Discusses the legal requirements/options for joint venture/licensing in this market.

American firms considering establishing a joint venture (JV) with an Azerbaijani partner should carefully evaluate the proposed structure, particularly in the non-energy sector, which is not protected by the production sharing agreements that shield oil and gas investments.  If a JV is selected as the best way to proceed, U.S. firms should ensure there is tight management control, clear capital increase and cash call provisions, iron-clad confirmation of share increases and decreases, clear procedures for calling shareholder meetings, and a well-planned exit strategy. 

Several U.S. companies have reported being pressured by local partners to establish joint ventures and localize production.

U.S. companies previously reported obstacles with licensing in Azerbaijan.  However, as part of its economic reform program, the government simplified the licensing regime.  All licenses are now issued with indefinite validity through the “ASAN” Service Centers and must be issued within 10 days of application.  The Ministry of Economy also reduced the number of activities requiring a license from 60 to 32 in 2015.
 

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