Definition of NGO  

The understanding of NGO in Azerbaijani legislation is equalized to public unions and funds (Art. 2 of the Law On Non Governmental Organisations (Public Unions and Funds)” as of 13 June, 2000, hereinafter Law “On NGOs).

Public union is a voluntary, self –governed non-governmental organisation that is not aimed at profits as a major objective, and not distributing generated profit among its members, and that is created upon initiative of several individuals and/or legal entities having common interests, for purposes defined in charter documents of such organization (Art. 2.1 of the Law On NGOs).

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Definition of NGO  

The understanding of NGO in Azerbaijani legislation is equalized to public unions and funds (Art. 2 of the Law On Non Governmental Organisations (Public Unions and Funds)” as of 13 June, 2000, hereinafter Law “On NGOs).

Public union is a voluntary, self –governed non-governmental organisation that is not aimed at profits as a major objective, and not distributing generated profit among its members, and that is created upon initiative of several individuals and/or legal entities having common interests, for purposes defined in charter documents of such organization (Art. 2.1 of the Law On NGOs).

Fund is a non membership organisation and is aimed at charitable, social, cultural, educational and other public activities (Art. 2.2 of the Law On NGOs).

Founding of NGOs 

The founders can create an NGO or it can be created as a result of re-organisation.  The charter of NGO should be approved during the general meeting of founders, when the creation of an NGO is declared (Art. 12 of the Law On NGOs).

Aims that may be pursued by NGO and rules applicable to its members

A non-governmental organization may be established and operated for purposes that are not prohibited by the Constitution and laws of the Republic of Azerbaijan (Art. 2.3 of the Law On NGOs).  Any individual and legal entity (except for state and local government bodies) in the Republic of Azerbaijan may become a member of a public union.

Members of a public union shall have equal rights.  They may elect and be elected to management bodies of public unions, participate in operations of public unions, supervise operations of their management bodies, and exercise other rights provided by charters of public unions.  Members of public unions shall as well follow requirements stipulated in charters of public unions.

Issues of acquiring and termination of membership of a public union shall be determined by its charter. Charter of a public union shall guarantee the right to lodge complaint within the organization and in court regarding termination of membership (Art. 10 of the Law On NGOs).

Functioning of NGOs without state registration

The commercial organizations and representations or affiliates of foreign entities can carry out their activities only after state registration (Article 4.1 of the Law On State Registration and State Register of Legal Entities as of 9 January, 2004, hereinafter “On state Registration).  Although, this provision does not mention the NGOs, that doesn’t mean that they can automatically function without state registration. 

Registration requirements for NGOs

An application should be provided to the relevant executive power body of the Republic of Azerbaijan, for state registration of an institution that wishes to obtain the legal entity status.  The application shall be signed by the founder (if several founders – by all of them) and his (their) representatives authorized in relevant order, and be notarized (Art. 5 of the Law On state Registration).  There is also a list of documents (indicating the address, name, document of payment of state duty, names and surnames as well as the contacts of the founders) that the founders should present for the state registration of NGO (Art. 5 of the Law On state Registration).  State registration of an institution that wishes to obtain the legal entity status, or representation or affiliate of a foreign legal entity should, as a rule, be carried out within 40 days.  Application on state registration and documents to be enclosed thereto shall be accepted for consideration by the relevant executive power body of the Republic of Azerbaijan, and within 30 days, their compliance with the Constitution of the Republic of Azerbaijan, this Law and other legal acts of the Republic of Azerbaijan be checked. In exceptional cases, when there is necessity for further investigation during the check, the period can be prolonged for additional 30 days (Art. 8 of the Law On state Registration).  The amount of state duty payment for the registration of NGO is 5.500 Azer. Manats (approx 1 EURO).

Authorized state bodies and NGO registry

The registration body for NGOs and other legal entities is within the Ministry of Justice.  The Registrar should be open to the public and there should be an opportunity to get copies of registration records (Art. 12 of the Law On state Registration).  However, these records are not open and the Ministry of Justice does not provide the needed information to NGOs and to media.

Denial of registration to NGOs

The application can be rejected if:

there is a contradiction of the submitted documents and Azerbaijani legislation;

the goals, tasks and forms of activity of the NGO contradicts the Azerbaijani legislation;

the drawbacks revealed in documents by the relevant executive power body of the Republic of Azerbaijan, are not eliminated within the period specified by this Law (Art. 11 of the Law On state Registration);

there is another NGO already existing with the same name;

there is a presentation of false information for getting registered (Art. 17 of the Law On NGOs).

