LexInfoSys (University of Bremen)
legislative acts are available from this source
Baku, 13 January 1995
of the Azerbaijan Republic
present Law establishes general social, economic and legal conditions of
investment activity (capital investment) on the territory of the Azerbaijan
Law is directed to the intensive attraction of investments into the economy
of the Azerbaijan Republic, efficient use of economy for the development
of country economic base, as well as international economic cooperation
and integration and will ensure protection of rights of all investors,
independent of their property form.
I General provisions
1 Definition of investment
is comprised of financial means, as well as material (actual) and intellectual
values, used in all kinds of business activity with the aim of income (profit)
extraction or for the social benefit.
means and values include the following:
pecuniary means, purpose bank assignments, credits, stakes, shares and
other securities; movables and immovables (buildings, constructions, equipment
and other valuables);
scientific-experimental and other intellectual valuables, officially drawn
up in the appropriate order;
complete set of technical, technological, commercial and other knowledge
(´know-howª), drawn up in the form technical documentation,
skills and production experience, necessary for the organisation of the
given and other kinds of production;
rights to use soils, waters and other resources;
buildings, constructions, equipment, also connected with copyright or other
of investments for the acquire and replenishment of basic funds and development
of material production is carried out in the form of capital investments.
2 Investment activity
Investment activity represents the combination of investment contribution
and all actions of investors, connected with the execution of the given
There are following kinds of investment activity:
privatised investment activity, carried out by citizens, all juridical
entities, public, religious communities and other communities of the Azerbaijan
state investment activity, carried out by supreme and local power authorities
of the Azerbaijan Republic and Nakhchvan Autonomous Republic at the expense
of budget, extra-budget funds and means of debts;
external investment activity, carried out by foreign citizens, juridical
entities, state, international finance organisations, as well as persons
joint investment activity, carried out by citizens, juridical entities
of the Azerbaijan Republic, foreign states and both states.
To apply the achievements of the research0technical programmes in the production
and social sphere the innovation activity as a part of investment activity
is carried out. The innovation activity includes:
implementation of long-term research-technical programmes; financing of
fundamental investigations for the introduction of qualitative changes
into the state of production powers aiming at the improvement of economic
working out of new economic types of technique and technology, their output,
distribution, application and etc.
3 Facilities for investment activity
property in all spheres of economy, including general funds and circulating
assets, securities, purpose cash deposit, scientific-technical products,
intellectual valuables, other property facilities, as well as property
rights may become the facilities for investment activity.
is prohibited to invest into facilities, the creation and use of which
does not meet the sanitary-hygiene, radiation, ecological, architectural
and other norms, established by the legislative acts of the Azerbaijan
Republic, as well as contradicts the rights and interests of juridical
entities and state.
4 Subjects of investment activity
Persons, that have intended to invest borrowed or attracted finance means,
material (actual) or intellectual valuables into the facilities they possess
and provided the use of these means by the said facilities, are considered
the subjects of investments activity and called investors (capital investors).
may act as depositors, creditors and buyers in the investments activity,
as well as fulfil other functions, connected to the investment activity.
Citizens and juridical entities of the Azerbaijan Republic, persons without
citizenship, foreign states may become the subjects (investors and participants)
of investment activity.
Citizens and juridical entities of the Azerbaijan Republic and foreign
states, as well as persons without citizenship may participate in the fulfilment
of investment intentions as executors of orders or be the members of investment
5 Investments legislation
occurring at the execution of investment activity on the territory of the
Azerbaijan Republic are regulated by the present Law, other legislative
acts and international treaties of the Azerbaijan Republic.
activity of investors of the Azerbaijan Republic on the territory of the
Azerbaijan Republic is regulated by the legislation of the given state.
II Fulfilment of investment activity
6 Rights of subjects of investment activity
All subjects of investment activity enjoy equal rights in the fulfilment
of investment activity independent of the form of property or kind of economic
activity on the territory of the Azerbaijan Republic.
in any project, except for those, prohibited for investment by the present
Law and other legislative acts of the Azerbaijan Republic represent the
absolute right of investor and are protected by law.
