Corporate Governance 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

CHAMBERS GLOBAL PRACTICE GUIDES

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editors James Palmer, Gareth Sykes and Isobel Hoyle Herbert Smith Freehills Kramer

Global Practice Guides

Corporate Governance

Contributing Editors James Palmer, Gareth Sykes and Isobel Hoyle Herbert Smith Freehills Kramer

2025

Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer p.6

CÔTE D’IVOIRE Law and Practice p.207

Contributed by Houda Law Firm Trends and Developments p.228 Contributed by Houda Law Firm ETHIOPIA Law and Practice p.236 Contributed by TBeST Law LLP

ARMENIA Law and Practice p.11 Contributed by HAP Trends and Developments p.36 Contributed by HAP

BAHRAIN Law and Practice p.42 Contributed by Hassan Radhi & Associates BURKINA FASO Law and Practice p.61 Contributed by SCP Yanogo Bobson CABO VERDE Law and Practice p.75 Contributed by Raposo Bernardo & Associados Trends and Developments p.92 Contributed by Raposo Bernardo & Associados

FRANCE Law and Practice p.256 Contributed by Aurès

GEORGIA Law and Practice p.278 Contributed by Andersen in Georgia GERMANY Law and Practice p.292 Contributed by POELLATH Trends and Developments p.314 Contributed by Freshfields

CANADA Law and Practice p.98 Contributed by Fasken Trends and Developments p.115 Contributed by Dentons

GHANA Law and Practice p.323

Contributed by Addison Bright Sloane Trends and Developments p.344 Contributed by Addison Bright Sloane

CHILE Law and Practice p.131

GIBRALTAR Law and Practice p.353 Contributed by ISOLAS LLP

Contributed by Clyde & Co Chile Trends and Developments p.155 Contributed by Clyde & Co Chile CHINA Law and Practice p.162 Contributed by Global Law Office COLOMBIA Law and Practice p.184 Contributed by Baker McKenzie S.A.S. Trends and Developments p.199 Contributed by Baker McKenzie

INDONESIA Law and Practice p.373 Contributed by SSEK Law Firm Trends and Developments p.395 Contributed by SSEK Law Firm

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Contents

IRAQ Law and Practice p.401 Contributed by MENA Associates in association with AMERELLER Trends and Developments p.414 Contributed by MENA Associates in association with Amereller ITALY Law and Practice p.419 Contributed by FIVERS Studio Legale e Tributario

NETHERLANDS Law and Practice p.579 Contributed by Stibbe

NEW ZEALAND Law and Practice p.610 Contributed by Webb Henderson

NIGERIA Law and Practice p.633

Contributed by Jackson, Etti & Edu Trends and Developments p.651 Contributed by Jackson, Etti & Edu

JAMAICA Law and Practice p.443 Contributed by Henlin Gibson Henlin

PORTUGAL Law and Practice p.658 Contributed by Santiago Mediano e Associados, SP, RL

JAPAN Law and Practice p.461 Contributed by Nagashima Ohno & Tsunematsu Trends and Developments p.483 Contributed by Anderson Mori & Tomotsune

PUERTO RICO Law and Practice p.682 Contributed by Ferraiuoli LLC

KENYA Law and Practice p.492 Contributed by Kieti Law LLP Trends and Developments p.509 Contributed by Kieti Law LLP

SENEGAL Law and Practice p.697

Contributed by Houda Law Firm Trends and Developments p.718 Contributed by Houda Law Firm SERBIA Trends and Developments p.723 Contributed by Gecić Law

LIECHTENSTEIN Law and Practice p.516 Contributed by Schurti Partners Attorneys-at-Law Ltd.

MALAYSIA Law and Practice p.530 Contributed by David Lai & Tan Trends and Developments p.553 Contributed by David Lai & Tan

SOUTH AFRICA Law and Practice p.733 Contributed by ENS

SOUTH KOREA Law and Practice p.763 Contributed by Lee & Ko Trends and Developments p.782 Contributed by Lee & Ko

MEXICO Law and Practice p.559 Contributed by Aziz & Kaye Abogados, S.C.

