ENG | RUS Content  
ABOUT TAJIKISTAN

Establishing a Company

// Individual Entrepreneur
// Legal Entity: Corporation
// Partnerships
// Branch or Representative Office of a foreign company
// Formation Procedure: Registering the Business
______________________________

Tajikistan welcomes business ventures from everyone, irrespective of nationality or place of residence. Investment and business activities are governed by the following laws: ‘Civil Code of the Republic of Tajikistan’, ‘Law on state registration of legal entities and individual entrepreneurs’, ‘Law on state protection of business in the Republic of Tajikistan’ and the ‘Law on investments’.
Foreign investors can choose between different types of legal forms for conducting business in Tajikistan. Existing foreign companies can also carry out business activities through a Tajik branch office. The various business options in Tajikistan can be summarized as follows:

// Individual Entrepreneur

In Tajikistan an ‘Individual Entrepreneur’ is an individual (sole proprietor) who is involved in business activities without forming a legal entity and operating at his/her own risk. Individual entrepreneurs can work under a business license (known in Russian as a ‘patent’) or a certificate.
To be eligible to work under a business license (‘patent’), an individual entrepreneur shall not exceed a turnover of 200,000 Somoni (@ 42,000 USD) annually, may not import or export goods, and may not hire employees. Individual entrepreneurship under a patent uses a simplified taxation process. The cost of a patent is fixed, based on the type of activity engaged by the entrepreneur. The business license must be renewed annually.
The certificateis a more structured legal form, with stricter fiscal and accounting requirements. There are two types of certificate holders:
• Those whose tax obligations are calculated based on the profit (standard regime). There is no ceiling on turnover for certificate holders in the standard regime. They are able to engage in international trade and may hire staff.
• Those whose tax obligations are calculated on a turnover basis (simplified regime). They are also able to engage in international trade and may hire staff.

// Legal Entity: Corporation

The legal status of a ‘Corporation’ in Tajikistan encompasses different types of entities. With reference to the‘Civil Code of the Republic of Tajikistan’, the most common forms of corporations are:
• Limited Liability Company
• Company with Supplementary Liability
• Joint Stock Company
A corporation is a legal entity, meaning that the holder of rights and obligations is not the individual shareholder, but the company itself. The company itself concludes contracts, possesses assets and has to pay taxes.
A corporation is a legal entity, meaning that the holder of rights and obligations is not the individual shareholder, but the company itself. The company itself concludes contracts, possesses assets and has to pay taxes. Liability is limited to the corporation’s business assets, including the share capital. A minimum share capital is required, and the accounting obligations are more extensive than those for other business legal forms (such as partnerships).

— Limited Liability Company (‘Ltd’, or ‘OOO’ in Russian)
The‘Limited Liability Company’ is the most widely used legal formfor corporations in Tajikistan. The legal foundation for the establishment of a Limited Liability Company is Article 94 of the ‘Civil Code of the Republic of Tajikistan’. To set up a Limited Liability Company, the number of shareholders is at least one person, but cannot exceed 30 persons.
The minimum share capital required, to establish a limited liability company is 500 Somoni ($105USD) , as expressed in the founding document of the Ltd. At least half of the charter capital must be investedat time of registration, the remaining amount within the first year after registration.The founding document must be accompanied by a charter, if the number of shareholders amounts to more than one person. To be valid, the Limited Liability Company must be entered into the Unified State Registry for legal entities. The application has to be accompanied by the founding documents whichmust be notarizedin Tajikistan.
Details on how to register a company are summarized in chapter 7.5. Once registered in the Unified State Registry for legal entities, the Limited Liability Company becomes a legal entity.

— Company with supplementary Liability (‘ODO’ in Russian)
The ‘Civil Code of the Republic of Tajikistan’ (Article 105)foresees the establishment of a ‘Company with Supplementary Liability’. The main difference between a ‘Limited Liability Company’ and a ‘Company with Supplementary Liability’ lies in the scope of liability. The additional liability of each partner may not exceed the amount of his/her investment into the capital stock of the company.
Apart from the specification in terms of liability, the current regulations of a Limited Liability Company (Ltd) are applied in equal manner to a Company with Supplementary Liability. The Company with Supplementary Liability is not a frequently used legal mechanism in Tajikistan.

