heavily in infrastructure projects, including power generation, utilities, transportation and construction projects, while Azerbaijan’s market continues to grow for consumer goods, and many western shops are already visible on the streets. The capital of Azerbaijan, Baku, is currently undergoing a construction boom and this has resulted in strong business opportunities in areas such as architectural services and project management.
For those looking to invest in Azerbaijan, there are several business structures to consider, the most common of which is the limited liability company (LLC). The LLC is the most convenient and widespread way of doing business. Azerbaijan’s Civil Code states the minimum and maximum amount of share capital; up to 50 people can be founders. If authorised capital is declared, payment must be made immediately at the time the company is registered. One can also consider setting up a Joint Stock Company or a representative or branch office. According to Azerbaijan law, a representative or branch office is not a legal entity.
The parent company is liable for their activities and they are managed by a director on the basis of a power of attorney issued to him by the parent company. However, representative offices and branches as well as legal persons have the right not only to exercise executive functions, but also to engage in any commercial activity not prohibited by the legislation of Azerbaijan.
Registration can be done in eight working days. There are companies in Azerbaijan that can provide registration services for obtaining the appropriate business licence for representative offices or branches of foreign banks.After selecting a business structure, a few options for the company name are needed. The name of a legal entity in Azerbaijan must be unique. Legal entities with foreign participation which use foreign-language titles must have the name transliterated into the Azeri language.
If a company plans to employ foreign specialists (employees), then the company needs permission for them to work in Azerbaijan. It takes approximately 20 working days to get a work permit and there is a state fee.
Despite the vast opportunities of investing in Azerbaijan, there are numerous challenges one would also face, which include a possible lack of transparency, inconsistent application of regulations and inconsistent procedures relating to licensing or certification requirements. The country is in fact ranked 80th in the World Bank’s ‘Ease of Doing Business’ and is not a member of the World Trade Organization (WTO), causing customs issues. Azerbaijan maintains its status as an observer at the World Trade Organization (WTO) since it expressed its intention to become a member in June 1997.
WTO membership will help Azerbaijan integrate into the world economy and modernize its trade policy. Also, few companies have comprehensive English language websites and many companies don’t have audited accounts. Azerbaijan’s main trading partners include the United States, the United Kingdom, Russia, Turkey, Italy, Germany, France, Kazakhstan, Georgia and Indonesia. Also, Azerbaijani legislation is evolving in accordance with the strategic goal of the Government of implementing a “welcoming policy” for foreign businesses.
Foreign investments are also protected by certain government and statutory guarantees, while Azerbaijan has established a sound legal basis for promoting and protecting foreign investments. If you are looking to set up a business in Azerbaijan, contact us.