Shareholders Agreement in Azerbaijan: The New Corporate Agreement (2026)

Short answer: A law signed on 27 July 2026 added the corporate agreement to Azerbaijan's Civil Code (Article 65-1) — the local equivalent of a shareholders' agreement. LLC participants, shareholders and the company itself can use it to regulate voting, governance and share transfers. It must be in writing and sealed, but no notarisation is required, and the parties must notify the company in writing within 15 days of signing. A new Article 65-2 expressly recognises tag-along, drag-along and pre-emption rights.

What changed — and what this guide does not cover

Before 2026, shareholders' agreements were signed as ordinary civil-law contracts, with an unclear relationship to the charter. The new law makes the corporate agreement a distinct legal institution:

• Parties: LLC participants, shareholders of a joint-stock company, and — where the law provides — the company itself.
• Scope: how corporate rights are exercised, internal governance, voting and restrictions on share transfers — provided nothing breaches the law or affects third-party rights.
• Who it binds: only the signatories. Against a company that is not a party, and against third parties, the charter prevails.

Not covered: listed shares, investment funds and the currency-control changes made by the same law are separate topics.

Key rules for corporate agreements

Share transfers: tag-along, drag-along, pre-emption

These mechanisms sit in Article 65-2. The same law also introduced convertible loans (Article 404-3) and future equity agreements (Article 404-4) for start-up investment.

What to put in a corporate agreement

• Governance: appointing the director, supermajorities or veto rights for key decisions.
• Deadlock: what happens when a 50/50 company cannot decide.
• Share transfers: tag-along, drag-along, pre-emption, lock-up periods.
• Exit: compulsory transfer when a participant leaves or their employment ends.
• Dividends: the distribution policy.
• Security: penalties, pledges or guarantees for breach.

Five common mistakes

1. Not updating the charter. The agreement does not override the charter against a non-party company or third parties — put key rules in the charter too.
2. Forgetting the 15-day notice. The company must be told in writing.
3. Not bringing everyone in. The agreement binds only those who sign it.
4. No stated consequence for breach. Without an agreed penalty or security, you are left proving losses.
5. Choosing foreign law. Corporate matters of an Azerbaijani company are governed by Azerbaijani law; a foreign governing law may not have the effect you expect.

Frequently asked questions

Does a corporate agreement need notarisation?
No. It must be in writing and sealed.

Does it replace the charter?
No. It binds the parties, but the charter prevails against a company that is not a party and against third parties.

Can an existing LLC sign one?
Yes — participants can sign at any time and must notify the company within 15 days.

Is drag-along recognised in Azerbaijan?
Yes, under Article 65-2 of the Civil Code as amended in 2026.

What must be done when shares are sold?
The shareholder change must be registered within 15 business days — see director and shareholder changes.

How we can help

Affidacons drafts corporate agreements for joint ventures, investors and founders, aligns them with the charter and supports share transactions. For pre-deal checks, see legal due diligence. See our corporate and commercial advisory services, or contact us.

This article is for general information and is not legal advice. It is based on the official text of Articles 65-1, 65-2, 404-3 and 404-4 added to the Civil Code by the law of 27 July 2026, as of October 2026; legislation may change. Obtain advice on your specific situation before making decisions.