A recent court case has caused concern in the foreign investment community over the ease with which a shareholder in an Azerbaijani company can be deprived of its shares. The case involves the ownership of shares in the largest downstream oil company Azpetrol and the largest oil transporter Azertrans.
The stability of the regime in Azerbaijan over the past decade has helped to attract investors such as Anglo Asian Mining, which was recently listed on the Alternative Investment Market of the London Stock Exchange. It is hoped that this trend will continue, with further mining companies commencing exploration. This will make the Azerbaijani economy less dependent on oil and gas, and boost local economies.
On May 25 2005 the first crude oil was pumped into the Baku-Tbilisi-Ceyhan (BTC) main export pipeline. With the pipeline on the verge of operation, Azerbaijan will soon have an export route for its oil with significant capacity and Baku stands to become a crude oil transportation hub. It is anticipated that large volumes of oil will be shipped across the Caspian Sea to the BTC pipeline, principally from Kazakhstan.
Following recent legislative amendments concerning the operation of the State Register, it is now possible to conduct the effective equivalent of a company search at the Ministry of Justice. Meanwhile, amendments to the Civil Code set out clearer procedures for the formation and operation of limited liability and joint stock companies.
Including: Legal Regime; Government Authorities; Production-Sharing Agreements; Pipelines.
The president of Azerbaijan has approved regulations drafted by the recently created Ministry of Fuel and Energy, which is now responsible for all regulatory functions relating to the national energy sector.
The new Ministry of Economic Development has been given power to approve certain creation, merger, consolidation, liquidation and acquisition transactions involving local entities. Its prior consent to such transactions is necessary where certain thresholds are met.
Azerbaijan has recently identified certain enterprises in a wide range of sectors for privatization. It is expected that privatization will involve a combination of closed subscription for employees, cash and voucher auctions, investment tenders and case-by-case privatization techniques.
The State Oil Fund is a non-budgetary state institution set up to accumulate and manage the nation's oil and gas revenues. Its proceeds will be used to address Azerbaijan's most pressing needs and to reconstruct the nation's strategic infrastructure, pursuant to an annual programme approved by the president of Azerbaijan.
On October 30 1998 Azerbaijan ratified the Basic Multilateral Agreement on International Transport for the Development of the Europe-Caucasus-Asia Corridor, known as TRACECA. The programme will enable Azerbaijan to develop its transportation infrastructure and improve its business connections with Western Europe.
Over the past two months a number of new tax regulations were adopted by various executive authorities in connection with the January 1 2001 enactment of the new Tax Code. In the coming months, further acts will be introduced to extend the regulatory basis for the code's implementation.
Azerbaijani law recognizes both promissory notes (simple veksels) and bills of exchange (transferable veksels). New banking and finance rules on transferable veksels are pending at both the Ministry of Finance and the National Bank, although it is difficult to predict whether these will cause a veksel market to develop.
The new Civil Code of Azerbaijan equips the local commercial and banking community with specific provisions on factoring operations, suretyship and bank guaranties.
Since independence, the Azerbaijani government has attempted to introduce a measure of transparency in its contractual dealings with commercial entities. The government hopes to make progress through a programme to procure goods and services through commercial tenders and contests. This update outlines the main points of the regime.
The first codified digest of Azerbaijani tax has finally become law and will take effect on January 1 2001, allowing the government and tax authorities an opportunity to prepare regulations relating to its general provisions. Tax practitioners may be challenged by the important changes to the tax regime which it has introduced.
The new Azerbaijani Civil Code has updated local banking law to reflect the needs of modern commerce. In contrast to the civil codes of other countries of the former Soviet Union, the code is now better designed for commercial transactions.
Agreements signed by Azerbaijan, Georgia and Turkey outlining the legal framework for the Baku-Tbilisi-Ceyhan Main Export Pipeline have been ratified by the respective governments. Efforts to secure financing are now underway.
After much anticipation, concrete steps are being taken toward the privatization of the Azerbaijani power sector. A number of regulations have been issued to enable the eventual privatization of the electrical distribution companies. A new electricity tariff system has also been introduced.
Including: Profits Tax (Corporate Income Tax); Value Added Tax; Other Taxes; Double Tax Treaties; Penalties; Proposed Legislation
Including: Foreign Bank Subsidiaries; Licensing; Liquidation and Reorganization of Banks