Azerbaijan: legal status of business entities

Purpose The purpose of the paper is to investigate the legal status of business entities in the Republic of Azerbaijan. The Azeri government intends to establish a suitable environment for local and foreign companies working in the country. Design/methodology/approach The paper presents a scientific investigation aimed at discovering and interpreting facts related to legal entities in the Azeri context. The goal of the research process is to produce new knowledge, through the exploratory research, which structures and identifies new problems, and the constructive research, which develops solutions to a problem. Findings The main finding is that constructing the legal entities within the legal frameworks and in compliance with the European standards play a substantial role in overall economic growth and in attracting foreign investments in the local economy as well as in implementing measures for continuing economic reforms, further improving business climate and developing the non‐oil sector in line with the oil sector. Practical implications As a result of this research paper some changes may be made in the local legislation in order to develop the company incorporation procedure in the Republic of Azerbaijan in the most effective way and to provide the integration of the local economy into the world economy. Originality/value The originality of this paper is that it describes for the first time the legal status of legal entities in the Republic of Azerbaijan, and discusses the advantages and disadvantages of the company incorporation system. The paper addresses the international business community, particularly those involved in all aspects of commercial and corporative law.