Liquidation in Azerbaijan: Statutory procedures and timelines

In this article, I will touch upon the processes/procedures required in connection with liquidation of a company, branch or representative office of a foreign company in Azerbaijan (hereinafter referred to as the "Entity”), as well as statutory periods/terms related to the liquidation.

1) Procedure - Issuing official statement on creditworthiness of the Entity before all creditors for a period of 12 months (declaring assets and debts)

Timeline: Maximum 20 days prior to the issue of the decision on liquidation of the Entity (the “liquidation decision”).

At this stage, audit report of independent auditor may be requested as the case may be to confirm that assets of the Entity may cover all debts.

2) Procedure - Adopting the liquidation decision and establishment of the liquidation commission

Effective from this date, the Entity can only operate within the framework of the liquidation process and cannot deal with any activity other than related to the liquidation. All authorities of the Entity’s director pass to the liquidation commission.

3) Procedure - Publication of first official information on the terms and order of notifying on the claims of all creditors

Timeline: Within 10 days upon establishment of the liquidation commission

Re-publication of the same information is required twice with 15-20 days interval.

4) Procedure - Official application to the registration authority (of the State Tax Services) to record the information that the Entity is in the liquidation process

Timeline: Within 15 days upon establishment of the liquidation commission

The followings need to be submitted to the registration authority:

The liquidation decision; Official statement confirming creditworthiness; Proof of confirming publication of first official information on the terms and order of notifying on the claims of all creditors; Stamp of the Branch Office.

If all the documents are in place, the registration authority inserts the relevant information into the State registry within 5 days upon submission. Thereafter the new stamp with the note “in liquidation process” needs to be obtained.

The name of the Entity will appear in the State registry with the note “in liquidation process”.

5) Procedure - Submission of creditor’s claims

Timeline: Not less than 60 days from the date of the first official information as described herein.

The liquidation commission must take all necessary actions to find out all creditors and to collect all debtor payments, send notices to all known creditors, apply to all relevant state authorities to find out the existence of debts to state budget (related to mandatory payments, social insurance contributions, insurance payments for unemployment, compulsory medical insurance payments etc.)

6) Procedure - Drawing up an interim liquidation balance (which includes information about the structure of the assets, list of the remaining creditor claims and debtors’ list)

Timeline: Within 10 days upon expiry of the term regarding the claims of creditors

7) Procedure - Payment of all claims to the creditors in accordance with the interim liquidation balance in a sequential manner

8) Procedure - Drawing up a report reflecting the liquidation balance

Timeline: Within 5 days upon settlement with all the creditors

9) Procedure - Approval of liquidation balance and report

Timeline: Within 45 days upon issuance

10) Procedure - Submission of remaining assets to the parent company (to the head office)

Timeline: Within 10 days upon approval of the liquidation balance

11) Procedure - Submission of all remaining documents to the State archive on the basis of the handover act

12) Procedure - Submission of an application to the registration authority (the State Tax Service) for final registration of liquidation

Timeline: Within 10 days upon submission of remaining assets

The followings need to be submitted to the registration authority:

Liquidation decision; Liquidation balance approved by the tax authority; Information about the latest tax audit; Originals of the corporate documents of the Entity and stamp with the note “in liquidation process”; Handover act related to the documents given to the State archive; Document confirming that information on liquidation process was published in press.

13) Procedure - Registration of the Entity’s liquidation with the State registry

Timeline: 7 days upon submission of an application

It should be noted that the general term of the liquidation process must not exceed a period of more than a year from the date of insertion of the information as to the liquidation into the State registry. Expiry of one year period leads to the restart of the liquidation process.

It should also be emphasized that the tax audit (extraordinary) may be conducted by tax authorities in connection with the liquidation.

As described, the liquidation of the Entity in Azerbaijan consists of complex procedures and engagement of professional service providers is strongly recommended once the decision is made on the liquidation.

About the author: Fuad Gashamov is a professional lawyer with over 12 years of experience in consulting industry. He mainly specializes in dispute resolution, real estate, contracts, regulatory, intellectual property and compliance. He is the founding partner at Legalize Law Firm. He is a member of the Bar Association since 2014. For more information about the author please see the following link:

https://www.legalize.az/en/team/fuadgashamov