Company Registration in Turkmenistan - Business Starting & Setup

The legal system of Turkmenistan is based on civil law.

The main sources of law are the following kinds of legal acts:

• legislative acts: the Constitution, constitutional statutes, codes, laws, decrees of the Parliament.
• bylaws: decrees of the President, resolutions of the President, resolutions of the Cabinet, legal acts of ministries, state committees and departments, resolutions of local authorities.

Turkmenistan is a member of over 150 international conventions, treaties and other multilateral documents. Generally accepted international law is prioritized.

According to article 24 of the Law on Enterprises, several kinds of legal entities may be incorporated in Turkmenistan, each of which has its own features and advantages. The main of them are listed below.

It is an enterprise formed at the expense of the state or transferred into the state’s ownership, which owns, uses and disposes of property assigned to it.

The minimum amount of the statutory fund (authorized capital) of a state-owned enterprise is determined by the state authority that established it.

The founder may determine for a state-owned enterprise:

• compulsory work (assignments, orders);
• prices and tariffs for goods, work and services, and rules of their calculation;
• administrative positions to which the founder appoints employees.

A state-owned enterprise is liable for its obligations to the extent of all its property and is not liable for its founders’ obligations. Founders, in turn, besides the property assigned to the enterprise, are not liable for the enterprise’s obligations.

Sole proprietorship (SP) is owned by one person and established by resolution of the owner of the property.

An SP may also be established as a result of purchase by an individual of an enterprise that belonged to other owners.

Property of a sole proprietorship is formed by property of the individual, received income and other sources.

The minimum amount of the statutory fund (authorized capital) is 25 times the base value set by legislation of Turkmenistan to calculate taxes and duties. Currently, it is TMT 50. Hence, the statutory fund of a sole proprietorship is TMT 1 250.

A sole proprietorship is managed by its owner. And the owner has the right to contract with another person (manager, executive director) to manage the sole proprietorship’s affairs.

The owner of a sole proprietorship is liable for obligations that they have assumed to the extent of all their property.

A cooperative enterprise is based on personal participation of each member in its activity.

Its property is formed by cash and property contributions of its members, income and other sources.

The minimum amount of the statutory fund (authorized capital) of a cooperative enterprise is 50 times the base value set to calculate taxes and duties, i.e. TMT 2 500.

A cooperative enterprise is managed by the general meeting of members.

A cooperative enterprise is liable for its obligations to the extent of its property. Shareholders are jointly and severally liable for the enterprise’s obligations to the extent of their shares.

It is an enterprise established to make profit by the generalization of property of individuals and/or legal entities of Turkmenistan and individuals and/or legal entities of foreign countries.

It is established based on a contract entered into between its founders. Each founder’s share in the statutory fund (authorized capital) must be at least 10% of the total property.

The minimum amount of the statutory fund of a joint venture is 100 times the base value set to calculate taxes and duties, i.e. TMT 5 000.

A joint venture is liable for obligations that it has assumed to the extent of its property.

The supreme body is the general meeting of members.

It is an enterprise established by public associations, religious organizations, charitable or other social foundations.

Public organization enterprises are established through the use of funds of those organizations and/or funds of other founders as well as other cash and property assets.

The minimum amount of the statutory fund (authorized capital) is 100 times the base value set to calculate taxes and duties, i.e. TMT 5 000.

A public organization enterprise is liable for its obligations to the extent of all its property.

Business company is an association of two or more individuals and/or legal entities that conduct business jointly.

Its property is formed by combining in its statutory fund shares (contributions) of individuals and/or legal entities that are its members.

The minimum amount of the statutory fund of a business company is TMT 5 000.

The supreme body is the general meeting of members.

Joint stock company (JSC) is an enterprise where contributions of individuals and/or legal entities are combined into the statutory fund divided into a certain number of shares that certify rights of obligation of members of the company (shareholders) in respect of the JSC.

A company may be open or closed, which shall be shown in its founding documents.

Contributions of founders (shareholders) made in exchange for the company’s shares purchased by them comprise the statutory fund of the JSC. The minimum amount of the statutory fund is the aggregate par value of issued and outstanding shares of the company that is not less than 200 times the base value, i.e. TMT 10 000.

A JSC is liable for its obligations to the extent of all its property that can be recovered.

Foreign investors will be interested in a business company (BC) since that is the form of incorporation analogous to limited liability company (LLC).

An enterprise’s name must contain:

• the specific name of the enterprise that makes it possible to distinguish it from existing enterprises;
• the full name or abbreviation of the form of incorporation.

An enterprise may not use a name that is identical or, as defined by the state registration authority, similar to the name of another enterprise already incorporated.

The name of an enterprise with foreign investment may contain an indication of the country of its founders.

The words “Turkmenistan” and “Ashkhabad” are not allowed to be used, but it is possible to negotiate analogous names, for example, those containing the prefix “Turkmen-“ (on a case-by-case basis).

1. Preparation of documents necessary to incorporate a business company.

Founders shall provide the following documents for the purpose of state registration:

• application for state registration signed by founders or an authorized person;
• articles of association;
• memorandum of association;
• document proving that the state registration fee has been paid.

The following shall be stated in the registration application:

• name and registered address;
• amount of statutory fund;
• list of founders containing their names and registered addresses if the founder is a legal entity;
• full name, place of residence and data of identity document if the founder is an individual.

All documents must be notarized and legalized or apostilled. For members from CIS countries apostille and legalization of documents are not required.

2. Registration of the business company with the registration authority.

3. Ordering and issuing the seal of the enterprise.

4. Registration of the business company with non-budgetary foundations.

5. Opening a corporate account with a Turkmen bank for the enterprise’s operations.

A company incorporated in Turkmenistan must have a local address. According to the law, a registered address is one of the mandatory attributes of an enterprise.

A registered address is the address of an enterprise that has been entered in the prescribed manner in the Unified State Register of Legal Entities and determines the enterprise’s location.

The Law of Turkmenistan on Enterprises provides for the use of a seal by an enterprise when conducting business that contains the enterprise’s official name.

A seal is stated to be one of the official attributes of an enterprise.

Redomiciliation of a company to or from Turkmenistan is not allowed by the law.

A business company may have one or more directors. Their residency does not matter.

If a Turkmen company is willing to employ a foreign citizen, it is required to apply for a license to employ foreign workers.

The supreme body of a BC is the general meeting of its members.

A business company may be established by two or more persons.

There are no restrictions regarding residency. Both an individual and a legal entity may be a founder.

Depending on the form of property liability BCs may be established whose members are jointly and severally liable for the company’s obligations to the extent of all their property as well as BCs whose members are liable to the extent of their contributions (shares) in the statutory fund.

Founders’ data is on a public trade register.

Turkmenistan does not have a register of beneficiaries yet, and information on the real owner of a company is confidential. But information on directors and shareholders is available on the trade register.

The minimum amount of the statutory fund of a business company is 100 times the basic value set by legislation of Turkmenistan to calculate taxes and duties, which is TMT 5 000.

In practice, the contributed statutory fund is USD 100 000 to USD 200 000.

Contribution to property may be money (in manats and/or foreign currency), securities, other things, property rights or other rights that have monetary value.

Unless otherwise provided by the memorandum of association, the ratio of each member’s contribution to the aggregate amount of the statutory fund is their share. The size of founders’ contributions (shares) in the statutory fund of an enterprise is determined by agreement between the founders.

During the period from the signing of the founding documents to the filing of the enterprise’s incorporation application, half (50%) of the amount of the statutory fund must be contributed. The other half must be contributed