— Joint Stock Company(‘AO’ in Russian)
A‘Joint Stock Company’ in Tajikistan can be established by one person irrespective of national or foreign origin. In general, a Joint Stock Company enjoys a valuable market reputation among business partners. This is due to the more formal procedures and organizational obligations of the company’s day-to-day business operations. The founding document of a Joint Stock Company is its charter, approved by its founders.
The ‘Civil Code of the Republic of Tajikistan’ distinguishes between an open and a closed Joint Stock Company. An open Joint Stock Company has the right to openly conduct the subscription of shares whereas a closed Joint Stock Company distributes its shares usually among the founders.
The minimum share capital to startan open Joint Stock Companyis 5.000 Somoni (@1050USD) and for a closed Joint Stock Companyto 1.000 Somoni (@210 USD) ,both must be deposited by the founding shareholder by the end of the financial year.
A Joint Stock Company comes into existence upon registration in the Unified State Registry for legal entities. The application has to be signed by the founding shareholders, accompanied by a notarial record on the authenticity of the signatures in the founding document. Joint Stock Companies are subject to several disclosure regulations, including annual audit reports. The companies are managed by an executive board or an appointed Director/General Director. A Joint Stock Company with more than 50 shareholders also requires the establishment of a supervisory board (board of directors).

// Partnerships

The main feature of a ‘Partnership’ is the personal commitment of an interested party towards the partnership. Any partnership requires at least two partners.
The liability of the partners for the partnership’s debt is generally unlimited and personal. No minimum share capital is required and accounting requirements are less involved than those for corporations.
In Tajikistan, there are three major partnership mechanisms relevant for foreign investors:
• Full Partnership
• Limited Partnership
• Production Cooperatives
The main difference between these entities lies in the liability of its partners.

— Full Partnership
A ‘Full Partnership’ is defined as an association of individuals united forthe achievement of a joint contractual purpose. Forming a ‘Full Partnership’ is not complicated. At least two partners must agree on the establishment of the intended type of partnership and conclude a founding contract in writing, which serves at the same time as the charter of the partnership. The founding contract must be signed by all partners. Unless additional regulationsare stated in the founding contract, each partner has the right to act independently in the name of the partnership. All partners are jointly liable with their private assets for any debts incurred by the company.
Registration of a ‘Full Partnership’ into the Unified State Registry of legal entities is necessary. The application must be accompanied by a notarial record on the authenticity of the signatures in the partnership agreement.

— Limited Partnership
A ‘Limited Partnership’ is a partnership agreement with the option of limiting the liability of some of the partners. At least one partner is personally liable without limitation, usually the general partner, whereas the liability of the limited partners is limited to their respective share of the partnership capital.
The establishment of a ‘Limited Partnership’ requires an agreement between at least one limited and one unlimited partner. The founding document of a ‘Limited Partnership’ has to be signed by all general partners. The ‘Civil Code of the Republic of Tajikistan’ does not foresee a minimum share ofcapital.
The liability of the limited partner will become limited only after the registration of the ‘Limited Partnership’withthe Unified State Registry of legal entities.
A ‘Limited Partnership’ offers a greater flexibility compared to a ‘Full Partnership’ as the capital base can be increased by including additional limited partners.

— Production Cooperative (‘Artel’ in Russian)
A ‘Production Cooperative’ is a voluntary association of at least five people to conduct joint commercial activities mainly in the fields of production, processing, sales and trade. The legal foundation for the establishment of a production cooperative is the ‘Civil Code of the Republic of Tajikistan’ (Article 118).
To establish a ‘Production Cooperative’, no minimum share capital from its members is required. Nevertheless, regulations on each member’s share must be defined in the charter of the ‘Production Cooperative’.
The liability of the members of a ‘Production Cooperative’ is limited to the amount defined in the bylaws. The bylaws may define a generally unlimited and personal liability but mayalso limit the liability to the amount of cooperative shares each member holds.
Due to its commercial status, a ‘Production Cooperative’ has to be registered in the Unified State Registryfor legal entities. At time of registration, each member is obliged to contributeat least ten percent (10%) of the agreed capital share, whereas the remaining amount can be carried forward within the first year after registration.
A ‘Production Cooperative’is generally managed by an executive board or an appointed Executive Director. A ‘Production Cooperative’ with more than 50 members requires additionally the establishment of a supervisory board.
At any time and upon unanimous decision of its members, a production cooperative can be transformed into another legal entity such as Full or Limited Partnership.

