ARMENIA Law and Practice Contributed by: Varoujan Avedikian, Tamara Martirosyan, Sofya Sargsyan and Larisa Gevorgyan, Andersen Legal
investment’s nature and the investor’s home jurisdic - tion, SPVs are often incorporated in other “friendly jurisdictions”, mainly to benefit from treaty protection and tax advantages. In regulated industries, such as financial institutions and utility services, prior approval from the relevant regulatory authority might be neces - sary before acquiring a controlling stake, as outlined in 6. Antitrust/Competition . 3.2 Regulation of Domestic M&A Transactions The regulatory approvals usually applicable to domes - tic M&A transactions are detailed in 6. Antitrust/Com- petition . 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework The most common entity types in Armenia are joint- stock companies and limited liability companies. Though the law envisages the possibility of establish - ing partnerships and other types of entities, those are uncommon in practice. Both joint stock and limited liability companies limit the responsibility of their shareholders to the amount of their investments in the company. Joint-stock com - panies are classified as open and closed companies, with the open form mainly used to offer shares to the public. Armenia’s corporate governance framework is built on a combination of laws, the corporate governance code, stock exchange rules and corporate constitu - tional documents. The main sources applicable to companies include the following. • The company law regime (including, without limita - tion, incorporation, governance and winding up) is set out in the Civil Code, Law on Joint-Stock Com - panies and Law on Limited Liability Companies. For financial institutions registered and licensed by the CBA (banks, investment companies, credit institutions, insurance companies, investment fund managers, etc), the regime is supplemented by relevant entity-specific laws. The framework and procedure for winding up due to bankruptcy are set
out in the Law on Bankruptcy (applicable to regular entities) and the Law on Bankruptcy of Banks, Credit Organizations, Investment Companies, Cryptoasset Service Providers, Investment Fund Managers, and Insurance Companies (applicable to financial institutions). • The Law on Securities Market regulates financial services and securities activities. It imposes restric - tions on the offering and promotion of securities and requires companies to prepare a prospectus when offering their shares to the public. • The Corporate Governance Code, approved by the Minister of Economy, serves as a soft law code of practice, though in some instances companies are required to follow its provisions on a “comply or explain” basis. For instance, companies whose shares are listed on the main (A) or secondary (B) share lists, or whose bonds are traded on the main (Abond) or secondary (Bbond) bond lists, of the Armenia Stock Exchange (AMX) are required to comply with the Corporate Governance Code, along with additional disclosure and governance obligations set out in the secondary legislation of the CBA and the AMX Rules. • Their constitutional documents regulate the internal management of companies, primarily the charter (by-laws). These documents, to the extent permit - ted by and consistent with applicable laws, define matters such as the rights attached to shares (including voting rights), the powers of directors, the conduct of shareholders’ and directors’ meet - ings, changes to share capital and procedures for share transfers. In the context of shareholder rela - tions, shareholder agreements are used. 4.2 Relationship Between Companies and Minority Investors Minority investors are afforded certain fundamental protections, including the right to file a derivative claim against the company’s directors for breaches of fiduciary duty or trust, block resolutions requiring unanimous voting and call an extraordinary meeting of shareholders.
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