New amendments to the Civil Code of the Republic of
Azerbaijan are introduced by Law No 635-VQD, dated 25 April 2017,
effective 21 May 2017. The amendments principally govern corporate
matters of commercial legal entities.
In accordance with amended Sub-Sections 67.6 and 68.3, neither a
subsidiary nor a dependent company may acquire shares of the main
(parent) company (typically, a company is a subsidiary of another
if it is >50 per cent belongs to the latter and dependent if
such percentage is >20). The changes can be regarded aiming to
eliminate practical issues with determining subsidiary and
dependent statuses where ownership is "circular". The
changes may also restrict an ability of shareholders to
"inflate" the equity capital (the contributions of which
are otherwise tax-free) of a group parent company.
