A legal entity, whether or not established in Azerbaijan, may form a subsidiary in Azerbaijan in any legal form available for commercial purposes, i.e. a GP, an LP, a JSC, an LLC, or an ALC. A subsidiary is a separate and distinct legal entity; the parent enterprise may contribute property to its subsidiary but is typically not liable for the obligations of the subsidiary. A parent company, however, may be held liable for the obligations of its subsidiary in bankruptcy if such bankruptcy was caused through the fault of the parent company in connection with the execution of its instructions.

Additionally, a parent company and its subsidiary are jointly liable for obligations incurred by the subsidiary as a direct result of the implementation of the parent’s instructions, even if the former is not in bankruptcy.