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1.1.1. Main Forms of Doing Business

Turkmenistan provides several business forms for investors, of which the main forms include:

  • Company (Joint Venture Company or Joint Stock Company)
  • Sole Proprietorship
  • Partnership
  • Foreign Business (Subsidiary or Branch or Representative Office)

Company

Companies can be formed either as Joint Venture Companies ('JVC') or as Joint Stock Companies ('JSC').

JVC is a form of legal entity which is formed by joint participation from residents and non-residents with an intention to earn a profit.

The key aspects of Joint Venture Company (JVC) include:

  • Resident and non-resident founders may be individuals or companies
  • Founders' liability is limited to their contribution to the company
  • Minimum share of each founder in the capital is 10% of the common property of the JVC
  • Minimum capital requirement is TMT 5,000

The key aspects of Joint Stock Company (JSC) include:

  • Shareholders' liability is limited to the paid-up value of their shares
  • Government and local authorities may establish or become co-founders of a JSC
  • Minimum 2 shareholders and 1 director are required who can be non-resident individuals or companies
  • Minimum capital requirement is TMT 10,000
  • JSC cannot have a shareholder which is a single shareholder legal entity
  • Mandatory to submit annual audited financial statements to the government
  • A JSC can be an open JSC or a closed JSC
  • Under an open JSC, shares can be offered to the public
  • Under a closed JSC, shares cannot be offered to the public and maximum 50 shareholders are permitted

Sole Proprietorship

A sole proprietorship, also known as 'Individual Entity', is formed by an individual who is liable for all the debts and obligations of the company. Nationals of Turkmenistan, foreign citizens are allowed to conduct business activities as individual entrepreneurs in the country. The minimum capital requirement is TMT 1,250.

Partnership

A partnership is formed when two or more persons agree to carry on a business for profit as co-owners. Partners can be individuals or companies. Rights and responsibilities of each partner are defined in the partnership agreement.

Foreign Business (Subsidiary, Branch, Representative Office)

Foreign companies can conduct their operations in Turkmenistan through the constitution of a Subsidiary or Branch Office or a Representative Office. A Subsidiary can be formed as a JVC or a JSC with foreign holding, subject to certain restrictions.

Branch is not considered as a separate legal entity in Turkmenistan. Its operations are pre-defined by the foreign parent company.

Representative Office is not regarded as a separate legal entity in the country. It is not permitted to carry out business or commercial activities in the country. It is only permitted to conduct market research and to promote products and services of the parent company within Turkmenistan.

Registration of a Branch or a Representative Office of a foreign bank in Turkmenistan requires a license or permission from the Central Bank of Turkmenistan. Branches and Representative Offices of a foreign company are registered for a period of 2 years in Turkmenistan and thereafter, they may apply for an extension.