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Contents

SWITZERLAND Law and Practice p.789 Contributed by Schellenberg Wittmer Ltd

TÜRKIYE Law and Practice p.811 Contributed by Balcıoğlu Selçuk Eymirlioğlu Ardıyok Keki Attorney Partnership Trends and Developments p.830 Contributed by Balcıoğlu Selçuk Eymirlioğlu Ardıyok Keki Attorney Partnership UK Law and Practice p.839 Contributed by Herbert Smith Freehills Kramer

USA Law and Practice p.861 Contributed by Sullivan & Cromwell LLP Trends and Developments p.885 Contributed by Sullivan & Cromwell LLP

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INTRODUCTION

Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer

Herbert Smith Freehills Kramer (HSF Kramer) was formed in June 2025 through the transfor - mational combination of Herbert Smith Free - hills and Kramer Levin, creating a world-leading global law firm. With over 6,000 people includ - ing c.2,700 lawyers and spanning 26 offices, HSF Kramer provides comprehensive legal ser - vices across every major region of the world. Uniquely positioned to help clients achieve ambitious objectives, HSF Kramer delivers ex - ceptional results in complex transactions and

high-stakes disputes. The dedicated corporate governance advisory team comprises govern - ance specialists with technical expertise who provide practical advice to clients on the full spectrum of governance issues. The team ad - vises listed and privately held companies on the regulatory, reporting and governance stand - ards applicable to them. The firm draws on its wide-ranging experience to advise on legal and regulatory requirements, emerging trends and market best practice

Contributing Editors

James Palmer is a senior corporate and governance lawyer who was the chair and senior partner of legacy firm Herbert Smith Freehills. He is one of the UK’s leading M&A,

Gareth Sykes leads the Herbert Smith Freehills Kramer corporate governance advisory team, advising a range of listed and privately held companies on a variety of governance issues.

capital markets and corporate lawyers, with deep experience of corporate governance and regulation, including financial regulation. He is frequently involved in helping clients in situations where they face significant and unusual challenges. These include hostile takeovers, board and governance disputes, regulatory and other investigations, business crises, interactions with governments or government bodies, significant liability or solvency exposures, as well as significant transactions. He is also recognised as a leading expert in relation to both Brexit and foreign direct investment regulation.

Gareth’s expertise includes advising on corporate reporting requirements, the UK Corporate Governance Code, continuing obligations pursuant to the UK listing regime, company meetings and directors’ duties. A key part of his role is horizon scanning, analysing new laws and regulations to ensure that the firm’s clients anticipate and remain at the forefront of corporate governance developments and practice. Gareth writes widely on corporate governance matters.

Isobel Hoyle is a member of the corporate knowledge team at Herbert Smith Freehills Kramer. She has extensive experience, giving technical advice on company law and listed

company regulation, with a particular focus on corporate governance and corporate reporting.

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INTRODUCTION Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer

Herbert Smith Freehills Kramer Exchange House Primrose Street London EC2A 2EG United Kingdom

Tel: +44 207 374 8000 Fax: +44 207 374 0888 Email: gareth.sykes@hsfkramer.com Web: www.hsfkramer.com

Governance in 2025 – Time for a Radical Rethink? As we set out in our introduction to this Guide last year, 2024 was the year of the election. Accord - ing to Time Magazine, almost two billion people headed to the polls in 2024, with elections held in over 60 countries (and the EU). By the end of 2024, many incumbent governments had been replaced and many of those which remained in power did so with significantly reduced majori - ties. The political upheaval of 2024 was there - fore a continuation of the volatility we have seen so far this decade arising from the COVID-19 global pandemic, multiple conflicts and global energy crisis. Now that the dust has settled after the elections and the new administrations have taken up office, it seems an appropriate time to consider whether this volatility, and its impact in the world of governance, will continue into 2025. It is obviously still early days but there are signs that a number of administrations are, at vary- ing speeds and to varying degrees, taking the opportunity to shake up the system. Some are engaged in discussions about how to reshape radically the regulatory landscape in a bid to drive growth, increase productivity and harness the possibilities offered by emerging technology. To respond to this, companies need good lead -

