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CIVIL CODE OF THE AZERBAIJAN REPUBLIC

of December 28, 1999

(as amended on 24-04-2020)

(KC1) According to the resolution of the Constitutional court of July 27, 2001 the disputes connected with the legal relationship arising in connection with use of the apartment house (apartment) after September 1, 2001 are permitted according to provisions of Articles 228.1 and 228.2 of the Civil code, and the disputes connected with the legal relationship which arose before the specified date are permitted according to provisions of article 123 of the Housing code.

(KC2) According to the resolution of the Constitutional court of December 27, 2001 the terms of limitation period specified in Article 373 of the Civil code of the Azerbaijan Republic are applied to the claims following from legal relationship, arising later September 1, 2000. The specified terms of limitation period can be applied also to the claims which are following from legal relationship, arose earlier taking into account provisions of Article 7 of the Civil code.

(KC3) According to the resolution of the Constitutional court of January 28, 2002 should apply operation of article 179 of the Civil code of the Azerbaijan Republic determining the term of acquisition of property right to real estate to the legal relationship arising after September 1, 2000.

(KC4) of the Provision of Article 21 of the Civil code of the Azerbaijan Republic provide compensation only of the actual damage, and also lost profit. The damage, stipulated in Article 23 Codes, is implied as moral damage (physical and moral sufferings) and the material damage caused to person in connection with humiliation of his honor, advantage and goodwill.

Compensation of moral damage, and also application of other restrictions, stipulated by the legislation, being proportional to other basic rights and freedoms protected by the Constitution of the Azerbaijan Republic in each case depend on the judicial discretion.

General part

Section I. Introduction provisions

Chapter 1. The legislation in the field of the civil law

Article 1. Purposes and tasks of the Civil code of the Azerbaijan Republic

1.1. The purpose of this Code is ensuring freedom of civil circulation on the basis of equality of his participants without damnification to the third party rights.

1.2. Tasks of this Code are:

regulation of the property and personal non-property relations of subjects of the civil law;

protection of the rights and legitimate interests of subjects of the civil law;

protection of right of defense of honor, advantage, goodwill, private and family life of security of person of physical persons;

ensuring civil circulation;

support of business activity;

creation of conditions for development of free market economy.

Article 2. Civil legislation of the Azerbaijan Republic

2.1. The civil legislation of the Azerbaijan Republic is based on the Constitution of the Azerbaijan Republic and consists of of this Code, other laws and other regulatory legal acts adopted on their basis and determining civil regulations.

2.2. The civil legislation determines legal status of subjects of civil legal relationship, the bases of origin and procedure of the property right and other corporeal rights, governs contractual and other obligations relations, and also other property and related personal non-property relations.

2.3. The family, employment relationships, the relations connected with use of natural resources, environmental protection, copyright and the related rights are regulated by the civil legislation and other legal acts if other is not provided by family, labor, land, nature protection, author's and other special legislation.

2.4. The relations connected with inaliennable human rights and freedoms, realization and protection of other non-material benefits are regulated by the civil legislation and other legal acts if other does not arise from being of these relations.

2.5. To the property relations based on administrative or other imperious subordination of one party another including to the tax, financial and administrative relations, the civil legislation and other legal acts are not applied if other is not stipulated by the legislation.

2.5-1. The civil relations in the Alyatsky free economic zone are governed according to requirements of the Law of the Azerbaijan Republic "About the Alyatsky free economic zone".

2.6. Regulatory legal acts which force is lower than the law are applied to regulation of the civil relations only if correspond to this Code and do not contradict it.

Article 3. Civil legislation and international legal acts

3.1. The international agreements of the Azerbaijan Republic are applied to the relations regulated by this Code is direct (except cases when follows from the international treaty that its application requires the edition of interstate regulatory legal act).

3.2. If the international treaty of the Azerbaijan Republic establishes other regulations, than those which are provided by the civil legislation are applied regulations of the international treaty.

Article 4. Objects of civil legal relationship

The material or non-material benefits having property or non-property cost, which are not removed by the legislation from civil circulation can be objects of civil legal relationship.

Article 5. Subjects of civil legal relationship

5.1. Any physical persons or legal entities which both are engaged, and which are not engaged in business activity can be subjects of civil legal relationship.

5.2. Civil legal relationship of public authorities and local self-government with other persons are regulated by the civil legislation if other is not provided by the law.

5.3. Subjects of civil legal relationship shall carry out the rights and obligations honesty.

Article 6. Principles of the civil legislation

6.1. The principles of the civil legislation are:

6.1.1. equality of subjects of the civil law;

6.1.2. freedom of declaration of will of subjects of the civil law;

6.1.3. property independence of participants of civil circulation;

6.1.4. security of property;

6.1.5. freedom of the agreement;

6.1.6. inadmissibility of any intervention in private and family life;

6.1.7. creation of conditions for free implementation of the civil laws;

6.1.8. ensuring recovery of the violated rights;

6.1.9. judicial protection of the civil laws.

6.2. Physical persons and legal entities acquire and perform the civil laws for realization of the interests according to the will. They are free in determination of the rights and obligations on the basis of the agreement and in promotion of any contractual conditions which are not contradicting the legislation.

6.3. The civil laws can be limited only to the law in need of it for protection of the state and public security, public order, health and morality of society, protection of the rights and freedoms, honor and advantage of other persons.

6.4. Movement of goods, services and financial resources in all territory of the Azerbaijan Republic freely. Restrictions can be applied to movement of goods and services according to the law if it is necessary for safety of people, protection of their life and health, conservation and cultural values.

Article 7. Operation of the civil legislation in time

7.1. Provisions of the civil legislation have no retroactive force and are applied to the relations which arose after their introduction in action except for provided in part VII of article 149 of the Constitution of the Azerbaijan Republic.

7.2. The civil legislation can have retroactive force in the cases which are directly provided by the law.

7.3. The civil legislation cannot have retroactive force if it does harm to subjects of the civil law or worsens their situation.

Article 8. Operation of the civil legislation in space

8.1. The civil legislation acts on one and all territory of the Azerbaijan Republic.

8.2. The rights provided by the civil legislation can freely be performed in all territory of the Azerbaijan Republic and are subject to obligatory protection.

Article 9. Operation of the civil legislation concerning persons

9.1. The civil legislation is valid for all physical persons and legal entities performing activities in the territory of the Azerbaijan Republic.

9.2. The rules determined by the civil legislation are applied also to the relations in which foreigners, stateless persons and foreign legal entities participate if other is not provided by the law.

9.3. Ignorance or the wrong understanding of the law cannot be the basis for its non-use or release from the provided responsibility.

Article 10. Business customs

10.1. Business custom the rule of conduct which developed and widely applied in any field of business activity, not stipulated by the legislation irrespective of whether it is fixed in any act is recognized.

10.2. The business customs contradicting the legislation or the agreement are not applied.

Article 11. Application of the civil legislation by analogy

11.1. In cases when civil legal relationship are directly not settled by the civil legislation or the agreement of the parties and there is no business custom, applicable to them, to such relations if it does not contradict their being, the regulations of the civil legislation governing the similar relations (analogy of the law) are applied.

11.2. In the absence of the civil regulations governing the similar relations, the rights and obligations of the Parties are regulated proceeding from the principles of the civil legislation (analogy is right). In case of application of analogy of the right it is necessary to consider requirements of justice, conscientiousness and morals.

11.3. it is excluded.

11.4. The provisions of the civil legislation governing the special relations (exception regulation) shall not be applied by analogy.

11.5. Absence or uncertainty of the precept of law regulating civil legal relationship cannot be the basis for refusal of court of consideration of civil case.

Article 12. Independence of the civil laws of the political rights

12.1. Implementation of the civil laws does not depend on the political rights established by the Constitution of the Azerbaijan Republic or the laws of the Azerbaijan Republic.

12.2. Subjects of civil legal relationship can perform action both directly not prohibited by the law, and directly not provided by it.

Article 13. Business activity

The activities performed by person independently which main objective consists in generation of profit (the income from business owners) from use of property, sales of goods, performance of works or rendering services are entrepreneurial.

Chapter 2. Civil laws and obligations, their protection

Article 14. Emergence of the civil laws and obligations

14.1. The civil laws and obligations arise from the bases provided by the civil legislation and also from actions of physical persons and legal entities which though are not stipulated by the legislation, but owing to the principles of the civil legislation generate the civil laws and obligations.

14.2. The bases for emergence of the civil laws and obligations are:

14.2.1. agreements and other transactions, stipulated by the legislation, and also agreements and other transactions, though not stipulated by the legislation, but not contradicting it;

14.2.2 acts of state bodies and local government bodies which are stipulated by the legislation as the basis of emergence of the civil laws and obligations;

14.2.3. the court resolutions establishing the civil laws and obligations;

14.2.4. property acquisition on the bases allowed by the legislation;

14.2.5. creation of works of science, literature, art, inventions and other results of intellectual activities;

14.2.6. damnification to other person;

14.2.7. unjust enrichment;

14.2.8. other actions of physical persons and legal entities;

14.2.9. events with which the legislation connects approach of civil consequences.

14.3. Property rights, subjects if the law does not provide other procedure for emergence of property rights, state registration, arise from the moment of their registration.

Article 15. Implementation of the civil laws

15.1. it is excluded.

15.2. Non-use by physical persons and legal entities of the civil laws belonging to them does not attract the termination of these rights, except as specified, stipulated by the legislation.

Article 16. Restriction of implementation of the civil laws

16.1. The actions of physical persons and legal entities performed only with intention to do harm to other person, and also abuse of the right in other forms are not allowed.

16.2. it is excluded.

Article 17. Protection of the civil laws

17.1. All public authorities, local government bodies, political parties, public associations, the trade-union organizations, physical persons and legal entities shall respect the civil laws and promote their protection.

17.2. it is excluded.

17.3. it is excluded.

Article 18. Methods of protection of the civil laws

Protection of the civil laws is performed according to the procedure, stipulated by the legislation, by the methods which are not contradicting the law, public law and order and morality.

Article 19. Recognition invalid act of public authority or local government body

The substandard act of public authority or local government body which is not corresponding to the civil legislation and violating the rights and interests of physical persons or legal entities protected by the law can be nullified by court.

Article 20. 

It is excluded.

Article 21. Indemnification

21.1. Person having rights to require indemnification can require full recovery of the losses caused to it if the law or the agreement do not provide indemnification in smaller size.

21.2. Losses are understood as expenses which person whose right is violated, made or will shall make for recovery of the violated right, loss or injury of its property (actual damage), and also the uncollected income which this person would receive in case of usual conditions of civil circulation if its right was not violated (lost profit).