// Branch or Representative Office of a foreign company

ИA foreign company with its headquarters and business operations outside of Tajikistan may establish a ‘Branch Office’or a ‘Representative Office’in Tajikistan.The main difference between both offices lies in the status of its business activities and accounting regulations.

— Branch office
A ‘Branch office’ is a suitable business form for a foreign company interested in establishing a physical presence in Tajikistan for the purpose of initiating business and fostering contacts with business partners.
A ‘Branch Office’ has no independent or separate legal personality distinct from the head office itself. In legal and organizational terms, it is part of the head office business and is thus subject to the laws governing the head office. A business branch forms part of the foreign company’s organization. The legal liability of the branch office depends on the liability of the legal entity of the head office.
A ‘Branch Office’ has to display some degree of autonomy vis-à-vis the head office by having its own management with its own executive power structure, separate local bank accounts, and separate accounting standards, including the preparation of a balance sheet.
The ‘Branch Office’must be registered withthe Unified State Registry for branches and representative offices. The application for registration requires detailed information on the foreign company, in particular its legal status. All documents must be prepared in Tajik language and must be legalized at the Ministry of Foreign Affairs.

— Representative Office
Offices that serve simply to monitor the market and pave the way for initial customer contacts are often described as ‘Representative Offices’. Those types of offices usually do not perform independent business activities on behalf of the foreign company. Representative offices are often managed by an external business person authorized by the foreign company.
A ‘Representative office’must register at the Unified State Registry for branches and representative office. The application requires the same formalities as for ‘Branch Offices’.

// Formation Procedure: Registering the Business

To start a business in Tajikistan requires different administrative procedures. In compliance with the ‘Law on State Registration of Legal Entities and Individual Entrepreneurs’, dated 19 May 2009, the Tax Authority Office is responsible for the registration of legal entities. To ease the registration process of business, the government of the Republic of Tajikistan has established ‘one-stop shops’ at all Tax Authority offices at national, regional and district levels which streamline procedures and facilitate the process for starting a business. However, legal status is not officially obtained until the final registration is recorded in the Unified State Registry,as outlined above.
The following documents should be submitted for registration of a legal entity:

• Application form for state registration of legal entity (This includes: legal form of entity; company name in Tajiklanguage; location of entity; origin of legal entity (creation or reorganization); information on founder and head of legal entity; all possible business activities – actual and envisioned)
• Resolution of founders on establishment of legal entity (with signatures of founders)
• Passport copy of Chief Executive Officer of legal entity.
• Receipt proving payment of registration fees.
In accordance with the legal regulations, the business can expect registration to be completed within five working days from the submission of documents.
The official registration of a business will result in a state registration certificate and a Tax Identification Number(TIN). Furthermore, a statistic code and a Social Protection and Pension number (SIN) will be issued automatically for the new business (but additional application is needed!).
To obtain a statistic code, the applicant has to visit the office of the Statistics Committee. The statistic code along with the state registration certificate, are both prerequisites for opening bank accounts and other administrativeprocedures.
A Social Protection and Pension number (SIN) can be obtained through application at the Ministry of Labour and Social Protection. Legal entities must register with the Social Fund within 30 days of state registration. More detailed information on the SIN can be found at the website of the Ministry of Labour and Social Protection of the Republic of Tajikistan (www.labour.tj).
To sum up: to establish a Company in Tajikistan, approximately 20 days have to be counted to complete the preliminary administrative requirements.

21, Valamatzadeh srt, 734012,
Dushanbe, Tajikistan
Tel.: (+992 37) 221-77-43, 221-52-84
Fax: (+992 37) 221-14-80, 223-06-69
chamber@tpp.tj
www..tpp.tj
Design and developed
by Design-studio "Anko"