In line with the recommendations of the Financial Action Task Force (FATF) – the leading international organization in the field of anti-money laundering and counter-terrorism financing – and in accordance with international practice, amendments made to the Azerbaijani legislation regarding the submission of beneficial ownership information entered into force on May 15, 2025.
Below are the main highlights of the amendments introduced to the Tax Code, and the Laws “On Currency Regulation,” “On Trade Secret,” “On State Registration and State Registry of Legal Entities,” “On Banks,” “On Insurance Activities,” “On Non-Bank Credit Institutions,” “On Investment Funds,” “On the Securities Market,” “On Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism,” and “On Payment Services and Payment Systems.”
Definition of "Beneficial Owner"
The concepts of "beneficial owner" and "chain of control and/or ownership" have been introduced into the legislation with the following wording:
Under the referenced law, new obligations have been established for legal entities to ensure transparency of beneficial ownership information and its submission to state authorities. These obligations are as follows:
► Each legal entity, as well as the representative office or branch of a foreign legal entity, must know, possess, and maintain accurate, reliable, and up-to-date information about its beneficial owner, along with supporting documents (including electronic documents), and must submit such information in cases and in the manner prescribed by law.
► Each legal entity, as well as the representative office or branch of a foreign legal entity, must store documents (including electronic documents) reflecting information on the beneficial owner in the manner prescribed by law.”;
► Any entity seeking legal entity status must provide the following beneficial ownership information in the prescribed application for state registration:
Additionally, a new Article 5-1 titled “Identification of the Beneficial Owner” has been added to the Law “On State Registration and State Registry of Legal Entities.” According to this article:
The following persons are considered the beneficial owners of a legal entity:
► A natural person (or persons) who ultimately owns directly or indirectly at least 10 percent of the charter capital and/or voting rights of a legal entity, or who holds a share that provides significant influence over decisions of the legal entity through a contract or otherwise (provided that the distribution of participation shares does not exclude the existence of a significant stake);
► If the natural person(s) specified under Article 5-1.1.1 of this Law does not exist or if there are doubts as to whether such person(s) is indeed the beneficial owner of the legal entity, then the natural person(s) who otherwise exercises control over the legal entity in any other form;
► If it is not possible to identify the natural person who exercises control over a legal entity through ownership interest or in any other form, then the natural person(s) who exercises executive control over the legal entity.
The following persons are considered beneficial owners of a foreign legal entity:
► the founder in the structure of the trust, the trustee, the protector (if any), the beneficiary or group of beneficiaries, and any other natural person who ultimately exercises effective control over the trust (including through a chain of control and/or ownership);
► In other types of foreign legal entities: any person who holds the same or similar rights and responsibilities as those specified in Article 5-1.2.1 of this Law.”;
As a result, the scope of information to be reflected in the state register has been expanded, and the following data must now be included in the relevant registers:
"The surname, first name, patronymic, date of birth, citizenship, and residential address of each beneficial owner of the entity, as well as information on whether the beneficial owner is a politically exposed person (PEP), a close relative, or a person closely associated with a PEP for the purposes of the Law of the Republic of Azerbaijan “On Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism.”
The relevant registration authority shall submit the information entered into the register regarding the beneficial owner to the financial monitoring authority within 5 business days. If there are doubts about the accuracy of the information in the register, the registration authority, upon request of the financial monitoring authority, shall require the legal entity to submit the relevant documents within 5 business days, and shall forward those documents to the financial monitoring authority within 3 business days from the date of their receipt.
If, based on conducted analysis, it is determined that the beneficial owner of the legal entity is a different person, and the legal entity does not agree with the information provided, it must submit additional supporting documents regarding its actual beneficial owner to the registration authority within 5 business days from the date of receipt of the information. The changes are then reflected in the register, and a notification is sent to the legal entity within 3 business days.
After receiving the notification about changes to the beneficial ownership information, the legal entity must ensure that the person identified as the beneficial owner is informed about this within 3 business days.
Amendments to the Tax Code, the Law “On Trade Secret,” and the Law “On State Registration and State Registry of Legal Entities” have classified information regarding beneficial ownership as commercial secret and tax secret data. Even if such information is reflected in the register, it is categorized as non-public information.
This information may only be provided to the financial monitoring authority upon request and in the cases and manner specified by the Law of the Republic of Azerbaijan “On Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism.”
The amendment to the law has established a new obligation for obligated persons. Accordingly, obligated persons must submit information about the beneficial owner, identified within the framework of customer due diligence measures applied to legal entity customersç to the financial monitoring authority within 3 business days.
The laws “On Currency Regulation”, “On Banks”, “On Insurance Activities”, “On Non-Bank Credit Institutions”, “On Investment Funds”, “On Securities Market”, “On Payment Services and Payment Systems” have been amended, and the following information has been added to the list of information to be submitted when obtaining a license:
"founders acting as managers of a foreign legal entity – a document confirming this, a copy of documents legalized or apostille-certified in accordance with the procedure established by the legislation, confirming the surname, name, patronymic (if any), date of birth, personal identification number or number of the document confirming the identity, citizenship, permanent residence (if these persons are legal entities, their name and identification number) of himself and other managers (if any), the founder of the foreign legal entity, the beneficiary (group of beneficiaries) of the foreign legal entity, the guarantor of the foreign legal entity (if any), as well as other persons exercising effective control over the foreign legal entity, and of the founding document of the foreign legal entity, and information on whether these persons are politically exposed persons, their close relatives or persons with whom they are in close relations for the purposes of the Law of the Republic of Azerbaijan “On Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism”.
This information is also included in the list of information that must be submitted to the supervisory authority when acquiring certain participation shares in the areas of activity regulated by the aforementioned laws.
Deadlines for submitting beneficial owner information
The identification of their beneficial owners by legal entities that have passed state registration by May 15, 2025, as well as the beneficial owners of a foreign legal entity by a representative office and branch of a foreign legal entity and the submission of information and documents to the state register of legal entities in accordance with the Law of the Republic of Azerbaijan “On State Registration and State Register of Legal Entities” is ensured by the following stages:
► for large business entities until December 31, 2025;
► for medium-sized business entities until June 30, 2026;
► for small business entities until December 31, 2026;
► for micro-business entities until December 31, 2027;
► for non-governmental organizations and religious institutions until June 30, 2026.
Several significant amendments have been made to the Labor Code of the Republic of Azerbaijan. Th...
Update on the practice of liquidation of legal entities
Regulations on the operation of hotels during COVID-19 pandemics approved
