Procedure for sale and purchase of shares of company in Azerbaijan
One of the cases that we constantly encounter in practice is the procedure for sale and purchase of shares of a company (Limited Liability Company) (hereinafter referred to as the “Company”). Considering that the procedure consists of two stages, it is important to pay attention to the requirements of the legislation and technical issues to avoid a waste of time and, as a result, any form of restriction of business activities.
As a rule, before starting the purchase and sale procedure, the requirements of Article 88.2 of the Civil Code of the Republic of Azerbaijan should be taken into account. Thus, according to this article, the only participant of a limited liability company cannot be another business company, whichconsists of one person, as a sole participant therein.
What stages does the procedure consist of?
Registration of the purchase and sale agreement on the share with the notary
Entrepreneurs should take into account that the following documents are required by the notary to formalize the contract:
The seller must provide the following documents: In the case of a legal entity – its corporate documents, a document confirming the identity and authority of the director or authorized representative (power of attorney). Also, the seller must submit a decision confirming the consent of its shareholders to sell the share; In the case of a natural person–a document proving his identity, in the case of marriage and the corresponding application of his wife (husband) on consent to the sale of the share if he or she acquired the shares in the company during the marriage; Extract of the Сompany from the state register; Applications confirmed by the notary,on consent to waive their preferred right, given that other participants in the company have a preferential right to purchase the seller's share (unless a separate rule is provided for in the charter of the company or the agreement of its participants), if there are other participants in the company along with the seller.
In addition, the seller must provide 3 (three) certificates related to the company:
Certificate on whether the share is encumbered (from the tax authority).
Processing period: within 15 (fifteen) calendar days;
Certificate on the presence or absence of debt (from the tax authority).
Processingperiod: within 5 (five) working days;
Certificate of availability of real estate (from the State Service of Property Issues).
Processing period: within 7 (seven) working days.
The buyer must provide the following documents: In the case of a legal entity–its corporate documents, a document confirming the identity and authority of the director or authorized representative; In the case of an individual – an identity document.
Entrepreneurs should take into account that documents issued in foreign countries must be legalized as required, and after translation into Azerbaijani and notarization, they may be accepted by a notary and a tax authority.
Registration of the shareholderchange with the tax authority
After the registration of the sales agreement by the notarial body, an application is submitted to the tax authority for registration in connection with the change of shareholder.
The following documents are required by the tax authority:
Relevant purchase and sales agreement; Decision on the change of shareholderbased on the purchase and sale agreement; Application; If the new shareholder is a legal entity– the corporatedocuments and a document confirming the identity of the director;
If the new shareholderis anindividual –a document proving his/her identity.
The application is reviewed by the tax authority within 5 (five) working days and payment of the state fee is not required.
What is our recommendation to entrepreneurs?
Entrepreneurs are advised to obtain information about the requirements of civil legislation in advance by using the services of professionals before starting the purchase and sale of a share concerning any company during business activities in the Republic of Azerbaijan and thus do not encounter unforeseen obstacles during their activities.
About the author:
Emin Musayev graduated from the Faculty of Law at the Baku State University with a bachelor's degree in 2019 and from the Faculty of Intellectual Property Law at the Baku State University with a master's degree in 2022. He is a professional lawyer with over 3years of experience in the area of law and specializes in contracts, intellectual property, corporate law, migration, public procurement, dispute resolution. He is a senior lawyer at “Legalize” Law Firm. For more information about the author please see the following link:
https://www.legalize.az/en/team/emin-musayev
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