Investor independently establishes aim, direction, kind and volume of investment,
attracts natural and juridical entities by means of tender or auction,
as any member of investment activity.
In virtue of legislative acts of the Azerbaijan Republic investor has all
rights of ownership, use and disposal of investment projects and results,
including re-investment and trade operations.
into projects without property rights does not exclude further rights of
investor in the ownership, effective control and participation in incomes
from the utilisation of given projects.
The right of ownership, use and control of investments and their results
may be ceded in the legally established order to other civic and juridical
entities with investor's consent. Mutual relations, appearing during the
said cede of rights are regulated independently on contractual terms.
Investor may attract credits, securities and debts as funds for investment
the aim of real security of his obligations investor can use his own property
available under his economic use for pledge.
guarantee is granted for the investments of state enterprises acting as
investors at the expense of credit under mortgage outside the territory
of the Azerbaijan Republic.
Investor is entitled to buy directly or indirectly property of any kind
in any amount at prices and conditions, established by the parties, unless
it contradicts the legislation of the Azerbaijan Republic.
Investors may participate in the privatisation of state and municipal property,
as well as uncompleted construction projects at conditions and in the order,
specified by the legislation of the Azerbaijan Republic.
7 Obligations of subjects of investment activity
Subjects of investment activity are to provide the following in circumstances
and in the order established by the legislation of the Azerbaijan Republic:
granting of appropriate bank license for the amount and source of investments,
carried out on the basis of financial resources and material values;
obtaining of necessary permit and approval from corresponding state bodies
and secret services for capital construction and other works, requiring
obtaining of expertise recall for investment projects from the viewpoint
of observation of ecological, sanitary-hygiene, radiation, ecological and
observation of norms and standards, established in the order specified
by the legislation of the Azerbaijan Republic; execution of requirements,
fixed by state bodies and executive officers within the limits of their
competence, in the order specified by the legislative acts of Azerbaijan
Republic; submitting of accounting and statistical acts in the established
not to permit the unfair competition and observe the requirements of anti-monopoly
payment of fines in cases, specified by the legislation or contract.
Members of investment activity are to get the license for the fulfilment
of special character works, requiring appropriate certification. The list
of such works is to be determined by the Supreme Council of the Azerbaijan
Republic, whereas the order of license granting is established by the Cabinet
of Ministers of the Azerbaijan Republic.
8 Relations between the subjects of investment activity
represents the general document, regulating relations between the subjects
of investment activity.
of contract, choice of supporters, determination of duties, adoption of
any conditions of economic relations not contradicting the legislation
of the Azerbaijan Republic do not represent absolute competence of subjects
of investment activity. The over-interference of state bodies and executive
officers into contractual relations of subjects of investment activity,
specified by the acts of legislation in force.
of investment activity are entitled to organise competitions and auctions
in accordance with legislation in force aiming at the fulfilment of investment
intentions and measures.
9 Sources of investment activity financing
activity may be financed from the following sources:
cash, real financial and internal economic resources of the investor himself
(profit, depreciation deductions, pecuniary charges, deposits of citizens
and juridical entities, appropriate payments of insurance bodies for the
coverage of damage incurred);
debt financial means of investor (bank and budget credits, bonds and other
attracted financial means of investor (stakes of working collectives, citizens
and other contributions, means resulted from the sale of shares);
budget assignment with the aim of investment
gratuitous and charity contributions of enterprises, organisations and
citizens, benefits and etc.