ership and robust governance structures and procedures. Reducing Regulation to Boost Growth The COVID-19 pandemic and the measures introduced to try and contain its transmission, had a profound impact on the global economy. Entire industries were shut down or had to adopt new practices, resulting in significant sectors of the global workforce that were unable to per - form their jobs in the usual way, or even at all. Supply chains were thrown into chaos as trans - port routes were disrupted and consumer habits changed overnight. And governments deployed huge sums of money in efforts to protect their cit - izens’ economic livelihoods and health (through containment and immunisation initiatives). In the aftermath of the pandemic, governments are now facing the dual challenge of regener - ating their economies, and servicing the debt accumulated in their COVID-19 response. In a bid to boost growth, governments are explor - ing how regulation, in governance and other aspects, may be adding to the cost of running businesses and stifling innovation. In the UK for example, the new Labour government is working with regulators to identify areas where regulation can support its growth mission, both through

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INTRODUCTION Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer

removing obstacles to business efficiency and utilising innovation to drive it. Regulators which have been tasked with reviewing their current rulebooks include the Financial Services Author - ity and the Competition and Markets Authority. In an EU context, Mario Draghi, the former Euro - pean Central Bank chief, published a report on the future of European competitiveness in Sep - tember 2024. The report, which will inform the EU Commission’s political guidelines for 2024 to 2029, looks at how to boost sustainable growth, identifies key barriers preventing Europe from reaching its full potential and presents a new industrial strategy for the EU. Looking to the US, there has been much atten - tion on initiatives being introduced by the US government to reduce the level of regulation and perceived bureaucracy, in a bid to drive US economic growth and prosperity. An early example of these initiatives is the decision of the US Securities and Exchange Commission (SEC) to cease its defence of the rules that it had proposed in relation to climate-related dis - closures by listed entities. Having been adopted by the SEC in 2024, the rules had been chal - lenged by various interested parties on account of the anticipated burden they would place on in-scope companies and the potential for con - flict between the US rules and climate-related disclosure requirements in other jurisdictions, and were subject to judicial review. The deci - sion of the SEC to cease its defence means that these disclosure obligations are unlikely to sur - vive under the current US government, although California and other US states have continued to regulate climate reporting at the state level. More broadly, the newly established Department of Government Efficiency has been tasked with looking at federal spending and making recom - mendations for reform.

While companies will no doubt welcome a reduc - tion in their regulatory burden, boards may at times also consider whether any of the measures being revised remain beneficial in the context of their companies’ specific strategies and culture. The views and interests of key stakeholders in the company will be fundamental in this assess - ment. Reducing the Reporting Burden Corporate reporting is an aspect of the govern - ance landscape which many jurisdictions are currently evaluating, to ascertain whether the correct balance is being attained. On the one hand, there are the benefits of transparency for shareholders and other interested stakeholders (including regulators and wider market partici - pants) but against that the costs of monitoring, gathering and disseminating this information need to be factored into the equation. Candid consideration of costs of transparency has not been a primary consideration in expanded gov - ernance transparency for some years. A well- balanced system will aim to deliver decision- useful information to the relevant stakeholders, without imposing disproportionate costs or sti - fling entrepreneurialism. It will also need to be kept under regular review to ensure that a rea - sonable balance is maintained. Narrative, non-financial disclosures have in recent years added significantly to the volume and complexity of the reporting obligations placed on companies, particularly in the area of environmental, social and governance (ESG) reporting. There are initiatives in place in a num - ber of jurisdictions to re-evaluate these obliga - tions and assess whether an appropriate bal - ance is currently being achieved. In the UK, the government is continuing with the review of non-financial reporting requirements,

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INTRODUCTION Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer

