Establishing a presence in Azerbaijan provides new business relationships, product opportunities, and access to top talent. However, expansion also brings certain challenges, such as hiring employees, adding them to payroll, and providing compensation and benefits.
G-P is a global Employer of Record (EOR) that enables companies to start working in the country, without setting up new entities, starting in just minutes.
How to set up an Azerbaijan subsidiary
Companies expanding on their own need to learn how to set up an Azerbaijan subsidiary before tackling any other tasks. It’s usually best to meet with other company executives to discuss a few factors of incorporation first, including where to establish a subsidiary, what kind of subsidiary is best for business goals, and similar considerations.
Separate regions or cities may have different Azerbaijan subsidiary laws that impact the ease of incorporation. If you aren’t familiar with the region surrounding the desired new location, you should work with a lawyer or consultant who can help pick an area friendly to international investment.
The subsidiary structure is another important part of the incorporation process. Azerbaijan allows companies to choose their structure, such as a limited liability company (LLC), branch, representative office, or joint-stock company.
Every entity allows companies certain freedoms within Azerbaijan, so you should choose the structure that best fits your business goals. Companies often choose to incorporate as an LLC because the structure is tax-friendly and allows you to provide a wide range of services in Azerbaijan.
The steps to set up an Azerbaijan subsidiary as an LLC include:
- Opening an in-country bank account.
- Depositing minimum share capital.
- Drafting the articles of association.
- Signing the articles of association through a power of attorney.
- Drafting any other required documents, including special forms provided by the Company Registration Office in Azerbaijan.
- Arranging public notary procedures.
- Registering an office space.
- Hiring an accountant to help with the new business registration process.
Azerbaijan subsidiary laws
Companies must follow Azerbaijan’s subsidiary laws to stay compliant and avoid any fines or delays. However, these laws aren’t the same for every entity. For example, LLCs need 1 or more founding individuals or legal entities that are limited in liability by how much money they invest. Companies cannot transfer participatory interests freely, but partners can purchase withdrawing participants’ interest.
Benefits of setting up a Azerbaijan subsidiary
Every subsidiary structure comes with its own benefits, including LLCs. The limited liability structure of an LLC can protect parent companies from the subsidiary’s decisions, and the subsidiary will get a degree of independence.
While these benefits are great, the lengthy Azerbaijan subsidiary setup process means companies won’t recognize them for months. By the time the subsidiary is set up, you might have lost talented job candidates along with time you could have spent growing.
Other important considerations
You can make expansion easier if you prepare for how to set up the Azerbaijan subsidiary ahead of time. Most companies will need an expert in the country’s subsidiary laws, tax code, and employment regulations, unless you work with a global EOR like G-P. You can assign a current employee to learn these laws, but it’s better to work with a lawyer or consultant who’s an expert in the field.
While some steps of the Azerbaijan subsidiary setup process can be done online, companies will need to travel back and forth for a few months. you should work with your finance team to budget for various fees.
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