III State regulation of investment activity
10 Aim of state regulation of investment activity
regulation of investment activity is carried out with the aim of pursuing
common economic, scientific-technical and social policy and is financed
at the expense of Republic and local budgets in the amount, specified by
the program of social-economic development of the Azerbaijan Republic.
fulfilling investment activity in the most important directions to meet
the public demand, are granted privileges, specified by legislative acts
of the Azerbaijan Republic.
case of necessity appropriate investment funds and other establishments
may be created or organised with the aim of fulfilment and regulation of
11 Forms of state regulation of investment activity
State regulation of investment activity includes control of state investment,
as well as regulation of conditions for investment activity and control
over the observance of conditions by all subjects of investment activity.
Regulation of state investment is carried out by Republic and local power
authorities and is comprised of the planning of budget, extra-budget means,
other means, attracted by the given bodies, determination of investments
and solving of other problems, connected to them.
State regulation of investment activity is carried out by the following
tax systems, subjects and objects of taxation are divided at, tax degrees
fulfilment of credit and depreciation policy, including accelerated depreciation
of capital assets. Changeable and various depreciation exemptions may be
determined for different economic spheres, kinds and elements of capital
assets and equipment;
rendering of finance assistance in the form of grant, subsidy and budget
determination of state norms and standards;
adoption of anti-monopoly measures;
separation of property from state and its privatisation;
establishing of conditions for soil, water and other natural resources
fulfilment of pricing policy;
conducting of expertise of investment projects;
12 Order of adoption of resolutions about state investments on the territory
of the Republic
Resolutions about state investments on the territory of the Republic based
on forecasts of economic and social development, scheme of development
and placement of production forces, on purpose scientific-technical and
complex programs, determining the expediency of given investments.
Projects of purpose and scientific-technical programs around the Republic
are to be worked out by appropriate state authorities and public organisation
in the order, established by the Cabinet of Ministers of the Azerbaijan
Republic and adopted by the Supreme Council of the Azerbaijan Republic
within the structure of general directions for social-economic development
of the Republic with the representation of Republic government.
Resolutions, the execution period of which makes up to two years, covering
state investment intentions, connected to extraordinary situations, emergencies
and natural disasters, are to be adopted by the Cabinet of Ministers of
the Azerbaijan Republic on the basis of proposals of appropriate central
and local state regulation authorities.
13 Procedure of state order placement for the execution of works in fundamental
State order for the execution of works in fundamental construction represents
one of the forms of state investment implementation on the territory of
As a rule, the state order is placed on the basis of competition (tender)
with consideration of economic profitability of the given order for enterprises
Projects of Republic state order are accepted for operation in the order,
specified by the Cabinet of Ministers of the Azerbaijan Republic.
14 State expertise of investments
Republic, interstate and regional investment projects and programs, financed
at the expense of budget, extrabudget means, as well as at the expense
of foreign investments are to come through state expertise in the order,
established by the Cabinet of Ministers of the Azerbaijan Republic.
financed at the expense of other sources are to come through the state
expertise in the order, specified by the Cabinet of Ministers of the Azerbaijan
Republic from the viewpoint of ecological, seismic and sanitary-hygiene
case of necessity the expert committee, created by the Cabinet of Minister
of the Azerbaijan Republic may conduct expertise of separate investment
projects and programs.
15 Regulation of investment activity by the Supreme Mejlis of the Nakhchivan
Autonomous Republic, local power and regulation authorities
Mejlis of Nakhchivan Autonomous Republic and local power and regulation
authorities, under the supervision of the Republic regulate investment
activity on their territories by means of creation of production and social
projects by subjects of investment activity, coordination of problems of
natural resources utilisation.
use of local budget for investment activities, construction of social infrastructure
facilities, allotment of land under construction, raising of questions
before appropriate bodies in cases of infringement of conditions for soil
use, volume and period of projects construction with the assignment of
social and nature-protection branches, represent the absolute competence
of local power and regulation authorities.
Mejlis of Nakhchivan Autonomous Republic may establish new conditions,
not contradicting the present Law with the aim of state regulation of investments.
16 Pricing in investment activity
the process of investment activity the cost of production, work and services
is established by free prices and tariffs, as well as results of competitions
(tender), and in cases specified by legislative acts - by prices and tariffs,
regulated by the state.
prices may be established during construction, using recommended state
norms of estimates and prices.