Decision on rejection of state registration of a non-governmental organization shall be submitted to a representative of that non-governmental organization in a written form, pointing out reasons for rejection, as well as provisions and paragraphs of legislation that have been violated in preparation of foundation documents (Art. 17.2 of the On NGOs).

If the NGO was rejected a registration the latter can appeal to the court the decision of the state responsible body for the state registration (Art. 17.4 of the Law On NGOs).

Branch offices of NGOs

Representations or affiliates of a legal entity registered in the Republic of Azerbaijan are not regarded as legal entities and therefore do not have to apply for state registration.  They are, however, included in the state registry. Representations or affiliates of foreign legal entities have to pass a routine procedure of state registration (Art. 4 of the Law On state Registration).

Operational requirements for international NGOs

An international NGO wishing to operate in the Republic of Azerbaijan has to open a branch office (Art. 4 of the Law On state Registration).

Re-registration requirements for NGOs

The re-registration of an NGO can be done in cases when legal addresses of legal entities or representations or affiliates of foreign legal entities change from one administrative territory to another, it shall be entered into the register at the relevant executive power body of the Republic of Azerbaijan and a new register number be issued, unless otherwise is provided for in the legislation (Art. 10 of the Law On state Registration).

Authorized state bodies granting financial and other benefits to NGOs

There is no such procedure. There are some provisions on VAT exemption which is a quite difficult and complicated procedure.

Foreign funding of NGOs

The Law “On Grants”, as of 17 April 1998.  According to this law the foreign funding of NGOs is under strict control of Ministry of Justice.

Tax exemptions for NGOs

Current tax legislation creates challenges for NGO financial stability and sustainability.  NGOs are eligible for some tax exemptions on grant funding.   This includes a VAT exemption, although the reimbursement mechanism for VAT refunds is not being implemented.  As of January 2003, all NGOs, except for those receiving grants provided through the United State government assistance program, are obligated to submit a contribution to the Social Insurance Fund equal to 27 percent of the organization’s staff salaries.

NGOs are able to conduct commercial activities.  However, the income earned from these activities is taxed at the same rate as a commercial entity and is restricted to specific uses.  Additionally, there are no tax incentives for charitable contributions, which further limit NGOs’ ability to benefit from individual or corporate philanthropy.

Law “On Social Insurance” (1997), as amended in January 2003, requires NGOs to contribute 27 percent of consolidated payroll each month into the Social Insurance Fund.

Reporting requirements for NGOs

There are several types of reports that NGOs submit to the government agencies.  Not only financial or tax reporting, but also reporting on substantial issues mainly related to activities of NGOs their decisions on various issues.  Such reporting is envisaged by the law (Articles 25 and 26 of the Law On NGOs).  These reports are often called reports to public as if they are foreseen for wider public and for the sake of transparency.

Termination, dissolution and liquidation procedure for NGOs

The termination and dissolution of NGO is possible in cases when the NGO’s activities are not in conformity with its goals and rules, or with legislation of the Republic of Azerbaijan.  If during one year there were two or more written warnings to the NGO about problems in its activities and necessity to make improvements and the mentioned improvement were not done, the NGO can be dissolved by a court ruling (Art. 31 of the Law On NGOs).

The Civil Code of the Republic of Azerbaijan has also some provisions on dissolution of NGOs:

1. Infringement of legislative norms while establishing a legal person;

2. Undertaking activities without having necessary license or carrying out activities prohibited by law;

3. Systematic and grave breaches of the law;

4. Engagement in activities inconsistent with charter objectives on regular basis; and

5. Other cases specified in this law (Art. 59 of the Civil Code, as of 2000).

Participation in law-drafting that affects the status of NGOs

A non-governmental organization may come up with proposals on improvement of legal and regulatory acts, according to the rules provided by the laws of the Republic of Azerbaijan and by its own charter (Art. 2.4 of the Law On NGOs).

However, practice shows that NGOs are not involved in the process of making laws which affect their status.  There have been rare instances when proposals submitted by NGOs were taken into consideration in the legislative process, but these instances mainly relate to normative-legal acts that do not have a direct impact on NGOs.

Posted: June 2006

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