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Mutallibov, Baku, January 15, 1992,
the Azerbaijan Republic
The present Law determines legal and economic principles of realisation of foreign investments at the territory of the Azerbaijan Republic. The Law is aimed to attraction and efficient use of foreign material and financial resources in the economy, modern foreign equipment and technology and managerial experience and guarantees protection of rights of foreign investors.
All relationships concerning foreign investments at the territory of the Azerbaijan Republic are governed by the present Law, other legislative acts and international agreements of Azerbaijan Republic.
Clause 2. Foreign investors
following persons and entities might be foreign investors in the Azerbaijan
Clause 3. Foreign investments and their forms
investments might be represented by any kind of property and proprietary
rights, including right for results of intellectual activity and other
immaterial rights being contributed by foreign investors to the objects
of business activity and other kinds of activity with the objective of
obtaining the profits.
Clause 4. Participation of foreign investors in privatisation
Foreign investors might take part in privatisation of state and municipal enterprises and also objects of incomplete construction on terms and according to the order stipulated by legislation of the Azerbaijan Republic.
Clause 5. Legal regime of foreign investments
regime of foreign investments and also activity of foreign investors in
connection with their implementation might not be more favorable than regime
for property, proprietary rights and also investing activity of legal entities,
citizens of the Azerbaijan Republic except cases envisaged by the present
Clause 6. Kinds of activity
with foreign investments might exercise any kinds of activity if they have
not been prohibited by legislative acts of the Azerbaijan Republic.
Clause 7. Territorial restrictions for foreign investments
Legislative acts of the Azerbaijan Republic might determine territories whereon the activity of the enterprise with foreign investments is restricted or prohibited from the point of view of defence and national security.
Clause 8. Coordination of investment activity
Cabinet of Ministers of the Azerbaijan Republic exercises control over development and implementation of measures on attraction and use of foreign investments, assistance to foreign investors and enterprises with foreign investments.
II. State guarantees concerning foreign investments
Foreign investments on the territory of the Azerbaijan Republic enjoy full legal protection that is guaranteed by the present Law, other legislative acts and international agreements of the Azerbaijan Republic.
Clause 10. Guarantees against changes in legislation
case if in future legislation of the Azerbaijan Republic will worsen investment
terms, then within 10 years legislation which existed at the moment of
implementation of investments will be applied thereto.
Clause 11. Guarantees against nationalisation and requisition
investments in the Azerbaijan Republic are not subject to nationalisation
except exclusive cases causing damage to the people and state interests
of the Azerbaijan Republic.
Clause 12. Compensation of losses to foreign investors
paid to foreign investors should correspond to actual cost of investment
at the moment of taking decision about nationalisation or requisition.
Clause 13. Guarantees against termination of investment activity
In case of termination of investment activity foreign investor has the right for compensation of sums due to him and profits obtained as a result of said activity in monetary or material form, at actual cost at the moment of termination.
Clause 14. Guarantees of transfer of profits and other sums in foreign currency
After payment of respective taxes and charges transfer of profits of foreign investors and other sums, including compensation of losses in foreign currency obtained legally in connection with investments is guaranteed.
Clause 15. Guarantees of use of profits
Profits of foreign investors obtained on the territory of the Azerbaijan Republic may be reinvested in the same currency, stored in banks of the Azerbaijan Republic, used for purchase of foreign currency in an order and on terms determined by National Bank of the Azerbaijan Republic.
III. Establishment and activity of enterprises with foreign investments
with foreign investments are established in the form of stock companies,
limited liability companies and other economic companies and enterprises
and also in any other forms not contradicting the legislation of the Azerbaijan
Clause 17. Expertise
establishing enterprises with foreign investments constitutors, in specific
cases and according to procedure envisaged by the legislation of the Azerbaijan
Republic, should obtain Certificate of expertise concerning sanitary-hygienic
and environmental requirements. Enterprise with foreign investments should
obtain such Certificate during the period of its activity and at the moment
Clause 18. State registration
with foreign investments are subject to state registration by authorised
state body. Procedure of registration and also requirements to constituent
and other documents necessary for registration are determined by the Cabinet
of Ministers of the Azerbaijan Republic.
Clause 19. Subsidiary companies, branches and representations
with foreign investments might establish subsidiary companies with the
rights of legal entities and also branches and representations both in
the Azerbaijan Republic and abroad following provisions of legislation
of the Azerbaijan Republic and legislation of respective foreign countries.
Clause 20. Joining of enterprises
with foreign investments might join into associations, concerns, consortiums
etc., on terms and in accordance with procedure envisaged by legislative
acts of the Azerbaijan Republic.
Clause 21. Contributions of Joint Venture partners
amounts, procedure of contributing and estimate of shares of each partner
in the Partnership fund of Joint Venture are specified in constituent documents.
Cost of property contributed by the partners of Joint Venture as their
share in the Partnership fund is determined according to mutual agreement
of the partners.