21.3. During scoping of the requirement connected with indemnification it shall be considered in what amount were promoted origin and increase in losses by behavior of the causer of damage, his worker and in stipulated by the legislation cases of the third parties.

Article 22.

It is excluded.

Article 23. Protection of honor, advantage and goodwill

23.1. The physical person can require confutation judicially of the data discrediting his honor, advantage or goodwill, breaking the mystery of its private and family life or personal and family immunity if person who spread such information does not prove that they are true. The same procedure is applied also in case of incomplete publication of the actual data if are wounded by it honor, dignity or goodwill of person. Honor and dignity protection of physical person upon the demand of interested persons is allowed also after the death of the physical person.

23.2. If the data discrediting honor, advantage or goodwill of physical person or encroaching on its private and family life are distributed in mass media, they are subject to confutation in the same mass media. If the specified data are entered in the official document, such document shall be changed, and interested persons are notified about it. The procedure for confutation in other cases is established by court.

23.3. The physical person concerning which mass media publish the data violating it the rights or interests protected by the law has the right to publication of the answer in the same mass media.

23.4. Physical person concerning which the information discrediting his honor, advantage or goodwill having the right to require along with confutation of such data and compensations of the damage caused by their distribution is spread.

23.5. If to identify person who spread the information discrediting honor, advantage or goodwill of physical person it is impossible, person concerning whom such information is spread has the right to require recognition of such data untrue.

23.6. Rules of this article about protection of goodwill of physical person are respectively applied also to protection of goodwill of the legal entity.

Section II. Persons

Chapter 3. Physical persons

Article 24. Concept of physical person

24.1. Physical person is the individual participating in legal relations on its own behalf.

24.2. In the Azerbaijan Republic all citizens, foreigners and persons without citizenship who are constantly living or temporarily staying in the territory of the Azerbaijan Republic are physical persons.

Article 25. Civil legal capacity of physical person

25.1. Civil legal capacity of physical person is the capability of the person to have the civil laws and to perform civil duties. Civil legal capacity is recognized equally behind all physical persons.

25.2. Legal capacity of physical person arises at the time of its birth and stops death. The moment of death the termination of activities of brain is recognized.

25.3. The right to be heir arises from the moment of conception, and implementation of this right is possible only after the birth.

25.4. The physical person cannot be deprived of legal capacity.

Article 26. The right addressed to

26.1. Each physical person has the right addressed to including actually name, middle name and surname.

26.2. The physical person acquires and performs the rights and obligations under the name.

26.3. In cases and according to the procedure, provided by the law, the physical person can use pseudonym (fictitious name).

26.4. The physical person has the right to change the name according to the procedure, established by the law. Change by the citizen of name is not the basis for the termination or change of its rights and obligations acquired under former name.

The physical person shall notify the debtors and creditors on change of the name and bears risk of the consequences caused by absence in these persons of data on change of his name. The physical person which changed the name having the right to require introduction at own expense of corresponding changes in the documents processed to his former name.

26.5. The name received by the citizen in case of the birth, and also change of name are subject to registration according to the procedure, established for civil registration.

26.6. Acquisition of rights and obligations under name of other person is not allowed.

26.7. The harm done to physical person as a result of illegal use of his name is subject to compensation according to this Code.

26.8. In case of misstatement or use of name of physical person methods or in shape which affect his honor, advantage or goodwill apply rules, stipulated in Article 23 of this Code.

Article 27. Residence of physical person

27.1. The residence the place where the physical person usually lives is recognized. Person can have several residences.

27.2. The residence of persons which did not reach fourteen years the residence of their parents who did not lose the parent rights, and the residence of persons which are under guardianship - the residence of guardians is recognized.

27.3. Person which for any reason left the residence for certain term does not lose the residence.

Article 28. Civil capacity to act of physical person

28.1. Civil capacity to act of physical person is its capability the actions to acquire and perform the civil laws, to create for itself civil obligations and to perform them.

28.2. Civil capacity to act of physical person arises in full with occurrence of age of majority, that is on reaching eighteen years.

28.3. Minors aged up to 7 years (juveniles) have no capacity to act. Minors aged from 7 up to 18 years have special disability.

28.4. The minor who reached 16 years and working according to the employment contract or with the consent of parents, adoptive parents or the custodian engaged in business activity, can be acknowledged sui juris. The minor is recognized sui juris (emancipation) according to the decision of guardianship and custody body with the consent of both parents, adoptive parents or the guardian, and in the absence of such consent - by a court decision.

28.5. Parents, adoptive parents and the custodian do not bear responsibility according to obligations of the minor recognized sui juris including according to the obligations which arose owing to causing harm by him.

28.6. In cases when the law allows marriage before achievement of eighteen years, the physical person which did not reach eighteen-year age since marriage acquires capacity to act in full.

The capacity to act acquired as a result of marriage remains in full and in case of annulment of marriage before achievement of eighteen years.

28.7. In case of scrap recognition invalid the court can make the decision on loss by the minor spouse of full legal capacity since the moment determined by court.

28.8. Persons who owing to weak-mindedness or sincere disease cannot understand values of the actions or direct them, can be recognized as court incapacitated. Over them guardianship is established. On behalf of the physical person recognized incapacitated transactions are made by his guardian. The bargain concluded by person, acknowledged incapacitated can be considered valid in case of the subsequent consent of the guardian.

28.9. In case of recovery or considerable improvement of the state of health of person recognized incapacitated the court recognizes it capable. Based on the judgment the guardianship established over it is cancelled.

Article 29. Capacity to act of minors aged up to 14 years

29.1. For the minors who did not reach fourteen years, only their parents, adoptive parents or guardians can make the transactions except for specified in Article 29.2 of this Code from their name. The bargain concluded by such minor is valid in case of subsequent its approval by his parents, adoptive parents or custodians.

29.2. Persons aged from seven up to fourteen years have the right to make independently:

29.2.1. small household transactions;

29.2.2. the transactions directed to non-paid receipt of benefit, which are not requiring the notarial certificate or state registration;

29.2.3. transactions on the order the means provided by the legal representative or with the consent of the last the third party for particular purpose or for free use.

29.3. Property responsibility according to transactions of the minor who did not reach 14 years including on the transactions made by it independently is born by his parents, adoptive parents or the guardian if do not prove that the obligation was violated not on their fault. These persons according to the law are also responsible for the harm done by juveniles.

Article 30. Capacity to act of minors aged from 14 up to 18 years

30.1. Minors aged from 14 up to 18 years make transactions, except for specified in Article 30.2 of this Code, from written consent of the legal representatives - parents, adoptive parents or the custodian.

The transaction made by such minor is valid also in case of its subsequent approval by his parents, adoptive parents or the custodian.

30.2. Minors aged from 14 up to 18 years have the right independently, without the consent of parents, adoptive parents or the custodian:

30.2.1. dispose of the of earnings, grant and other income;

30.2.2. perform the rights of the author of the work of science, literature or art, the invention or other result of the intellectual activities protected by the law;

30.2.3. it is excluded;

30.2.4. make small household transactions and other transactions, stipulated in Article 29.2 of this Code. On reaching sixteen years minors have the right to become members of cooperatives also.

30.3. Minors aged from 14 up to 18 years independently bear property responsibility according to the transactions made by them according to Articles 30.1 and 30.2 of this Code. Minors aged from 14 up to 18 years bear responsibility according to this Code for the harm done by them.

30.4. In the presence of strong reasons the court according to the petition of parents, adoptive parents or the custodian or guardianship and custody body can limit or deprive of the minor aged from 14 up to 18 years of the right to independently dispose of the of earnings, grant or other income (if it did not acquire capacity to act in full).

Article 31. Inadmissibility of deprivation of physical person of legal capacity and capacity to act and their restriction

31.1. The physical person cannot be under no circumstances deprived of legal capacity. Legal capacity and capacity to act of physical person can be limited only in cases and according to the procedure, established by the legislation.

31.2. Non-compliance with the conditions established by the law and procedure for legal incapacity of physical persons or their right to be engaged in business or other activity attracts invalidity of the act of the state or other body which set the corresponding restriction.

31.3. The complete or partial refusal of physical person of legal capacity or capacity to act and other transactions directed to restriction of legal capacity or capacity to act are insignificant.

Article 32. Legal incapacity of physical person

32.1. The physical person which owing to abuse of alcoholic drinks, drugs or psychotropic substances, or interests in gamblings puts the family in difficult financial position can be limited to court in capacity to act. Over it guardianship is established. He has the right to make small household transactions independently. Make other transactions, and also receive earnings, pension and other income and it can dispose of them only with the consent of the custodian. However such physical person independently bears property responsibility according to the transactions made by it and for the harm done to them. In cases when the consent of the custodian of physical person which capacity to act is limited is required, the bargain concluded without such consent can be considered valid in case of the subsequent written consent of the custodian.

32.2. If the bases owing to which the physical person was limited in capacity to act disappeared, the court cancels restriction of his capacity to act. Based on the judgment also the guardianship established over physical person is cancelled.

Article 33. Guardianship and custody

33.1. Guardianship and custody are established for protection of the rights and interests incapacitated or restrictedly capable physical persons. Guardianship and custody over minors are established also for the purpose of their education. The rights corresponding to it and obligations of guardians and custodians are determined by the Family code of the Azerbaijan Republic.

33.2. Guardians and custodians speak out in defense of the rights and obligations of the wards in the relations with any persons, including in courts, without special power.

33.3. Guardianship and custody over minors are established in case of absence at them of parents, adoptive parents, deprivation of the parent rights by court of parents, and also in cases when such physical persons for other reasons were left without parent care, in particular, when parents evade from their education or from protection of their rights and obligations.

33.4. Guardianship is established over the minors which did not reach age of 14 years and also over the physical persons recognized by court incapacitated owing to mental disturbance.

33.5. Guardians are representatives of wards by law and make from their name and in their interests all necessary transactions.

33.6. Guardianship is established over minors aged from fourteen up to eighteen years, and also over the physical persons limited to court in capacity to act owing to abuse of alcoholic drinks, drugs or psychotropic substances or interest in gamblings.

33.7. Custodians agree to making of those transactions which the physical persons which are under the guardianship having no right to make independently.

Custodians render to wards assistance in implementation of the rights by them and fulfillment of duties, and also protect them from abuses of the third parties.

Article 34. Guardianship and custody bodies

34.1. Guardianship and custody bodies are established by the legislation.

34.2. The court shall within three days from the date of the introduction in legal force of the decision on recognition of physical person incapacitated or about restriction of his capacity to act to report about it to guardianship and custody body at the place of residence of physical person for establishment of guardianship or custody over it.

34.3. The guardianship and custody body at the place of residence of wards exercises supervision of activities of guardians and custodians.

