AZE - CHANGES TO LEGISLATION (II)

In light of continued fight against legalization of criminally obtained property and financing of terrorism, the government of Azerbaijan has made some considerable changes to various Codes and other legislation of the Republic of Azerbaijan in respect to so-called “know-your-client” or “ultimate beneficiary/beneficial owner”.  As of May 15, 2025 reporting on the Ultimate Beneficiary/Beneficial Ownership Information Reporting has been introduced in Azerbaijan.

The Tax Code of the Republic of Azerbaijan [dated July 11, 2000, # 905-IQ], The Law of the Republic of Azerbaijan “On state registration and state register of legal entities” [dated 12 December 2003, #560-IIQ], Law of the Republic of Azerbaijan “On Currency Regulation” [21 October 1944, #910], Law of the Republic of Azerbaijan “On Banks” [16 January 2004, #590-IIQ], Law of the Republic of Azerbaijan “On insurance activity” [25 December 2007, #519-IIIQ], Law of the Republic of Azerbaijan “On non-bank credit institutions [25 December 2009, #933-IIIQ], Law of the Republic of Azerbaijan “On investment funds” [22 October 2010, #1101-IIIQ], Law of the Republic of Azerbaijan “On the Securities Market [15 May 2015, #1284-IVQ], Law of the Republic of Azerbaijan “On  the Prevention of the legalization of criminally obtained property and the financing of terrorism [30 December 2022, #781-VIQ] have been amended to better identify criteria and requirements for a so-called “ultimate beneficiary”.

Among other things, the amendment to the Law of the Republic of Azerbaijan “On state registration and state register of legal entities” [dated 12 December 2003, #560-IIQ] (“Law”) reflects additional requirements for state registration of the legal entities, branch offices and representations in the Republic of Azerbaijan in respect with ultimate beneficiary.  Thus, as of May 15, 2025, impressively extensive list of documents on company ultimate beneficiary(ies) must be provided for the state registration purposes, such as, passport details, date of birth, citizenship, residence address of ultimate shareholder(s) as well as information on direct or indirect beneficial ownership, political affiliations of ultimate shareholder(s) (if any) and information on whether the ultimate beneficiary/beneficial owner is a politically exposed person (PEP), a close relative, or a person closely associated with a PEP for the purposes of the Law of the Republic of Azerbaijan “On Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism” and so on.

Furthermore, each legal entity, as well as the representative office or branch of a foreign legal entity, must have access to, possess, and maintain accurate, reliable, and up-to-date information about its beneficial owner, along with supporting documents (including electronic documents), and must submit such information in cases and in the manner prescribed by the law, as well as must store documents (including electronic documents) and relevant information on the beneficial owner.

The amendments to the Law also introduce a new concept and definitions of so-called , “ultimate beneficiary/beneficial owner” and “chain of control and/or ownership”, as well as criteria and requirements for ultimate beneficiary/beneficial owner.

Based on the above-mentioned amendments to the numerous legislative acts of the Republic of Azerbaijan, FOR THE PURPOSE of identification of ultimate beneficiary/beneficial owner of legal entities as well as ultimate beneficiary/beneficial owner of foreign legal entity(ies) HAVING representative office and branch office in the Republic of Azerbaijan, that have been registered prior to May 15, 2025, must submit required information and documents related to their ultimate beneficiary/beneficial owner to the Registration Authority as per below deadlines:

• for large business entities by December 31, 2025; 
• for medium-sized business entities by June 30, 2026;
• for small business entities by December 31, 2026;
• for micro-business entities by December 31, 2027;
• for non-governmental organizations and religious institutions by June 30, 2026*

*Note: