The Charter Capital of the company in Azerbaijan is the minimum investment amount required for the company to start its operations. The shares of the company’s founders are also proportional to their shares in the Charter Capital. Basically, the founders invest the Authorized Capital during the company registration process. However, we would like to inform you that it is possible to increase and/or decrease the Charter Capital in accordance with Azerbaijani legislation during the company’s operation.
We hope that this post will provide valuable information about the company’s Charter Capital and the process of increasing or decreasing its amount in Azerbaijan. If you need professional legal assistance in the process of changing the amount of the company’s Authorized Capital, DLB Consulting is at your service, providing you with consultations and services.
Requirements for the Charter Capital in Azerbaijan
Founders can contribute to the Charter Capital of their company in Azerbaijan with cash, securities, various material assets or property rights that possess monetary value. According to the Civil Code, the founders of the company have the right to contribute to the Charter Capital during the company’s registration process or within three months following the registration.
Since most business fields in Azerbaijan do not have minimum Charter Capital requirements, the founders are free to contribute any amount they decide. However, for certain business fields, legislation dictates a minimum required amount of Charter Capital. Examples of such businesses include the following:
- Banks – The minimum Charter Capital amount for banks is set at AZN 50,000,000 (approximately USD 29,330,000);
- Non-Bank Credit Organizations – The minimum Charter Capital amount for NCOs is set at AZN 300,000 (approximately USD 176,000);
- Credit Unions – The minimum Charter Capital amount is set at AZN 4,000 (approximately USD 2,500);
- Insurance Companies – The Charter Capital amount for insurance companies is set at AZN 5,000,000 (approximately USD 2,940,000);
- For a Joint Stock Company (JSC), the minimum Charter Capital requirementis AZN 2000 (approximately USD 1200) etc.
In Azerbaijan, the aforementioned minimum requirements for the Charter Capital of companies are primarily aimed at organizing business activities and protecting citizens’ rights. However, in some instances, the requirements for Authorized Capital may serve other purposes. For example, one purpose is to combat illegal migration. Thus, foreigners who register a company in Azerbaijan and aim to obtain a temporary residence permit must ensure the company’s paid-up Charter Capital is at least 50,000 AZN (approximately USD 30,000).
Changing the Amount of Charter Capital in Azerbaijan: Increasing or Decreasing
Companies can change (increase or decrease) the amount of authorized capital at any stage of their operations, subject to legal requirements.
Increasing the Amount of Charter Capital
According to the legislation shareholders can increase the Charter Capital of a Company through additional contributions or by reinvesting undistributed profits. Let’s also note that, according to legislation, companies in Azerbaijan can increase their Charter Capital amount using various material assets they own.
Decreasing the Amount of Charter Capital
Similar to increasing the Charter Capital, shareholders can also decrease its amount. However, to decrease the Charter Capital, all shareholders must agree unanimously. The decrease can take various forms, depending on the types of investments initially made to the Charter Capital.
In turn, decreasing the amount of the Charter Capital of a Joint Stock Company is possible in two ways: by reducing the par value of shares or by purchasing part of the shares to reduce their total number.
Legal Process for Changing the Amount of Charter Capital: Increase or Decrease
So, after deciding to change (increase or decrease) the amount of the company’s Charter Capital, shareholders must follow these practical steps:
- Firstly, the general meeting or the sole participant must adopt a decision to increase or decrease the Charter Capital and amend the charter;
- Secondly, formalizing the increase or decrease of the Company’s Authorized Capital in accordance with the requirements of legislation.
- Thirdly, the preparation of a new version of the charter and other documents, which will reflect the new amount of Charter Capital;
- Fourthly, publishing an advertisement in the newspaper about reducing the charter capital. When increasing the size of the charter capital, publication is not required;
- Lastly, after completing all the necessary documents, you will need to submit an application to the State Tax Service. The registration process typically takes 3-5 business days. Following this, you will receive a new extract from the register and an updated charter of the company.”
Legal Services for Increasing and Decreasing the Amount of the Charter Capital in Azerbaijan
In conclusion, if you need legal services or consulting for the process of changing (increasing or decreasing) the amount of the Charter Capital of a company in Azerbaijan, feel free to contact DLB Consulting. We would be happy to provide you with our services and see you among our valued clients.