Article 35. Guardians and custodians

35.1. The guardian or the custodian is appointed by guardianship and custody body at the place of residence of person needing guardianship or custody, within three months since the moment when the specified body knew of need of establishment of guardianship or custody over physical person. Before appointment of a guardian or the custodian of obligation of the guardian or the custodian of person needing guardianship and custody carries out guardianship and custody body. Appointment of a guardian or the custodian it can be appealed in court by interested persons.

35.2. Guardians and custodians are appointed from full age capable physical persons. The physical persons deprived of the parent rights cannot be appointed by guardians and custodians.

35.3. The guardian or the custodian is appointed only from its consent. At the same time its moral and other personal qualities, capability to accomplishment of obligations of the guardian or the custodian, the relations existing between it and person needing guardianship or custody shall be considered and if it is possible - and desire of the ward.

35.4. Guardians and custodians of the physical persons which are needing guardianship or custody and being in the relevant organizations of social servicing or placed in them are these organizations.

35.5. Duties on guardianship and custody are fulfilled gratuitously, except the cases provided by the law.

35.6. Guardians and custodians of minor physical persons shall live jointly with the wards. Separate accommodation of the custodian with the ward who reached sixteen years is allowed with the consent of guardianship and custody body provided that it will not affect adversely education and protection of the rights and interests of the ward. Guardians and custodians shall inform guardianship and custody bodies on change of the residence.

35.7. Guardians and custodians shall care for content of the wards, for providing children with leaving and treatment, for their study and education, to protect the rights and interests of the wards, including the children placed with probation period in family of person wishing to adopt them according to articles 118.12 and 118.13 of the Family code of the Azerbaijan Republic.

35.8. The obligations specified in Article 35.7 of this Code are not assigned to custodians of the full age physical persons limited to court in capacity to act.

35.9. If the bases owing to which the physical person was acknowledged incapacitated or is limited by capable disappeared, the guardian or the custodian shall petition before court for recognition of the ward capable and for removal of guardianship or custody from it.

Article 36. Order property of the ward

36.1. The income of the ward of physical person, including the income which are due to the ward from management of its property except for of the income of which the ward has the right to dispose independently are spent by the guardian or the custodian only for the benefit of the ward and with preliminary permission of guardianship and custody body. Without preliminary permission of guardianship and custody body the guardian or the custodian pays expenses, necessary for content of the ward, at the expense of the amounts which are due to the ward as its income.

36.2. The guardian cannot without preliminary permission of guardianship and custody body make, and the custodian - to agree to transactions on alienation, including on exchange or donation, property of the ward, on its delivery in lease, in free use or as a deposit, the transactions attracting refusal of the rights belonging to the ward, from it add the Section of its property or apportionment, and also any other transactions attracting reduction of property of the ward. The procedure for property management of the ward is determined by the legislation.

36.3. The guardian, the custodian, their spouses and close relatives has no right to make transactions with the ward, except for cessions of property to the ward as gift or in free use, and also to represent the ward in case of the conclusion of transactions or conducting legal cases between the ward and the spouse of the guardian or the custodian and their close relatives.

Article 37. Property trust management of the ward

37.1. In need of permanent management of real and valuable personal estate of the ward the guardianship and custody body concludes with the managing director determined by this body, the agreement on trust management of such property. In this case the guardian or the custodian keeps the powers concerning that property of the ward which is not delivered in trust management. When implementing by the managing director of competences on property trust management of the ward the rules provided by Articles 36.2 and 36.3 of this Code extend to the managing director.

37.2. Property trust management of the ward stops on the bases, stipulated by the legislation for termination of the contract about property trust management, and also in cases of the termination of guardianship and custody.

Article 38. Release and discharge of guardians and custodians from execution of the obligations by them. Termination of guardianship and custody

38.1. The guardianship and custody body exempts the guardian or the custodian from execution of the obligations by it in cases of return of the minor to his parents or its adoptions.

38.2. In case of the placement of the ward to organization of social servicing or other similar organization the guardianship and custody body exempts earlier appointed guardian or the custodian from execution of the obligations by it if it does not contradict interests of the ward.

38.3. In the presence of reasonable excuses (disease, change of property status, lack of mutual understanding with the ward, etc.) the guardian or the custodian can be exempted from execution of the obligations by him at his desire.

38.4. In cases of inadequate accomplishment by the guardian or custodian of the obligations lying on it, including when using of guardianship or custody by it in the mercenary purposes or when leaving the ward without supervision and necessary assistance, the guardianship and custody body can discharge the guardian or the custodian of execution of these obligations and to take necessary measures for involvement of guilty physical person to the responsibility established by the law.

38.5. Guardianship and custody over full age physical persons stop in cases of removal by court according to the statement of the guardian, custodian or guardianship and custody body of the decision on recognition of the ward capable or about cancellation of restriction of his capacity to act.

38.6. On reaching the juvenile ward of fourteen years guardianship over him stops, and the physical person performing obligations of the guardian becomes the minor's custodian without additional decision on it.

38.7. Guardianship over the minor stops without singular solution on reaching the minor ward of eighteen years, and also in case of its introduction in scrap and in other cases of acquisition of full legal capacity by it before attainment of majority.

Article 39. Patronage over capable physical person

39.1. At the request of full age capable physical person which for health reasons cannot independently perform and protect the rights and fulfill duties, over it patronage can be established.

Establishment of patronage does not attract restriction of the rights of physical person.

39.2. The boss (assistant) of full age capable physical person is appointed by guardianship and custody body with the consent of such physical person.

39.3. The order the property belonging to full age capable physical person is performed by the boss (assistant) based on the agreement of the order or trust management concluded with physical person. Making of the household and other transactions directed to content and satisfaction of household needs of the physical person is performed by his boss (assistant) with the consent of physical person.

39.4. The patronage over full age capable physical person established according to Article 39.1 of this Code stops upon the demand of the physical person which is under patronage. The boss (assistant) of the physical person which is under patronage is exempted from accomplishment of the obligations lying on it in cases, stipulated in Article the 38th of this Code.

Article 40. Recognition of physical person is unknown absent

40.1. The physical person can be unknown acknowledged according to the statement of interested persons the court which is absent if the place of its stay is unknown and within two years it did not appear in the place of the residence.

40.2. In case of impossibility to establish day of receipt of the last data about absent the beginning of calculation of term for recognition of unknown absence the first, following in what the last data about absent were received is considered, and in case of impossibility to establish this month - the first of January of the next year.

40.3. After the introduction in legal force of the judgment about recognition of person it is unknown absent his legitimate heirs acquire the right to manage its property as confidential property, including to benefit from it.

From this property content is issued to persons whom it is unknown absent shall contain, and its debt is repaid.

40.4. In need of permanent property management of physical person, acknowledged it is unknown absent, in case of absence at such face of legitimate heirs this property is transferred by a court decision to person who is determined by guardianship and custody body and acts on the basis of the agreement on trust management signed with this body. The managing director of property it is unknown the absent person pay its debts at the expense of its property, manages property for benefit of this person, issues content to persons whom it is unknown absent shall contain. If before the expiration of three years from the date of appointment of the managing director the judgment about recognition of person is not cancelled it is unknown absent and appeal to the court about the announcement by his dead will not be made, the guardianship and custody body shall take a legal action with the statement for the announcement of physical person the dead.

40.5. In case of appearance or detection of the place of stay of person, acknowledged it is unknown absent, the court cancels the decision on recognition it the decision on management of its property is unknown absent, and also.

Article 41. Announcement of physical person dead

41.1. Person can be declared judicially the dead if in the place of his residence there are no data on the place of its stay within five years and if he was missing under the circumstances threatening with death or giving the grounds to assume his death from certain accident - within six months.

41.2. The serviceman or the other person, missing persons in connection with military operations, can be declared judicially the dead not earlier than after two years from the date of the end of military operations.

41.3. In the afternoon of death of person declared in the dead day of the introduction in legal force of the judgment about the announcement is considered his dead.

41.4. In the cases provided by Articles 41.1 and 41.2 of this Code, the court can recognize as day of death of person day of his expected death.

Article 42. Consequences of appearance of person declared the dead

42.1. In case of appearance of person declared the dead or detection of the place of its stay the court cancels the decision on the announcement his dead.

42.2. Irrespective of time of the appearance person can demand return of the remained property which gratuitously passed to other person after the announcement of person with the dead.

42.3. Person to whom the property of person declared the dead passed paid shall return it this property if it is proved that, acquiring property, it knew that person declared the dead is in live.

42.4. If the property of person declared the dead was transferred to receipt of the state and realized, then after cancellation of the decision on the announcement of person by the dead the sum realized from realization of this property to it returns.

Chapter 4. Legal entities

§1. Basic provisions
Article 43. Concept and types of the legal entity

43.1. Legal entity is the structure which is specially created and undergone state registration which has the isolated property in property and answers for the obligations this property, can acquire and perform on its own behalf the property and personal non-property rights, perform duties, to be claimant or the defendant in court.

The legal entity shall have separate balance.

43.2. Legal entities can be created by one physical person or legal entity or community of physical persons and legal entities, can be based on membership, depend or not depend on availability of members, be engaged or not be engaged in business activity.

43.3. The Azerbaijan Republic participates in civil legal relationship on an equal basis with other legal entities. In these cases of competence of the Azerbaijan Republic are performed by its bodies which are not legal entities.

43.4. Municipalities participate in civil legal relationship on an equal basis with other legal entities. In these cases of competence of municipality are performed by its bodies which are not legal entities.

43.5. The structures which are pursuing generation of profit as main objective (commercial legal entities) or not having generation of profit as such purpose and not sharing the got profit between participants (non-commercial legal entities) and also engaged activities of nation-wide and (or) social significance (public legal entities) can be legal entities.

43.6. Legal entities, being non-commercial structures, can be created in the form of public associations, funds, the unions of legal entities, and also in other stipulated by the legislation forms.

Non-commercial legal entities can be engaged in business activity only so far as it serves goal achievement for the sake of which they are created, and answers these purpose. For implementation of business activity non-commercial legal entities can create economic societies or participate in such societies.

43.7. Activities of public legal entities are regulated by this Code and the Law of the Azerbaijan Republic "About public legal entities".

Article 44. Legal capacity of the legal entity

44.1. The legal entity from the moment of passing of state registration has the civil laws and performs civil duties. Legal capacity of the legal entity stops at the time of completion of its liquidation.

44.2. Commercial legal entities can have the civil laws and perform the civil duties necessary for implementation of the any kinds of activities which are not forbidden by the law. Legal entities can be engaged in separate types of activity which list is determined by the legislation only based on special permission (license).

