In recent years, the protection of small investors’ interests has been a constant focus within the framework of economic reforms carried out in Azerbaijan, and relevant improvements have been regularly implemented in line with the most advanced international practices. As a result of these reforms, Azerbaijan has achieved high recognition at the international level. In particular, in the Doing Business 2018 report prepared by the World Bank, Azerbaijan ranked among the top ten countries for the indicator of protecting the interests of small investors.

As a continuation of these reforms, on April 23, 2018, President Ilham Aliyev signed a Decree introducing relevant amendments to the Civil Code in order to further increase the attractiveness of the Azerbaijani economy for local and foreign investors.

Ayaz Chaparli, Head of Department at the Center for Analysis of Economic Reforms and Communication (CAERC), states that under the new Decree, shareholders may hold directors liable for damages caused to the buyer as a result of transactions carried out. The executive director may be fined, imprisoned, or dismissed from office based on substantiated claims by shareholders. In addition, as a result of a successful shareholder claim, a court may annul a transaction (contract).

If a shareholder of a joint-stock company decides to sell their share, it must first be offered to the existing shareholders. Moreover, a potential buyer acquiring 50 percent of a joint-stock company’s shares is required to announce a tender to the other shareholders. When 51 percent of the assets of a limited liability company are sold, the consent of the company’s participants is required. Additionally, shareholders holding at least 5 percent of shares in a joint-stock company may add new items to the agenda. The company’s board of directors must also include an audit committee consisting solely of board members.

The CAERC department head adds that the amendments to the legislation will create favorable conditions for further improving Azerbaijan’s attractive business and investment environment and for strengthening the country’s position in international rankings, including the Doing Business 2019 report.