Legal support of investment projects
Investments – long-term capital investments in the economy to generate income.
Investments are an integral part of the modern economy.
The investment policy specifies the highest priority for capital investment, on which the efficiency of the economy, providing the largest increase in output and national income. Investment climate characterizes the ease the situation in the region, the industry in relation to the investments that can be made. Practice shows that investors are interested in a different country than the political and economic stability. A potential investor knows that reliability of investments and profits are inversely proportional. Safer than the country in terms of investment, the less profit. United States – the most reliable country for investment, and therefore the profit that investors receive in Azerbaijan for the year from oil production in the U.S. – for 8-10 years.
Estimated (Doing Business-2009 Project) of the World Bank for 2008-2009. Azerbaijan ranks 33rd on freedom of doing business (eg, ease of doing business). For Azerbaijan and the international business community, it was very surprising news, since Azerbaijan for the year rose to whole 64 steps, leaving behind almost all CIS countries, some developed European countries, as well as the rich oil states of the Middle East.
It is known that investment opportunities are one of the main indicators of economic development. In terms of further development of Azerbaijan’s achievements in this area have been very encouraging.
A significant part of the investment in the national economy since independence, is foreign investment. According to international organizations, Azerbaijan has the highest share of foreign investments in the FSU. The argument for the attractiveness of the investment climate of Azerbaijan for the monsters of the world economic system is a specific indicator of their share in the national economy: United Kingdom (46.6%), USA (20.7%), Japan (10.6%) and Norway (6.6 %).
In December 2010, foreign investments in Azerbaijan’s economy grew 4.16 times in November, and for all of last year – a 40.9% year on year (by 2009).
As stated in the State Statistics Committee, in 2010 the total investments made 2405.915 million manats, including 571.142 million manats in December (the absolutely best indicator per month in 2009-2010) against 137.008 million manats In November, 298 bn in October, AZN 296.7 in September.
As of 2010 the leaders of foreign investments in the economy did not change. UK with investments for AZN 1247.238 provided 51.9% of their volume. U.S. invested $ 359.383 million or 14.9% of all foreign investments, Czech Republic – 216.695 bn (9%), Japan – 180.105 manats (7.5%), Norway – 111.866 million manat (4.7%) Turkey – 94.801 million manat (3.9%), South Korea – 40.225 million manat (1.7%), France – 29.388 million manat (1.2%), Saudi Arabia – 4.268 million manat (0.2% ), Russia – 1.937 million manat (0.1%).
Among international organizations major investments were made by the World Bank (79.949 million or 3.3% of total investments), the Asian Development Bank (32.222 million or 1.3%), the Islamic Development Bank (3.679 million or 0.2% ).
There is no doubt that, first of all, investors, especially foreign, pay attention to the mechanisms of protection of their rights and interests in the country where they invest their investments, and in this case there are legal remedies they have in the first place.
The main legal regulators common social, economic and legal environment of investment and foreign investment in the territory of the Azerbaijan Republic establishes the Law “On Protection of Foreign Investment” and the Law “On Investment Activity” above law provides state investors, both local and foreign, security and legal protection. Law of the Azerbaijan Republic “On the protection of foreign investment,” defines the legal and economic principles of foreign investment in the country. The law is aimed at attracting and effective use of foreign material and financial resources and guarantees the protection of the rights of foreign investors. Foreign investors are allowed in any activity, which may be involved national investor, unless prohibited by other laws.
As a positive factor should note the presence of bilateral agreements of the Azerbaijan Republic with key countries in the protection and promotion of investments.
Among the most important international treaties to which Azerbaijan should highlight the Convention on the Settlement of Investment Disputes between States and Nationals of Other, the Convention Establishing the Multilateral Investment Guarantee Agency, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the CIS Convention on Human Rights investors and others.
The Government is making quite progressive steps to improve the investment climate in Azerbaijan. Among the significant measures can distinguish the removal of restrictions related to the convertibility of profits in other currencies are converted profits to other countries and reinvestment, the formation of a unified exchange rate based on the principles of a market economy and a significant reduction in the number of licensed activities. The most revolutionary step was the removal of a large red tape with the state registration of legal entities and the use of a “single window”, ie single center – the public authority in the person of the Ministry of Taxes in charge of registration of legal entities in the Republic of Azerbaijan. The same practice is applied in the customs system. It is no secret that these measures will increase the investment attractiveness of Azerbaijan and allow to rise in the rating list of the World Bank.
The most important comparative advantage of Azerbaijan’s economy are the following:
• Azerbaijan is rich in natural resources, especially hydrocarbons;
• level of education is high, almost half the population of the same age has technical or higher education, the general population is mainly secondary education.
• Azerbaijan has a developed infrastructure, including development of the road network, major irrigation system, a good network of railways, large capacity for electric power, cable telecommunications.
Legal support of investment projects
Support for investment projects can be divided into the following steps:
– The preparation of financial model for the project.
The preparation of financial model of the company is cash flow planning in a project company (a company established for a particular project, which are made all the rights and obligations – Project Firm). Planning for long-term solvency, the effective use of borrowed funds, return on investment and net profit.
– Legal analysis (due diligence) of office parties to the transaction, as well as rights to assets (if applicable): A study of corporate documents, real estate rights, assessment of legal, accounting, tax, risk, etc. The purpose of examination – the identification of risks to potential investors and other participants in the project, identify possible ways to avoid risks:
– Participation in negotiations with stakeholders
– Preparation of documents for the project
To implement the project, you must make a set of documents:
• Preparing the transaction (investment project).
Structure of the deal is a choice of legal forms transaction participants, choice of jurisdiction of the transaction, the construction of the contractual relationship, the choice of ways to ensure the interests of the participants, tax and financial planning, compliance with antitrust laws.
• Contractual relationships with the investor: the main investment contract, the definition of the contract value, the definition of cash flow and repayment, the mechanisms of return: loan agreements, collateral.
• Contractual relationships c other project participants.
• Implementation of the registration process at any stage of the project.
In the provision of registry services include:
• Advising on the order and timing of the registration procedures.
• Review of documentation and preparation of documents necessary for registration, and to assist in the collection of such documents, if necessary.
• Development and submission of documents for state registration in the competent state authorities.
• Getting the registered documents.
• Support of transactions of purchase and sale of shares / stocks
• Control of the relationship between project
• Compliance with the terms of the contracts on the project
• Timely delivery of documents to the project contract