44.3. The legal entity can be limited in the rights only in cases and according to the procedure, provided by the law. The decision on restriction of the rights can be appealed by the legal entity in court.

44.4. The right of the legal entity to perform activities on which occupation receipt of special permission (license) is necessary arises from the moment of receipt of such license or in the time specified in it and stops after the term of its action if other is not established by the legislation.

Article 45. Creation of the legal entity

45.1. The legal entity is created by its organization and preparation of the charter.

45.2. During creation of the legal entity by several founders founders sign the agreement and determine the charter of the legal entity, procedure for joint activities for its creation, conditions of transfer of the property and participation in its activities to it.

Article 46. Responsibility of founders of the legal entity

Founders of the legal entity bear joint liability according to obligations which arose before its state registration and are connected with creation of the legal entity.

Article 47. Charter of the legal entity

47.1. The charter of the legal entity approved by founders is the constituent document of the legal entity. The legal entity created by one, except as specified, provided by the Laws of the Azerbaijan Republic "About banks" and "About investment funds" the founder, performs activities based on the charter approved by this founder.

47.2. In the charter the name of the legal entity, the place of its stay, procedure for management of activities, and also procedure for its liquidation are determined. In the charter of the non-commercial legal entity the subject and the purposes of its activities are determined. The prediscretion in charters of non-governmental organizations of assignment of powers of state bodies and local government bodies, and also functions of the state control and check is not allowed.

47.3. Changes of the charter acquire legal force for the third parties from the moment of their state registration. However legal entities and their founders (participants) have no right to refer to lack of registration of such changes in the relations with the third parties acting taking into account these changes.

Article 48. State registration of legal entities

48.1. The legal entity is subject to state registration in relevant organ of the executive authority. This to state registration, including for the commercial organizations trade name, join in the state register of legal entities open for general acquaintance.

48.2. The refusal in state registration of the legal entity is allowed in the cases provided by the Law of the Azerbaijan Republic "About state registration and the state register of legal entities".

Refusal in state registration, and also evasion from such registration can be appealed in court.

48.3. The legal entity is subject to re-registration only in the cases established by the law.

Article 49. Bodies of the legal entity

49.1. The legal entity acquires the civil laws and assumes civil obligations through the bodies operating according to the legislation and the charter. The procedure for election or appointment of bodies of the legal entity is determined, respectively, by the charter, the Laws of the Azerbaijan Republic "About banks", "About insurance activity", "About investment funds", "About the security market" and "About deposit insurance".

49.2. The legal entity can acquire the civil laws and assume civil obligations through the participants, and also representatives.

49.3. Person acting on behalf of the legal entity including any person provided in governing bodies of the legal entity (the supervisory board (board of directors), executive body) shall in case of accomplishment of the obligations for the benefit of the legal entity be effective honesty, professionally and according to logic, to be to right interests of the legal entity and all his participants, to give preference to interests of the legal entity before the interests, to be careful, and also to be fair and impartial in case of decision making. This person bears responsibility for accomplishment of the specified tasks according to interests of the legal entity. In case of violation of the obligations, upon the demand of the participant (participants) having share (shares) in the amount of at least than 5 percent of the authorized capital of the legal entity it shall compensate to the legal entity the harm done as a result of violation.

49.4. Person acting on behalf of the legal entity including any person represented in governing bodies (the supervisory board, the board of directors, executive body) of the legal entity bears damage liability, caused to the legal entity or the shareholder (unitholder), in the following cases:

49.4.1. payment to members of governing bodies of the legal entity of bonuses if the legal entity acts with damage or if these bonuses are disproportionate profits of the legal entity;

49.4.2. alienation or transfer to use of property of the legal entity on conditions and on the price which are much lower than market conditions;

49.4.3. the conclusion with affiliates of the legal entity of the agreements violating requirements of the law or creating danger to interests of the legal entity;

49.4.4. purchase by the legal entity of goods (works, services) based on the signed agreements at the price which is much higher than their actual cost;

49.4.5. assignment or waste of property of the legal entity for the purpose of providing, affiliates of the legal entity or other persons material and non-material property and the rights to such property;

49.4.6. the conclusion of the unfair or causing them damage in relation to shareholders (unitholders) transactions.

49.5. For the damage caused to the legal entity any person who acts on behalf of the legal entity is provided in governing bodies (the supervisory board, the board of directors, executive body) of the legal entity, can be discharged of the position held by it according to the decision of general meeting of the legal entity. Involvement of person who acts on behalf of the legal entity is provided in governing bodies (the supervisory board, the board of directors, executive body) of the legal entity, to administrative or criminal liability for the damage caused to the legal entity does not exempt its obligation to indemnify the caused loss.

49.6. In case of approach of circumstances, stipulated in Article 49.4 of this Code, or in the presence of thorough suspicions concerning approach of such circumstances, the participant (participants) having share (shares) in the amount of at least than 10 percent of the authorized capital of the legal entity, having the right to demand from person who acts on behalf of the legal entity including at any person who is provided in governing bodies (the supervisory board, the board of directors, executive body) of the legal entity, all documents or data which are available in the legal entity and are connected with these circumstances (without specifying of the specific document), for the purpose of viewing of these documents (data). In similar case person shall provide the requirement of this participant within 5 (five) working days. If the participant wishes to receive the copy of this document (data), person whom addressed, shall hand the certified copies of this document (data). The participant shall protect confidentiality of data which became known to him and were received during viewing, and, the cases except for established by the law, not to transfer these data to the third parties.

Article 49-1. Procedure for the conclusion legal entity of transactions with affiliates

49-1.1. The transaction with the affiliate is any transaction, the agreement or set of the connected bargains which are concluded between the legal entity and the affiliate of this legal entity. Affiliates of the legal entity are:

49-1.1.1. head and board members (supervisory board) and executive body of the legal entity;

49-1.1.2. head of the structural unit (branch, representation, management and so forth) legal entity;

49-1.1.3. relatives of persons specified in Articles 49-1.1.1 and 49-1.1.2 of this Code (the husband (wife), parents, including parents of the husband, the wife, the grandfather and the grandmother, the children, adoptive parents (adopted) brothers and sisters);

49-1.1.4. any person who direct or indirect way owns share in the amount of 10 and more percent in the authorized capital of the legal entity;

49-1.1.5. legal entities in whom persons specified in Articles 49-1.1 directly or indirectly participate. 1, 49-1.1.2 and 49-1.1.4 of this Code;

49-1.1.6. the legal entity in whose authorized capital the legal entity participates from shares in the amount of at least 20 percent;

49-1.1.7. any person who has share (shares) in the amount of at least 20 percent in the legal entities specified in Articles 49-1.1.4 and 49-1.1.6 of this Code;

49-1.1.8. heads of the board of directors (supervisory board) and executive bodies of the legal entities specified in Articles 49-1.1.4 and 49-1.1.6 of this Code;

49-1.1.9. Other affiliates of banks and investment funds established respectively by the Laws of the Azerbaijan Republic "About banks" and "About investment funds".

49-1.2. If the cost of the transaction who is supposed to be imprisoned with the affiliate constitutes 5 and more percent of assets of the legal entity, this bargain is concluded by means of the conclusion of the independent auditor involved with the legal entity and the decision of general meeting of members of the legal entity made by simple majority. The participant who is affiliate concerning this transaction cannot participate in vote with respect thereto question.

49-1.3. If the cost of the transaction who is supposed to be imprisoned with the affiliate constitutes up to 5 percent of assets of the legal entity, this bargain is concluded according to the charter of the legal entity, general meeting of his participants, the board of directors (supervisory board) or, except as specified, provided by the Law of the Azerbaijan Republic "About banks", executive body. In this case the participant (member) who is the affiliate cannot participate in vote on general meeting of participants, in meetings of the Board of Directors (supervisory board) and collegiate executive body. If the head of sole executive body of the legal entity, and also persons specified in Articles 49-1.1.3 and 49-1.1.5 of this Code acts as the affiliate, the transaction between them and the legal entity consists based on the solution of the board of directors (supervisory board), in case of its absence - the decision of general meeting of the legal entity.

49-1.4. Persons guilty of damnification to the legal entity as a result of the conclusion of the transaction with violation of requirements of Articles 49-1.2 and 49-1.3 of this Code, bear responsibility. If other party of the transaction learns that the bargain is concluded with violation of requirements of Articles 49-1.2 and 49-1.3 of this Code, the legal entity or any his participant can challenge this transaction according to Articles 337.1 and 339 of this Code.

49-1.5. The head or board members (supervisory board) of the legal entity shall provide to members of the legal entity written information that they, and also persons specified in Articles 49-1.1.3 and 49-1.1.5 of this Code act as the affiliate concerning the concluded bargain, and also on features (origin, I will eat around and so forth) their interests in connection with this transaction.

49-1.6. The head or other members of executive body of the legal entity shall provide to the board of directors (supervisory board) of the legal entity, and in case of its absence to members of the legal entity written information that they, and also persons specified in Articles 49-1.1.3 and 49-1.1.5 of this Code act as the affiliate concerning the concluded bargain, and also on features (origin, I will eat around and so forth) their interests in connection with this transaction.

49-1.7. Except for the head or board members (supervisory board) and executive body of the legal entity, other persons shall provide to the board of directors (supervisory board) of the legal entity, and in case of its absence to executive body of the legal entity written information that they, and also persons specified in Articles 49-1.1.3 and 49-1.1.5 of this Code act as the affiliate concerning the concluded bargain, and also on features (origin, I will eat around and so forth) their interests in connection with this transaction.

Article 50. Name of the legal entity

50.1. The legal entity has the name containing specifying on its form of business. The name of non-profit organization shall contain specifying on nature of activities of the legal entity.

50.1-1. In the name of non-governmental organization names of state bodies of the Azerbaijan Republic, and also names of the famous persons of Azerbaijan cannot be used (without the consent of their close relatives or heirs).

50.2. The legal entity, being the commercial organization, shall have trade name. The legal entity whose trade name is registered in the procedure established by the law has exclusive right of its use. The order of registration and uses of trade names is determined by the legislation.

50.3. Acquisition of rights and obligations under trade name of other legal entity is not allowed. Person who is illegally using others registered trade name upon the demand of the owner of the right to trade name shall stop its use and pay the caused damages.

Article 51. Location of the legal entity

The location of the legal entity the place in which the permanent body of the legal entity, the headquarters of governing bodies of political party is located is recognized.

Article 52. Responsibility of the legal entity

52.1. The legal entity answers for the obligations all property belonging to it.

52.2. The founder (participant) of the legal entity does not answer for obligations the legal entity, and the legal entity does not answer for obligations the founder (participant), except as specified, provided by this Code or the charter of the legal entity.

