AZERBAIJAN Law and Practice Contributed by: Ismail Askerov and Amil Jafarguliyev, MGB Law Offices
viable option, particularly for companies seeking to diversify funding sources or improve financial trans - parency. 5.2 Securities Regulation Regulation of Azerbaijan’s capital markets is overseen by the Central Bank of the Republic of Azerbaijan, which is responsible for supervising the securities market and establishing the rules governing the issu - ance, placement and public offering of investment securities. The Baku Stock Exchange (BSE) is the country’s primary trading platform for publicly traded securities. Settlement, custody and registration of securities are carried out by the National Depository Centre, which maintains the centralised register of securities and provides depository, clearing and information dis - closure services. Investors must hold a depository account with a licensed investment intermediary in order to purchase, hold or sell securities on the BSE. Issuances in Azerbaijan may take the form of a pub - lic offering or a private placement (to fewer than 50 investors). Subscription to investment securities must be completed within three months from launch, and a placement is deemed finalised once the initial own - ers of the securities are registered in their depository accounts. 5.3 Investment Funds Foreign investment funds may operate in Azerbaijan only through a representative office, which requires prior authorisation from the Central Bank. To obtain this permit, the fund must submit detailed documen - tation, including: • information on the beneficial owner; • evidence of managerial experience and profes - sional qualifications of key personnel (legalised/ apostilled); • audited financial statements covering the period of activity; • the charter of the representative office; • the foreign fund’s charter and state-registration documents (legalised/apostilled); • the decision of the authorised body establishing the representative office; and
• relevant licences and permits from the fund’s home jurisdiction. There are no specific exemptions available to foreign investment funds. Additionally, foreign capital partici - pation limits apply in certain regulated sectors. The Central Bank determines maximum foreign ownership levels for investors seeking to acquire shares in banks and insurance companies. Within the insurance sec - tor, the combined participation of international finan - cial institutions (of which Azerbaijan is a member), foreign insurers and foreign institutional investors – including banks, credit institutions, pension funds and investment funds – may not exceed 50% of the insurer’s authorised capital. 6. Antitrust/Competition 6.1 Applicable Regulator and Process Overview Azerbaijan operates a formal merger control regime under the Competition Code, which entered into force on 1 July 2024. The competent authority is the Com - petition Authority. Importantly, this framework is not an investment screening mechanism; it governs trans - actions irrespective of whether the acquirer is foreign or domestic, and the analysis is limited to the con - centration’s effects on competition within Azerbaijan. Transactions requiring notification are regulated under Article 27 of the Competition Code, which provides that a concentration must be notified when any of the following alternative thresholds are met: • dominant position – one of the undertakings involved holds a dominant position in the relevant market; • financial institution resale exception – a financial institution cannot dispose of shares acquired for resale within the period permitted under the Com - petition Code; • individual turnover – turnover of any participating undertaking, or the entity formed as a result of the concentration, exceeds AZN25 million (approxi - mately USD14.7 million; • combined worldwide turnover – combined turno - ver of all parties, inside and outside Azerbaijan,
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