Clause 22. Reserve fund
Reserve fund in the amount of up to 25% of the Partnership fund is established at the enterprises with foreign investments. Reserve fund is formed at the expense of annual deductions thereto. Amounts of deductions and kind of currency are determined by the enterprise independently.
Clause 23. Sale of products and deliveries to the territory of the Republic
Enterprise with foreign investments has the right to establish prices on its own products (works, services), to determine terms of sale thereof in the inner republican market, to choose sellers of products (works, services) from this market.
Clause 24. Settlements in foreign currency on the territory of the Azerbaijan Republic
Enterprises with foreign investments might dispose of foreign currency and also payment documents when accomplishing settlements on the territory of the Azerbaijan Republic according to provisions of legislation of the Azerbaijan Republic concerning currency regulation.
Clause 25. Export and import of products
fully belonging to foreign investors and joint ventures with more than
30% of foreign investments in the partnership fund have the right to export
products (works, services) without licenses. Enterprises with foreign investments
have the right to import products (works, services) for their own economic
Clause 26. Payment of custom duties
delivered to the territory of the Azerbaijan Republic as the share of foreign
partner being contributed to the Partnership fund of Joint Venture is completely
exempted from custom duty and is not subject to import tax.
Clause 27. Insurance
Property, productive, financial and other risks of the enterprise with foreign investments will be insured at decision of the enterprise if obligatory insurance is not provided for by legislation of the Azerbaijan Republic.
Clause 28. Taxation
Enterprises with foreign investments and also foreign investors themselves pay taxes in accordance with legislation of the Azerbaijan Republic.
Clause 29. Control over activity of enterprises with foreign investments with taxation purposes
over financial and commercial activity of enterprises with foreign investments
with taxation purposes is accomplished by auditor companies.
Clause 30. Accountancy and reports
Enterprise with foreign investments should keep accounts and prepare reports in accordance with regulations of the Azerbaijan Republic and, if necessary, in accordance with regulations existing in the country of origin of foreign investor.
Clause 31. Security
Property of the enterprise with foreign investments might be used as security as per all kinds of obligations, including use of loans. Proprietary rights of the enterprise on buildings, structures, equipment and other proprietary rights including right for use of land might be used as security.
Clause 32. Right for results of intellectual property and other immaterial rights
Protection and realisation of rights of enterprises with foreign investments for results of intellectual property and also other immaterial rights (know-how, commercial secrets and others) are implemented according to legislation of the Azerbaijan Republic.
Clause 33. Labour relationship
and employer-employee relationship including problems of hiring and dismissal,
conditions of work and recreation, payment, guarantees and compensations,
at the enterprise with foreign investments are controlled by collective
agreement and individual working agreements (contracts).
Clause 34. Social insurance and social maintenance
insurance of employees of the enterprise with foreign investments and their
social protection (excl. pensions for foreign employees) are controlled
by legislation of the Azerbaijan Republic.
Clause 35. Liquidation
with foreign investments may be liquidated in cases and according to procedure
envisaged by legislative acts of the Azerbaijan Republic.
IV. Purchase of securities by foreign investors
Purchase of state securities by foreign investors is accomplished on terms and according to procedure established by legislation of the Azerbaijan Republic.
Clause 37. Purchase of shares, bonds and other securities of enterprises by foreign investors
Foreign investors have the right to purchase shares, bonds and other securities of enterprises located at the territory of the Azerbaijan Republic according to procedure established by legislation of the Azerbaijan Republic.
V. Acquisition of rights for use of land and other proprietary rights by
Granting right for use of land, including lease thereof and use of other natural resources to foreign investors is regulated by Land Code and other legislative acts of the Azerbaijan Republic.
Clause 39. Leasing
Letting property on lease to foreign investors and enterprises with foreign investments is accomplished by the owner based on agreements and according to legislation of the Azerbaijan Republic concerning leasing.
Clause 40. Concession agreements
right for search, exploration and development of natural resources is accomplished
based on concession agreements concluded with foreign investors by the
Cabinet of Ministers of the Azerbaijan Republic and approved by the Supreme
Council of the Azerbaijan Republic.
VI. Foreign investments in free economic zones
whereon privileges for economic activity of foreign investors and enterprises
with foreign investments are established shall be considered free economic
zone of the Azerbaijan Republic.
Disputes or disagreements arising between foreign investors and enterprises with foreign investments and state bodies of the Azerbaijan Republic, enterprises, public organisations and other legal entities of the Azerbaijan Republic, disputes and disagreements between participants of the enterprise with foreign investments and such enterprise itself are to be settled in Law Courts of the Azerbaijan Republic or, on agreement between the Parties, in the Court of Arbitration, including those abroad; in cases stipulated by legislative acts of the Azerbaijan Republic in special bodies involved in settlement of disputes.
Clause 43. International agreements
If according to International agreement of the Azerbaijan Republic rules other than those included in the present Law are established, the former will enjoy priority.
of the Azerbaijan Republic
of Milli Mejlis of Supreme Council
Assembly of Azerbaijan Republic decides:
President of the Azerbaijan Republic, Chairman of the Supreme Council