Article 53. Representations and branches

53.1. The separate division of the legal entity located out of the place of its stay which represents the interests of the legal entity is considered representation and performs their protection.

53.2. The separate division of the legal entity located out of the place of its stay and performing all its functions or their part, including functions of representation is considered branch.

53.3. Representations and branches are not legal entities and act on the basis of the provisions approved by the legal entity. Heads of representations and branches are appointed the legal entity and act on the basis of the its powers of attorney. Citizens of the Azerbaijan Republic shall be deputy managers of branches or representative offices of non-governmental organizations which founders are foreigners or foreign legal entities.

Article 54. Organization

54.1. The organization created by the legal entity for implementation of managerial, welfare or other functions of non-commercial nature is considered organization.

54.2. The organization is not legal entity and is effective by the provision approved by the legal entity.

54.3. The organization performs rights of possession, uses and orders of the property assigned to it in limits established by the law and according to the purposes of the activities, orders of the legal entity and purpose of property.

54.4. Responsibility according to obligations of organization is conferred on the legal entity who created organization.

54.5. Features of legal status of public institutions and separate types of other organizations are determined by the legislation.

Article 55. Reorganization of the legal entity

55.1. Reorganization of the legal entity (merge, accession, separation, allocation, transformation) can be performed according to the decision of his founders (participants) or body of the legal entity authorized on that by the charter.

55.2. In the cases established by the law, reorganization of the legal entity in the form of its separation or allocation from its list of one or several legal entities is performed by a court decision.

55.3. The court appoints the external managing director of the legal entity and charges to it to perform reorganization of this legal entity. From the moment of appointment of the external managing director pass powers on administration of the legal entity to it. The external managing director appears on behalf of the legal entity in court, constitutes the separation balance sheet and submits to it court together with charters of the legal entities resulting from reorganization. The court order which took legal effect, with observance of requirements of the legislation is the basis for state registration of again arising legal entities.

55.4. The legal entity is considered reorganized, except as specified reorganization in the form of accession, from the moment of state registration of again arisen legal entities.

55.5. By reorganization of the legal entity in the form of joining to it of other legal entity the first of them is considered reorganized from the moment of entering into the state register of legal entities of record about the termination of activities of the attached legal entity.

55.6. Reorganization of banks is performed according to the Law of the Azerbaijan Republic "About banks".

55.7. For the purpose of ensuring criminal legal measures which can be applied to the legal entity its reorganization can be forbidden according to the procedure, provided by the Code of penal procedure of the Azerbaijan Republic. The judgment about prohibition on reorganization of the legal entity immediately goes to relevant organ of the executive authority.

Article 56. Legal succession by reorganization of legal entities

56.1. In case of merge of legal entities of the right and obligation of each of them pass to again arisen legal entity according to the transfer act.

56.2. When joining the legal entity to other legal entity to the last pass the rights and obligations of the attached legal entity according to the transfer act.

56.3. In case of separation of the legal entity of its right and obligation pass to again arisen legal entities according to the separation balance sheet.

56.4. In case of allocation from the list of the legal entity of one or several legal entities pass to each of them the rights and obligations of the reorganized legal entity according to the separation balance sheet.

56.5. When transforming the legal entity of one type to the legal entity of other type (change of form of business) pass to again arisen legal entity the rights and obligations of the reorganized legal entity according to the transfer act.

Article 57. Transfer act and separation balance sheet

57.1. The transfer act and the separation balance sheet shall contain regulations on legal succession according to all obligations of the reorganized legal entity concerning all his creditors and debtors, including also the obligations challenged by the parties.

57.2. The transfer act and the separation balance sheet affirm founders (participants) of the legal entity who made the decision on its reorganization or the body of the legal entity authorized on that by the charter and are represented together with charters for state registration of again arisen legal entities or introduction of amendments to charters of the existing legal entities.

57.3. Non-presentation together with constituent documents according to the transfer act or the separation balance sheet, and also lack in them of regulations on legal succession according to obligations of the reorganized legal entity attract refusal in state registration of again arisen legal entities.

Article 58. Guarantees of the rights of creditors of the legal entity by its reorganization

58.1. Founders (participants) of the legal entity who made the decision on its reorganization, or the body of the legal entity authorized on that by the charter, and in cases, stipulated in Article 55.3 of this Code, the external managing director shall notify on reorganization of the legal entity of his creditors in writing.

58.2. The creditor of the reorganized legal entity has the right to demand the termination or early obligation fulfillment on which debtor is this legal entity, and indemnification.

58.3. If the separation balance sheet does not give the chance to determine the legal successor of the reorganized legal entity, again arisen legal entities bear joint liability according to obligations of the reorganized legal entity to his creditors.

Article 59. Liquidation of the legal entity

59.1. Liquidation of the legal entity is the termination of its existence and activities without transition of the rights and obligations according to the procedure of legal succession to other persons.

59.2. The legal entity can be liquidated:

59.2.1. according to the decision of his founders (participants) or body of the legal entity authorized on that by the charter, including in connection with the expiration, the legal entity provided for existence, or with goal achievement for the sake of which it is created;

59.2.2. in case of recognition of invalid registration of the legal entity by court in connection with the violations of the law allowed during its creation;

59.2.3. by a court decision in case of implementation of activities without proper special permission (license) or activities forbidden by the law or with other numerous or gross violations of the legislation, or in case of systematic implementation by public organization or fund of the activities contradicting her (his) authorized purposes and also in other cases provided by this Code, the Laws of the Azerbaijan Republic "About banks", "About insurance activity" and "About investment funds";

59.2.4. on the final judgment in case of application of criminal legal measure in the form of liquidation of the legal entity.

59.2-1. The participant or the body of the legal entity authorized by the charter taking the initiative of liquidation of the legal entity on the bases specified in Article 59.2.1 of this Code requires from the executive body performing management of the current activities of the legal entity, adoption of the official declaration (about condition of assets and liabilities) confirming solvency for satisfaction of requirements of all creditors of the legal entity within 12 months. The executive body of the legal entity adopts this statement or informs on impossibility of adoption of such statement no later than 20 days to the decision on liquidation. If the executive body informs on impossibility of adoption of the statement, general meeting of participants can involve the independent auditor for the purpose of confirmation of availability or lack of solvency to satisfaction of requirements of all creditors of the legal entity within 12 months. If the independent auditor confirms with the conclusion solvency of the legal entity, then this conclusion is equated to the statement established by this Article.

59.3. The requirement about liquidation of the legal entity for the bases specified in Articles 59.2.2 and 59.2.3 of this Code can be shown in court by state body (structure) to which the right to presentation of such requirement is granted by the law. By the judgment about liquidation of the legal entity obligations on implementation of liquidation of the legal entity can be assigned to his founders (participants) or to the body of the legal entity authorized on that by its charter. The final judgment about liquidation of the legal entity on the basis specified in Article 59.2.4 of this Code to liquidation commission (liquidator) assigns obligations on carrying out liquidation of the legal entity.

59.4. The legal entity is liquidated also owing to bankruptcy.

59.5. If the property value of the liquidated legal entity is insufficient for satisfaction of requirements of creditors, it can be liquidated only owing to bankruptcy.

59.6. Aggregate term of process of liquidation shall not exceed one year from the moment of entering of data on liquidation of the legal entity into the state register of legal entities. Excess of the specified term attracts repeated process of liquidation.

59.7. In case of liquidation of branches or representations of foreign legal entities the rules established for liquidation of legal entities by this Code and the Law of the Azerbaijan Republic "About state registration and the state register of legal entities" are applied.

59.8. Liquidation of local banks, their branches, departments and representations, and also local branches and representative offices of foreign banks is performed taking into account requirements of the Law of the Azerbaijan Republic "About banks".

59.9. For the purpose of ensuring criminal legal measures which can be applied to the legal entity its liquidation according to the decision of founders (participants) or the body authorized by the charter of the legal entity can be forbidden according to the procedure, provided by the Code of penal procedure of the Azerbaijan Republic. The judgment about prohibition on liquidation of the legal entity immediately goes to relevant organ of the executive authority.

 

Article 60. Decision on liquidation of the legal entity

60.1. The decision on liquidation of the legal entity appoints liquidation commission (liquidator), the procedure and terms of liquidation according to this Code are established and liquidation process begins.

60.2. During process of liquidation complete legal capacity of the legal entity remains.

60.3. The members of the legal entity who made the decision on liquidation of the legal entity or its body authorized on it by the charter from the moment of decision making about liquidation act only within liquidation process. The liquidation commission (the liquidator, uprazdnitel) appears in court on behalf of the liquidated legal entity.

60.4. From the moment of appointment to liquidation commission (the liquidator, uprazdnitel) pass powers to administration of the legal entity. The liquidation commission continues work of the legal entity for the purpose of rational from the economic point of view profitable from the price point of view and at the same time quick sale of property of the legal entity to repayment of debts and preserving the residual income, the Section between participants of the repayment of debts of property which remained later. In case of liquidation of non-profit organization the legal fate of the property which remained after repayment of its debts is solved according to Articles 114. 3, 116.3 and 117.7 of this Code.

60.5. During the activities members of liquidation commission (the liquidator, uprazdnitel) shall observe requirements of Article 49.3 of this Code.

60.6. Members of liquidation commission (the liquidator, uprazdnitel) can be withdrawn or replaced by other persons according to the procedure in which they were appointed.

 

Article 61. Procedure for liquidation of the legal entity

61.1. Within 10 days from the moment of appointment the liquidation commission publishes in the printing edition in which data on state registration of legal entities are published in the Azerbaijan Republic, primary information on liquidation of the legal entity and on procedure and terms of presentation of requirements by creditors. This information is published in the same order two more times at an interval of 15-20 days. The term of presentation of requirements by creditors cannot constitute less than 60 days from the moment of publication of primary information on liquidation.

61.2. Within 15 days from the moment of appointment the liquidation commission (the liquidator, uprazdnitel) shall provide to the relevant organ of the executive authority which is carrying out the state registration of legal entities, the decision on liquidation specified in articles 59.2-1 and 61.1 of this Law the official declaration confirming solvency, the document certifying publication of primary information, and seal. The relevant organ of the executive authority which is carrying out state registration of legal entities within 5 days from the moment of receipt of the provided data enters them in the state register of legal entities according to the Law of the Azerbaijan Republic "About state registration and the state register of legal entities". After that in case of creation of documents by the legal entity the seal with text "in the course of liquidation" is used, and in all documents after its name the words "in the course of liquidation" are added.

61.3. The liquidation commission (the liquidator, uprazdnitel) undertakes measures for identification of creditors and repayment of receivables, and also in day of publication in connection with liquidation sends the notice on liquidation of the legal entity to announcement seals to all famous creditors, addresses relevant organ of the executive authority for identification of debts on obligatory payments in the government budget and to fees on compulsory national social insurance and to insurance premiums on unemployment in off-budget state fund.