IV Provision of rights of investment activity subjects and protection of
17 Provision of rights of investment activity subjects
ensures stability of conditions for implementation of investment activity,
protection of rights and legal interests of its subjects.
of the contract, concluded between the subjects of investment activity
remain valid during the whole period of the given contract even at the
establishment by the legislation conditions, complicating or contradicting
the state of subjects, if they have not agreed about their amendments.
bodies and their executive officers cannot interfere with the affairs of
subjects of investment activity except for those circumstances, permitted
by the legislation and being within their competence.
from circumstances, specified by the present Law, investors rights in the
choice of projects cannot be restricted.
the adoption of acts, infringing subjects rights by state bodies and other
authorities, the said bodies are to fully pay the damage, incurred to the
subjects of investment activity. Disputes about damage compensation are
to be considered in court or arbitrage.
18 Protection of investments
The state ensures guarantee for the provision of all investments, including
foreign investments, independently of the form of property.
of investments is provided by the corresponding legislation of the Azerbaijan
Republic, as well as contracts, concluded by other states. Investors, including
foreign ones, are granted equal legal regime, excluding measures, preventing
from control, use, liquidation of investments, also determining conditions
and the order of keeping the results of values and investments.
Provided further legislation of the Azerbaijan Republic deteriorates conditions
of investment depositing, the legislation in force at the moment of investment
is applied for the period, specified in the contract about investment activity.
Investments are not to be nationalised without compensation, confiscated
and no other similar measures are to be applied on the territory of the
Azerbaijan Republic. Such measures are possible on the basis of acting
legislation of the Azerbaijan Republic and with condition of full payment
of damage, incurred in connection with the termination of investment activity,
including lost profits. The order of payment of damage, incurred to investor
is determined by the given legislation.
the purchase of bank deposits, the contribution of shares and other securities
deposited or acquired by investors, compensation of payments for property
purchased or right for lease, excluding amounts used or lost as a result
of their own actions or actions conducted with their participation, are
to be returned to investors.
Disputes, occurred during the fulfilment of investment activity are considered
by court, or arbitrage correspondingly.
Investments may be insured, and in cases specified by the legislation should
19 Responsibility of subjects of investment activity
case of non-execution of requirements, specified by the legislation or
obligations, agreed upon between the subjects of investment investors bear
responsibility in the order, specified by the given acts.
responsibility is also foreseen for state bodies at the failure to execute
corresponding obligations under the contract, concluded between the subjects
of investment. In this case at the lack of state authorities means for
the compensation of damage incurred, including lost damage or fine, the
amount mentioned is to be paid by the Republic government or local executive
powers and executive officers, guilty in the infringement of obligations
are to bear personal responsibility in the legally established order.
of fines or amounts for the infringement of legislation and contractual
obligations, as well as the payment of incurred damage, does not release
the guilty party from the execution of requirements and duties, unless
otherwise specified by the legislation and contract.
20 Conditions for termination of investment activity
or termination of investment activity is permitted only with the resolution
of the following authorities:
investors themselves ( in this case investors pay the damage, incurred
to other members of investment activity);
competent state body.
The resolution of the state body about suspension or liquidation of investment
activity may be made only for the above reasons, stated below :
if it infringes ecological, seismic, sanitary-hygiene , architectural and
other norms, rights and interests of citizens and juridical entities, states,
protected by law;
in case of investor being declared bankrupt in the legally established
in case of emergencies and natural disasters.
21 Security at the termination of investment activity
are entitled to accept investment or incomes connected to the investment,
subject to them at the termination of investment activity, in peculiar
form at the real cost or in kind.
22 International agreements
international agreements of the Azerbaijan Republic establish rules other
than, those specified by the legislation of the Azerbaijan Republic, the
international agreements are applied.
of the Azerbaijan Republic Heidar Aliev
January 13, 1995