What is a Startup Certificate? Process of Obtaining and Revoking

What is a Startup?

A startup is a small business entity based on innovative ideas and technologies, aiming to generate revenue and profit, and creating a competitive product or service in the market within a short-term perspective (up to 3 years). Key characteristics of a startup include innovative initiatives, competitive advantages, and the ability to create added value for the market.

Startups can be launched by both individuals and legal entities. In startups established by legal entities, the share of medium or large business entities must not exceed 49%. The applicant must be a resident taxpayer.

What is a Startup Certificate?

A startup certificate is an official document that confirms the recognition of a startup project by the state. This certificate:

• Confirms the legal status of the startup;
• Grants the right to benefit from tax exemptions;
• Confirms that the project is innovative and competitive in the market.

The certificate is issued for three years and certifies that the proposed product or service meets the criteria established by the relevant decree of the Cabinet of Ministers of the Republic of Azerbaijan.

The Purpose of Obtaining a Startup Certificate

Obtaining a startup certificate provides several legal and economic advantages for the entrepreneur and the project:

• Official recognition by the state;
• Tax benefits and special rights;
• Credibility when presenting the project to investors and partners;
• Eligibility for incubator programs, grants, and financial support.

This certificate also ensures that the project is visible and trustworthy within the startup ecosystem.

Requirements for Obtaining a Startup Certificate

Applicant requirements:

• Must be a micro or small business entity;
• The share of medium or large business entities must not exceed 49%;
• Must be a resident taxpayer.

Product or service requirements:

• Must be developed to generate revenue or profit;
• Must create added value through new organization of existing production/service processes or by applying new technology;
• Must be competitive;
• Must have a projected demand in the market within a short-term perspective (up to 3 years);
• Must not duplicate existing startup products or services.

Process of Obtaining a Startup Certificate

1. Submitting the Application: The applicant submits an application in writing or electronically to the Small and Medium Business Development Agency (SMBDA/KOBIA). For legal entities, the authorized representative signs; for individuals, the applicant signs.
2. Supporting Documents: The application must include a business plan, product design or industrial sample, information about human resources, investment plans, patents, and grants if applicable.
3. Evaluation by the Expert Council: The Agency submits the documents to the Expert Council, which evaluates and provides its opinion by simple majority.
4. Decision Issuance: The Agency makes a reasoned decision to grant or deny the certificate. The certificate is issued for three years.
5. Duplicate Certificate: If the certificate is lost or damaged, a duplicate can be obtained within three business days.

Process for Duplicate Startup Certificates

• The owner submits an application to the Agency for a duplicate;
• The Agency prepares and delivers the duplicate within three business days, either in person or via registered mail;
• Until the duplicate is issued, the applicant may continue operations based on a receipt confirming the application date and registration number;
• The duplicate has the same legal force as the original certificate.

Revocation of a Startup Certificate

A startup certificate may be revoked under the following circumstances:

1. At the request of the certificate owner;
2. If the legal entity, foreign branch, or representative office holding the certificate is dissolved;
3. If an individual entrepreneur ceases their activity;
4. By a relevant court decision;
5. If false information is discovered in the submitted documents.

The revocation is implemented by the Agency, and the decision is delivered to the certificate owner within two business days. The decision can be appealed administratively or in court.

Reference link.

Conclusion

A startup certificate is a crucial document for the official recognition of innovative projects by both legal and individual entrepreneurs. It enables projects to attract investment, enhance market credibility, and benefit from state support programs. For legal firms and entrepreneurs, obtaining startup status accelerates business growth while providing legal and economic advantages.

As the Arbitro legal team, we provide corporate and individual legal assistance.