61.4. If the liquidation commission (the liquidator, uprazdnitel) does not agree with the demands made by any creditor, then this creditor has the right to lift the claim in court. Until pronouncement by court of the decision on the requirement it is necessary to store means, necessary for its satisfaction.

61.5. Within 10 days from the moment of the expiration of presentation of requirements by creditors the liquidation commission (the liquidator, uprazdnitel) constitutes and approves the interim liquidation balance sheet, sends it to members of the legal entity. In the interim liquidation balance sheet data on structure of property of the liquidated legal entity, the requirements list of creditors and receivables are entered at least. The participant not concordant with the interim liquidation balance sheet and having at least than 10 percent of the authorized capital of the legal entity, within 7 days from the moment of receipt of this balance has the right to demand convocation of general meeting. In this case the interim liquidation balance sheet shall be approved by general meeting of participants.

61.6. If the liquidation commission (the liquidator, uprazdnitel) reveals insufficiency of the property belonging to the legal entity for satisfaction of requirements of creditors, then it shall start bankruptcy process immediately.

61.7. Money is paid to creditors of the liquidated legal entity by liquidation commission (the liquidator, uprazdnitel) according to the interim liquidation balance sheet from the date of its approval, according to the procedure of priority of receipt of requirements about payment.

61.8. After completion of settlings with all famous creditors the liquidation commission (the liquidator, uprazdnitel) within 5 days constitutes the report reflecting the liquidation balance sheet and the plan of the Section (and in case of non-profit organization - use according to Articles 114. 3, 116.3 and 117.7 of this Code) residual property between participants. The specified balance and the report no later than 45 days from the moment of their creation shall be approved by participants or the body of the legal entity authorized by the charter.

61.9. Creditors can impose the requirements before approval of the liquidation balance sheet.

61.10. Within 10 days after approval of the liquidation balance sheet the liquidation commission (the liquidator, uprazdnitel) provides representation of residual property to members of the legal entity according to the approved plan of the Section, and in case of non-profit organization - its use according to the approved plan of use according to Articles 114. 3, 116.3 and 117.7 of this Code. The Section of property is carried out in proportion to share of the participant. In case of absence of the participant or the heir of the member of the legal entity the residual property is transferred to the state. On behalf of the state this property accepts relevant organ of the executive authority.

61.11. Within 10 days from the moment of the Section or use of residual property the liquidation commission (the liquidator, uprazdnitel) sends to the relevant organ of the executive authority which is carrying out state registration of legal entities, the approved liquidation balance sheet, the report reflecting the plan of the Section (use) of residual property, the document confirming representation of this property to participants (and in case of non-commercial legal entities - use according to Articles 114. 3, 116.3 both 117.7), and other documents, the stipulated in Article 16.2 Laws of the Azerbaijan Republic "About state registration and the state register of legal entities".

61.12. Liquidation of the legal entity is considered complete, and the legal entity is recognized stopped existence from the moment of entering of record about it into the state register of legal entities.

61.13. In case of property after completion of liquidation of the legal entity, the court based on the statement of person interested in it can resume process of liquidation and to appoint new liquidation commission (liquidator). The single task of this liquidation commission (the liquidator, uprazdnitel) is immediate transformation of this property to money with their subsequent Section between participants (and in case of non-profit organization - use according to Articles 114. 3, 116.3 and 117.7 of this Code). Emergence of new obligations after exception of the legal entity of the state register does not attract liquidation process renewal.

Article 62. 

It is excluded according to the Law of the Azerbaijan Republic of 22.11.2013 No. 819-IVQD

Article 63. Bankruptcy of the legal entity

63.1. If the legal entity is not able to meet requirements of creditors, it can be by a court decision declared by bankrupt.

63.2. The bases and procedure for recognition by court of the legal entity by the bankrupt are established, respectively, by the Laws of the Azerbaijan Republic "About bankruptcy and insolvency" and "About banks".

§2. Commercial organizations
Article 64. Economic partnerships and societies

64.1. Economic partnerships and societies are the commercial organizations with the authorized (share) capital divided into shares of founders (participants). The property created at the expense of deposits of founders (participants), and also made and acquired by economic partnership or society in the course of its activities belongs to it on the property right. In the cases provided by this Code, economic society can be created by one person.

64.2. Economic partnerships can be created in the form of complete partnership or partnership in commendam.

64.3. Economic societies can be created in the form of society with limited or with the accessorial liability or joint-stock company.

64.4 Only individual entrepreneurs and (or) the commercial organizations can be participants of complete partnerships and complete companions in partnerships in commendam.

64.5. Physical persons and legal entities can be members of economic societies and investors in partnerships in commendam.

64.6. State bodies and local government bodies cannot act as participants of economic partnerships and societies.

64.7. Economic partnerships and societies can be founders (participants) of other economic partnerships and societies, except as specified, provided by this Code.

64.8. The money, securities, other things or property rights or other rights having money value can be contribution to property of economic partnership or society.

64.9. The money value of contribution of the member of economic society is made under the agreement between founders (participants) of society and is subject to independent expert check (audit).

Article 65. Rights and obligations of participants of economic partnership or society

65.1. Participants of economic partnership or society have the right:

65.1.1. participate in the administration of partnership or society, except as specified, provided by this Code;

65.1.2. obtain information on activities of partnership or society and to get acquainted with its ledgers and other documentation in the procedure established by the charter;

65.1.3. take part in profit distribution;

65.1.4. receive in case of liquidation of partnership or society part of the property which remained after settlings with creditors or its cost.

65.2. Participants of economic partnership or society can have and other rights provided by this Code, the charter of partnership or society.

65.3. Participants of economic partnership or society shall:

65.3.1. make contributions according to the procedure, the sizes, methods and in terms which are provided by the charter;

65.3.2. not disclose confidential information on activities of partnership or society;

65.3.3. perform other duties provided by its charter.

Article 66. Transformation of economic partnerships and societies

66.1. Economic partnerships and societies of one type can be transformed to economic partnerships and societies of other type according to the decision of general meeting of participants according to the procedure, established by this Code.

66.2. When transforming partnership to society each complete companion who became the member (shareholder) of society within two years bears subsidiary responsibility all the property according to the obligations which passed to society from partnership. Alienation by the former companion of the shares (shares) belonging to it does not exempt it from such liability.

Article 67. Affiliated economic society

67.1. Economic society is recognized affiliated if other (main) economic society or partnership owing to the prevailing participation in its authorized capital or according to the agreement signed between them has opportunity to determine the decisions made by such society.

67.2. The subsidiary does not answer on debts of the main partnership or society.

67.3. The main partnership or society which has the right to instruct subsidiary obligatory for it, answers solidary with subsidiary according to the bargains concluded by the last in pursuance of such instructions. The main partnership or society is recognized having right to instruct subsidiary obligatory for it only if such right is provided by the contract with subsidiary.

67.4. Members (shareholders) of subsidiary have the right to require compensation by the main partnership or society of the losses caused through his fault to subsidiary. Losses are recognized caused because of the main partnership or society only if were caused owing to accomplishment by subsidiary of specifying of the main partnership, obligatory for subsidiary, or society.

67.5. In case of bankruptcy of subsidiary because of the main partnership or society the last bears subsidiary responsibility on its debts.

The subsidiary is recognized bankrupt because of the main partnership or society only if it occurred owing to accomplishment by it of specifying of the main partnership, obligatory for it, or society.

67.6. The subsidiary has no right to redeem shares (share) of the main society.

Article 68. Dependent economic society

68.1. Economic society is recognized dependent if another (prevailing, participating) the partnership or society has more than twenty percent of the authorized capital of limited liability company or twenty percent of voting shares of joint-stock company.

68.2. The economic partnership or society which acquired more than twenty percent of the authorized capital of limited liability company or twenty percent of voting shares of joint-stock company shall publish data on it without delay.

68.3. Dependent society has no right to redeem shares (share) of the main society.

Article 69. Complete partnership

69.1. The partnership which participants (complete companions) according to the charter are engaged in business activity on behalf of partnership is recognized complete and bear responsibility according to its obligations the property belonging to them.

69.2. Person can be the participant only of one complete partnership.

69.3. The trade name of complete partnership shall contain or names (names) of all his participants and the word "complete partnership", or name (name) of one or several participants with addition of the words "and company" and the words "complete partnership".

Article 70. Charter of complete partnership

The charter of complete partnership shall contain in addition to the data specified in article 47.2 of this Code, condition about the size and structure of the share capital of partnership; about the size and procedure for change of shares of each of participants in the share capital; about structure and procedure for introduction of deposits by them; about responsibility of participants for violation of obligations on introduction of deposits.

Article 71. Management in complete partnership

71.1. Control of activities of complete partnership is exercised on consensus of all participants. Cases when the decision is made by a majority vote participants can be provided by the charter of complete partnership.

71.2. Each participant of complete partnership has one voice if the charter does not provide other procedure for determination of number of votes of his participants.

71.3. Each participant of partnership irrespective of whether he is authorized to run business of partnership, can get acquainted with all documentation on business management. The refusal of this right or its restriction, including on the agreement of participants of partnership, are insignificant.

Article 72. Business management of complete partnership

72.1. Each participant of complete partnership can act on behalf of partnership if by the charter it is not determined that all his participants run business jointly or business management is entrusted to certain participants.

72.2. In case of joint business management of partnership by his participants making of each transaction requires the consent of all participants of partnership.

72.3. If business management of partnership is entrusted by his participants to one or some of them, other participants for transactions on behalf of partnership shall receive the power of attorney from the participant (participants) to whom business management of partnership is assigned.

72.4. In the relations with the third parties the partnership cannot refer to the charter provisions limiting powers of participants of partnership, except as specified, when the partnership proves that the third party at the time of transaction knew or owed know about absence at the participant of partnership of the right to act on behalf of partnership.

72.5. The powers of procuration of partnership conferred to one or several participants can be stopped by court upon the demand of one or several other participants of partnership in the presence to that serious reasons, in particular owing to gross violation by the authorized person (persons) of the obligations or its found inability to reasonable business management. Based on the judgment corresponding changes are made to the charter of partnership.

Article 73. Obligations of the participant of complete partnership

73.1. The participant of complete partnership shall participate in its activities in accordance with the terms of the charter.

73.2. The participant of complete partnership shall make the contribution to the share capital of partnership by the time of its registration.

73.3. The participant of complete partnership of other participants having no right without consent to make on its own behalf in the interests or for the benefit of the third parties of the transaction, uniform with those which constitute object of activity of partnership.

