ARMENIA Law and Practice Contributed by: Aram Orbelyan, Narine Beglaryan, Artur Hovhannisyan, Lilit Karapetyan, Sarkis Knyazyan and Shushanik Stepanyan, Concern Dialog
3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The most common business vehicles are limited lia - bility companies (LLCs) and joint-stock companies (JSCs). In both cases, the liability of shareholders (or, in the case of LLCs, participants) is limited. Furthermore, no requirements for the minimum share capital or a mini - mum number of shareholders are determined. How - ever, minimum capital requirements are envisaged in several sectors (mainly for financial institutions). Both LLCs and JSCs are governed by the meeting of shareholders (participants), which is the highest gov - erning body. The sole director, in the case of LLCs or, in the case of JSCs, a sole director (CEO) or a collegial executive board (directorate), carries out the company’s ongoing management. The establish - ment of a board (board of directors) is possible in either type, with the Law on JSCs regulating specific requirements and the scope of authorities of such a board. In contrast, the Law on LLCs is silent on most of these issues, allowing the companies to determine the scope at their discretion. The main differences between the two types of entities are as follows. LLCs are preferred when the shareholding and man - agement structures are straightforward and less com - plex. For JSCs, it is possible to have multi-layered, complex management structures (including the col - legial executive body) and regulate the relationships between the shareholders, including through share - holders’ agreements, etc. Furthermore, in LLCs, the participant has a right to withdraw from the company without the consent of the other participants and request the company to pay the market value of its share. The participant with 10% or more in the charter capital may bring a claim to expel the participant from the company if that par - ticipant hinders the company’s activities. Finally, a significant difference to consider is that the information on the participants of LLCs is open to the
public; however, in the case of JSCs, the informa - tion on shareholders is maintained by private registry keepers and is not provided to third parties without the company’s consent. At the same time, since 2023 all the companies are obliged to disclose their UBOs, and that information on UBOs is publicly and freely available on the webpage of the State Registry of Legal Entities. Therefore, irrespective of the corporate type, the information on the UBOs of any company is publicly available. 3.2 Incorporation Process The process of incorporation of both LLCs and JSCs is fairly straightforward. The registration of both types of entities before the Agency for State Register of Legal Entities of the Republic of Armenia (the “Agency”) is free of charge. However, JSCs must engage private entities (account operators) licensed by the Central Depository for share registry keeping, incurring addi - tional expenses compared to LLCs. The process of registration itself takes no more than two working days after submitting the neces - sary package of documents. For JSCs, the registry- keeping process may be longer, as account operators conduct KYC and due diligence procedures before entering into registry-keeping agreements. Foreign investors should consider the following nuances in the incorporation process. Template (Pre-Approved) Package-Based Registration of LLCs If the founder(s) of an LLC is an individual, and both the director and the founder(s) are in Armenia, the establishment process is relatively quick. They can simply visit the Agency with their passports (and veri - fied translations if applicable) and answer basic ques - tions from an Agency employee. The employee will provide a standard, pre-approved template package (in Armenian), and the company can be registered in under half an hour, free of charge. The Standard Process of Establishment and Registration of LLCs As an alternative, the founding and governing docu - ments of the LLC (founding decision, charter) can be drafted to meet the specific needs and requirements of the founders, including preparing multilingual ver -
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