73.4. In case of violation of this rule the partnership has the right to demand at the choice from such participant of compensation of the losses caused to partnership or transfer to partnership of all benefit acquired according to such transactions.

Article 74. Profit distribution and losses of complete partnership

74.1. The profit and losses of complete partnership are distributed between his participants in proportion to their shares in the share capital if other is not provided by the charter or other agreement of participants.

The agreement on elimination of the participant of partnership from participation in profit or in losses is insignificant.

74.2. If owing to the losses suffered by partnership the cost of its net assets becomes less than the size of its share capital, the profit got by partnership is not shared between participants until net assets value does not exceed the size of the share capital.

Article 75. Responsibility of participants of complete partnership according to its obligations

75.1. Participants of complete partnership solidary bear subsidiary responsibility the property according to obligations of partnership.

75.2. The participant of complete partnership who is not his founder answers on an equal basis with other participants for the obligations which arose to its introduction in partnership.

75.3. The participant who was disposed from partnership answers for the obligations partnership which arose until its disposal on an equal basis with the remained participants within two years from the date of approval of the activities report of partnership in year in which it was disposed from partnership.

75.4. The agreement of participants of partnership on restriction or elimination of the responsibility provided in this Article is insignificant.

Article 76. Change of list of participants of complete partnership

76.1. In cases of exit or death any of participants of complete partnership, recognition of one of them it is unknown absent, incapacitated, or is limited capable, or the bankrupt, opening concerning one of participants of reorganization procedures by a court decision, liquidations of the legal entity participating in partnership or addresses by the creditor of one of participants of collection on the part of property corresponding to its share in the share capital, partnership can continue the activities if it is provided by the charter of partnership or the agreement of the remaining participants.

76.2. Participants of complete partnership have the right to require judicially exception any of participants of partnership according to the unanimous decision of the remaining participants and in the presence to that serious reasons, in particular owing to gross violation by this participant of the obligations or its found inability to reasonable business management.

Article 77. Exit of the participant from complete partnership

77.1. The participant of complete partnership has the right to leave it, having declared refusal of participation in partnership.

77.2. The refusal of participation in complete partnership shall be declared by the participant at least in six months prior to the actual exit from partnership.

77.3. The agreement between participants of partnership on disclaimer from partnership to leave insignificant.

Article 78. Consequences of disposal of the participant from complete partnership

78.1. To the participant who was disposed from complete partnership the cost of part of property of partnership is paid, to respective share of this participant in the share capital if other is not provided by the charter.

Under the agreement of the disposed participant with the remaining participants payment of property value can be replaced with issue of property in nature.

The part of property of partnership which is due to the disposed participant or its cost is determined by the balance constituted except for of the case provided in article 80 of this Code at the time of its disposal.

78.2. In case of the death of the participant of complete partnership his heir can enter complete partnership only with the consent of other participants if other is not provided by the charter of partnership.

The legal entity who is the legal successor of the reorganized legal entity participating in complete partnership, can enter partnership with the consent of other his participants if other is not provided by the charter of partnership. Settlings with the heir (legal successor) who did not enter partnership are made according to Article 78.1 of this Code.

The heir (legal successor) of the participant of complete partnership bears responsibility according to obligations of partnership to the third parties for which according to Articles 75.2 and 75.3 of this Code the disposed participant, within the property of the disposed participant of partnership which passed to it would answer.

78.3. If one of participants was disposed from partnership, shares of the remained participants in the share capital of partnership respectively increase if other is not provided by the charter or other agreement of participants.

Article 79. Transfer of share of the participant in the share capital of complete partnership

79.1. The participant of complete partnership has the right to give the share in the share capital or its part to other participant of partnership or the third party with the consent of his other participants.

79.2. By transfer of share (part of share) to the other person pass to it completely or in the corresponding part of the right, belonging to the participant who gave share (part of share). Person to whom the share (part of share) is transferred bears responsibility according to obligations of partnership according to the procedure, stipulated in Clause 75.2 of this Code.

79.3. Transfer of all share to the other person by the participant of partnership stops its participation in partnership and attracts the consequences provided by Articles 75.2 and 75.3 of this Code.

Article 80. The address of collection on share of the participant in the share capital of complete partnership

80.1. The address of collection on the debts of the participant which are not connected with participation in partnership (personal obligations) on share of the participant in property of complete partnership is allowed only in case of lack of other its property for covering of debts. Creditors of such participant have the right to demand from complete partnership of apportionment of part of property of partnership, respective share of the debtor in the share capital, for the purpose of the address of collection on this property.

The part of property of partnership which is subject to apportionment or its cost is determined by the balance constituted at the time of presentation by creditors of the requirement about apportionment.

80.2. The address of claim to property corresponding to share of the participant in the share capital of complete partnership stops its participation in partnership and attracts consequences, stipulated in Article 75.3 of this Code.

Article 81. Liquidation of complete partnership

81.1. The complete partnership is liquidated on the bases specified in article 59 of this Code and also in case in partnership there is the single participant.

Such participant has the right within six months since the moment when he became the single participant of partnership, to transform such partnership to economic society according to the procedure, established by this Code.

The complete partnership is liquidated also in the cases specified in Article 76.1 of this Code if the charter of partnership or the agreement of the remaining participants do not provide that the partnership will continue the activities.

Article 82. Partnership in commendam

82.1. Partnership in commendam is the partnership in which along with the participants performing business activity on behalf of partnership and answering for obligations partnership the property (complete companions) there are one or several participants - investors (limited partners) who bear risk of the losses connected with activities of partnership, within the amounts of the contributions made by them and do not take part in business activity of partnership.

82.2. The legal status of the complete companions participating in partnership in commendam, and their responsibility are determined by obligations of partnership by rules of this Code about participants of complete partnership.

82.3. Person can be the complete companion only in one partnership in commendam. The participant of complete partnership cannot be the complete companion in partnership in commendam. The complete companion in partnership in commendam cannot be the participant of complete partnership.

82.4. The trade name of partnership in commendam shall contain names (names) of all complete companions and words "partnership in commendam" or name (name) at least than one complete the companion with addition of the words "and company" and "partnership in commendam".

82.5. If the trade name of partnership in commendam includes name of the investor, such investor becomes the complete companion.

82.6. Rules of this Code about complete partnership are applied to partnership in commendam so far as it does not contradict rules of this Code about partnership in commendam.

Article 83. Charter of partnership in commendam

The charter of partnership in commendam shall contain in addition to the data specified in article 47.2 of this Code, condition about the size and structure of the share capital of partnership; about the size and procedure for change of shares of each of complete companions in the share capital; about structure and procedure for introduction of deposits by them, about their responsibility for violation of obligations on introduction of deposits; about the cumulative size of the contributions made by investors.

Article 84. Management in partnership in commendam and conducting its cases

84.1. Control of activities of partnership in commendam is exercised of complete companions. The procedure for management and business management of such partnership by his complete companions is established by them by rules of this Code about complete partnership.

84.2. Investors have no right to participate in management and business management of partnership in commendam, to act from his name differently as by proxy. They have no right to challenge actions of complete companions for management and business management of partnership.

Article 85. Rights and obligations of the investor of partnership in commendam

85.1. The investor of partnership in commendam shall make contribution to the share capital. Contributing makes sure the certificate on participation granted to the investor by partnership.

85.2. The investor of partnership in commendam has the right:

85.2.1. receive the partnership part of profit which is due on its share in the share capital, according to the procedure, provided by the charter;

85.2.2. get acquainted with annual statements and balances of partnership;

85.2.3. upon termination of financial year to leave partnership and to receive the contribution according to the procedure, provided by the charter;

85.2.4. transfer the share in the share capital or its part to other investor or the third party.

85.3. Investors have the right of purchase of share (its part), preferential before the third parties, in relation to conditions and procedure, stipulated in Article 93.3 of this Code. Transfer by the investor of all the share to the other person stops its participation in partnership.

85.4. By the charter of partnership in commendam also other rights of investors can be provided.

Article 86. Liquidation of partnership in commendam

86.1. The partnership in commendam is liquidated in case of disposal of all investors participating in it. However complete companions have the right to transform instead of liquidation partnership in commendam to complete partnership.

The partnership in commendam is liquidated also on the bases of liquidation of complete partnership. However the partnership in commendam remains if in it there are at least one complete companion and one investor.

86.2. In case of liquidation of partnership in commendam, including in case of bankruptcy, investors have the right to deposits, preferential before complete companions, from property of the partnership which remained after satisfaction of requirements of his creditors. The property of partnership which remained after that is distributed between complete companions in proportion to their shares in the share capital of partnership if other procedure is not provided by the charter or the agreement of complete companions.

Article 87. Limited liability company

87.1. Limited liability company the society founded by one or several persons (physical and (or) legal entities) which authorized capital is divided into shares of the sizes determined by the charter is recognized. Members of limited liability company do not answer for its obligations and bear risk of the losses connected with activities of society, within the cost of the contributions made by them. Society does not bear responsibility according to obligations of the participants to the third parties.

87.2. Society is created by creation of new society according to this Code or way of reorganization (merge, accession, separation, department, transformation) the legal entity acting taking into account the rules and restrictions provided by this Code.

87.3. Creation of society includes convocation of the constituent assembly and the conclusion of the agreement (in the cases provided in Article 45.2 of this Code) or decision making about creation of society (in case of creation of society by one person), payment (if the charter of society does not provide payment of the authorized capital during certain term) the authorized capital and preparation of the charter.

87.4. During creation of society the constituent assembly (if the charter of society does not provide payment of the authorized capital during certain term) is convoked after complete forming by founders of the authorized capital. The constituent assembly is competent with the assistance of all founders or their representatives (quorum availability). In the absence of quorum the meeting is convened anew. In the absence of quorum at repeatedly held constituent assembly the founders or their representatives participating in meeting, creation of society is recognized cancelled, and within seven days all founders are notified on this decision.

87.5. The constituent assembly called during creation of society:

87.5.1. approves the cost of the deposits which are not money paid to the authorized capital during creation of society;

87.5.2. makes the decision on creation of society and approves its charter;

87.5.3. will organize the governing bodies provided by the charter of society and this Code;

87.5.4. resolves other issues connected with creation of society and the beginning of its activities, which are not contradicting this Code, other legal acts and the agreement signed between founders.

87.6. At the constituent assembly of society of the decision on organization of society, approval of the charter, approval of cost of the deposits which are not money paid to the authorized capital during creation of society, forming of governing bodies are accepted by founders unanimously, and decisions on other questions are made by a simple majority vote.

87.7. For the obligations connected with creation of society and which arose before its state registration, founders bear the common responsibility.

87.8. The trade name of limited liability company shall contain the name of society and the word "limited liability company".

87.9. The legal status of limited liability company and the right and obligation of his participants are determined by this Code.

87.10. The transaction in the amount of more than fifty percent of net assets value of limited liability company is considered the transaction of special value. The decision on the conclusion of the special transaction is made on general meeting of members of society.

Article 88. Members of limited liability company

88.1. The number of members of limited liability company shall not exceed the limit set by the legislation. Otherwise it is subject to transformation to joint-stock company within year, and after this term - liquidation judicially if the number of his participants does not decrease to the limit set by the law.

88.2. The limited liability company cannot have other economic society consisting of one person as the single participant.

Article 89. Charter of limited liability company

The charter of limited liability company shall contain in addition to the data specified in article 47.2 of this Code, condition about the size of the authorized capital of society; about the size of shares of each of participants; about structure and procedure for introduction of deposits by them; about responsibility of participants for violation of obligations on introduction of deposits; about structure and competence of governing bodies of society and procedure for adoption of decisions by them, including about questions on which decisions are made unanimously or caused by a majority vote.

Article 90. Authorized capital of limited liability company

90.1. The authorized capital of limited liability company is constituted from the cost of deposits of his participants.

The authorized capital determines the minimum size of property of the society guaranteeing interests of his creditors. The size of the authorized capital of society cannot be less amount, satisfying to interests of his creditors.

90.2. If the charter of limited liability company does not provide payment of the authorized capital during certain term, then founders shall pay completely the authorized capital before carrying out state registration of society. If the charter of limited liability company payment of the authorized capital is caused by term, then this term cannot exceed three months.

90.3. Release of the member of limited liability company from obligation of contributing to the authorized capital of society, including by offsetting of requirements to society is not allowed.

90.4. The authorized capital of limited liability company can be increased only after its complete payment according to the procedure, provided by this Code and the charter of society, way of increase at the expense of property of society in pro rata form to the cost of the initial contributions of participants and (or) by introduction by participants of additional contributions and (or) at the expense of the initial contributions of the new participants accepted in society.

90.5. Increase in the authorized capital of limited liability company at the expense of property of society is performed by the decision of general meeting of society according to the procedure, provided by the charter of society. Such decision can be made only on the basis of indicators of financial statements for last year. The amount of the authorized capital increased at the expense of property of society shall not exceed difference between net assets value of society, the amount of the authorized capital and reserve fund of society.

In case of the increase in the authorized capital according to the procedure established by this Article, nominal value of the initial contributions of all participants increases in pro rata form without change of the amount of the initial contributions of participants.

90.6. Increase in the authorized capital of limited liability company at the expense of additional shares of participants is performed by the decision of general meeting of society according to the procedure, provided by the charter of society. By this decision the total cost of additional shares, and also cost of additional share of the participant and ratio between nominal value of its share with the increased amount shall be established. This ratio is determined taking into account possibility of increase in nominal value of share of the participant at the amount, smaller or equal to its additional share.

Each participant has the right to enclose additional share in proportion to the amount of the initial contribution of the participant in the authorized capital, but not above total cost of additional shares.

Additional shares shall be brought by participants in the terms determined in the charter after decision making about it on general meeting or in the decision of general meeting. Increase in the authorized capital by the mentioned method is considered cancelled in case of delay of introduction of additional share.

90.7. The decision of general meeting of society on increase in the authorized capital according to the procedure, stipulated in Article 90.6 of this Code, is accepted on the basis of the statement for introduction of additional contribution by the participant (participants) and (or) on the basis of the statement of the third party (persons) for its acceptance in society and introduction of the initial contribution.

The amount and content of deposits, procedure and terms of their investment, the amount of the initial contribution in the authorized capital which the participant or the third party would like to have are specified in the statement. Other conditions for contributing and acceptance to society can be also specified in the statement.

General meeting of society along with decision making makes the decision and on introduction of amendments to the charter in connection with increase in nominal value of contribution of the participant who submitted the application on increase in the authorized capital. General meeting along with decision making based on the statement of the third party makes on increase in the authorized capital also the decision about introduction of amendments to the charter in connection with acceptance in society of the third party, establishment of nominal value of its initial contribution and change of the amount of the initial contributions of participants.

Nominal value of the initial contribution of the third party accepted in society shall be equal or to be lower than the amount of cost of its share. If increase in the authorized capital did not take place, society shall return in reasonable time additional contributions of participants and the initial contributions of the third parties;

90.8. Reduction of the authorized capital of limited liability company can be performed by reduction of nominal value of the initial contributions of all participants. Reduction of the authorized capital by reduction of nominal value of the initial contributions of all participants is performed with preserving ratio of the initial contributions of all participants.

Reduction of the authorized capital of society is performed based on the decision of general meeting of society. After decision making of general meeting about reduction of the authorized capital society in writing shall report about all this to the creditors in the terms determined in the charter or in the decision of general meeting of society. Within one month after receipt of the message creditors of society have the right to claim premature execution or the termination of the corresponding obligations, compensation of the suffered damage.

Article 90-1. Profit distribution in limited liability company

90-1.1. Distribution between participants of the net profit got as a result of activities of limited liability company is performed based on the decision made on the general meeting of society, according to the procedure, determined by the charter of society. In this decision complete or partial profit distribution can be established.

90.1.2. Each member of limited liability company has the right to the profit corresponding to its initial contribution in the authorized capital. The net profit shall be paid within one month after decision making of general meeting.

90.1.3. The limited liability company cannot make the decision on profit distribution in the following cases:

90-1.3.1. if at the time of the decision making provided in Article 90-1.1 of this Code, society approaches under the signs of insolvency or bankruptcy provided by the law or if adoptions of this decision result such signs;

90-1.3.2. if at the time of the decision making provided in Article 90-1.1 of this Code, net assets value of society is less than its authorized capital or if as a result of adoption of this decision there are less its amounts.

Article 91. Management in limited liability company

91.1. The supreme body of limited liability company is general meeting of his participants.

In society from one participant of power of general meeting of society are performed by the participant solely. In the cases provided by the charter of society and also in socially significant structures  the board of directors (or the supervisory board) and (or) audit committee (auditor) is created. In limited liability company the executive body (joint or individual) performing the current management of its activities and accountable to general meeting of his participants is created. The head and members of collegiate executive body of society or the head of sole executive body of society can be elected as well not from among his participants.

91.1-1. General meeting of limited liability company can be next and extraordinary. Each participant has the right to participate on general meeting of members of society, to choose (to appoint) bodies of society, to be chosen (to be appointed) in them and to participate in vote, personally to participate or be the provided representative, to require modification of the agenda of general meeting and amendment of the agenda new subjects for discussion appointed according to the procedure, provided by this Code. Any agreement or action limiting these rights is considered invalid.

On general meeting of members of society each participant has the number of votes pro rata to its share in the authorized capital. The head and members of collegiate executive body who are not members of society or the head of sole executive body on general meeting of society can participate with the right of advisory vote. Except the questions carried by this Code to exclusive competence of general meeting of society according to the charter of society other questions also can be carried to powers of general meeting of society. Regardless of fixing in the charter, general meeting can discuss any questions connected with activities of society.

91.1-2. The regular general meeting of members of society is convened by executive body in the terms determined by the charter, but at least once a year. The general meeting devoted to results of annual activities of society is convened no later than four months upon termination of financial accounting year.

91.1-3. The extraordinary meeting of participants of the meeting is convened in cases and the procedure established by the charter. Extraordinary general meeting is convened on own initiative executive body, and also upon the demand of the board of directors (supervisory board), audit committee (auditor) or participants having, at least, one tenth from total quantity of voices. Extraordinary general meeting of the society which is in process of liquidation is convened by liquidation commission.

91.1-4. General meeting is competent if at general meeting of members of society there are participants who have more than fifty percent of shares of society.

91.1-5. In case of lack of quorum on general meeting of members of society general meeting is convened by executive body of society according to the procedure, established by the charter of society, without change of the agenda of general meeting. Again convened general meeting is competent if at it there are participants who have fifty percent of shares of society.

91.1-6. In case of lack of quorum at again convened meeting general meeting is convened by executive body of society according to the procedure, established by the charter of society, without change of the agenda of general meeting. Repeatedly convened general meeting is competent if at it there are participants who have 25 percent of shares of society.

91.1-7. Decisions on the questions carried to competence of general meeting of the society consisting of one participant are accepted by this participant solely and are drawn up in writing.

91.2. Competence of governing bodies of society, and also procedure for adoption of decisions and performance by them on behalf of society are determined according to this Code and the charter of society.

91.3. Are within the exclusive competence of general meeting of members of limited liability company:

91.3.1. change of the charter of society, change of the size of its authorized capital;

91.3.2. formation of executive bodies of society and early termination of their powers;

91.3.3. approval of annual statements and financial statements of society and distribution of its profits and losses;

91.3.4. decision on reorganization or liquidation of society;

91.3.5. election and early termination of their powers of the board of directors of society (or supervisory board) and (or) audit committee (auditor) of society;

91.3.6. decision making about the conclusion of transactions, the provided Articles 49-1.2 and 87.10 of this Code.

91.4. It shall involve the independent auditor (external audit) to check of correctness of the annual financial reporting of limited liability company annually. Audit inspection of the annual financial reporting of society (except for subjects of micro and small business) can be carried also out upon the demand of any of his participants. In this case audit inspection is carried out at the expense of the participant requiring its carrying out. The procedure for carrying out audit inspections of activities of society is determined by the legislation and the charter of society.

91.5. Publication by society of data on results of conducting its cases (the public reporting) is not required, except as specified, stipulated by the legislation.

Note: in Articles 91. 1, 91-4.1, 107.3 and 107-12.1 of this Code "socially significant structures" are implied as the commercial organizations specified in article 2.1.9 of the Law of the Azerbaijan Republic "About financial accounting".

Article 91-1. Board of directors (supervisory board) of limited liability company

91-1.1. The board of directors (supervisory board) created in cases stipulated in Article 91.1, during the periods between general meetings of society exercises control over activities of its executive body. If election of audit committee (appointment of the auditor) is not provided in the charter, then powers of audit committee (auditor) according to this Code can be delegated to the board of directors (supervisory board).

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Effectively work with search system

Database include more 40000 documents. You can find needed documents using search system. For effective work you can mix any on documents parameters: country, documents type, date range, teams or tags.
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If you cannot find the required document, or you do not know where to begin, go to Help section.

In this section, we’ve tried to describe in detail the features and capabilities of the system, as well as the most effective techniques for working with the database.

You also may open the section Frequently asked questions. This section provides answers to questions set by users.

Search engine created by SojuzPravoInform LLC. UI/UX design by Intelliants.