which was launched by the previous government towards the end of its term in office. A num - ber of changes have already been introduced which are aimed at, or will have the effect of, reducing the disclosures expected by compa - nies. For example, companies are only subject to certain reporting requirements if they meet prescribed size thresholds, with the effect that the greatest level of disclosure is expected from the companies with the largest employee head - count, turnover and balance sheet totals. From April 2025, the monetary thresholds used for the classification of companies have been increased by approximately 50%, which according to the government will result in up to 132,000 com - panies moving to a smaller size category. This is substantially larger than the increase which was introduced to the equivalent EU monetary thresholds in 2024. Certain disclosures viewed as being unnecessary or duplicative are also being removed from the directors’ report and the directors’ remuneration report which make up part of the annual report and accounts com - panies need to produce each year under the UK reporting regime. It seems to us there is significant scope for further lightening of reporting burdens – the momentum to the removal of regulatory burden in financial services regulation is materially fur - ther progressed than that for wider corporate reporting – if UK Prime Minster Keir Starmer’s commitment to removing 25% of the cost of regulation for businesses is to be achieved in the near future. In Australia, the adoption of the Fifth Edition of the ASX Corporate Governance Principles and Recommendations, which was expected to apply to listed entities in place of the Fourth Edition for financial years commencing on or after 1 July 2025, was cancelled in February

this year. The updated edition would have intro - duced significant changes, including to embrace the importance of a company’s relationship with its shareholders and of board and work- force diversity. Aspects of the draft Fifth Edition were negatively received by certain parts of the governance ecosphere, and ultimately the ASX Corporate Governance Council, the independ - ent body charged with drafting the updated edi - tion, was unable to agree a final text. The Fourth Edition, published in 2019, therefore remains in place as the standard to be applied. The amendments made to the EU monetary thresholds in 2024 lifted a number of companies out of the scope of the Corporate Sustainabil - ity Reporting Directive (CSRD), as well as other EU reporting requirements. However, the EU Commission is proposing amendments to the size thresholds in the Omnibus Package which would have a greater impact on the applicabil - ity of the CSRD and the EU Taxonomy for sus - tainable activities. Amongst the Omnibus pro - posals are measures which would significantly increase the size threshold based on employee numbers for determining applicability of these legislative instruments and would require that the employee number threshold should always be met (under the current approach any two out of the three threshold criteria need to be met to bring an entity in scope). As well as amendments to the thresholds for applicability, the Omnibus package also contains measures to simplify the EU’s sustainability framework (which is highly technical and which many organisations have struggled to implement) and measures have already been passed to postpone the report - ing requirements contained in the CSRD and Corporate Sustainability Due Diligence Direc - tive (CS3D) for certain companies. Whilst the measures are broadly welcomed, proposing changes so soon after the framework has been

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INTRODUCTION Contributed by: James Palmer, Gareth Sykes and Isobel Hoyle, Herbert Smith Freehills Kramer

adopted and, in the case of the CSRD, during its phased implementation, has caused uncertain - ty for companies, many of which have already dedicated significant resources in responding to these directives. An aspect of reporting which can place addi - tional strain on companies’ resources is the fragmentation of reporting frameworks adopted in different jurisdictions. This lack of cohesion is also detrimental to investors and other inter- ested stakeholders as it makes it far harder to compare entities which are subject to different reporting regimes. The International Sustainabil - ity Standards Board (ISSB) was created in 2021, with a mandate to develop international sustain - ability disclosure standards. These standards are designed to operate for sustainability-related reporting in the same way as the IFRS framework operates for accounting standards. The ISSB issued the final form of its first two sustainability disclosure standards (ISSB Standards) in June 2023 and now individual jurisdictions are deter - mining whether, and how, to incorporate these standards into their domestic reporting frame - work. It is hoped that the ISSB Standards will become as universally endorsed and applied as the IFRS’s accounting standards, which would assist entities operating in, and subject to the reporting requirements of, multiple jurisdictions. Embracing Innovation Governments can help to boost growth and economic performance by ensuring that busi - nesses can take maximum advantage of techno - logical tools to drive efficiency, and by removing unnecessary barriers to the deployment of these tools. Again, there are examples of governments exploring how to incorporate technological advancements into best corporate governance practices.

An example of such an initiative is the UK gov - ernment’s stated plan to review the law relat - ing to virtual annual general meetings (AGMs). Whilst relaxations were introduced during the COVID-19 pandemic to allow companies to hold their AGMs virtually, these relaxations were sub - sequently removed once restrictions on travel and gathering in groups were removed. In light of the experience during the pandemic, the UK government has announced that its push to modernise company law will include clarifying the law in relation to the legality of virtual AGMs. This is an approach already permitted in Austral - ia, where companies can hold fully virtual AGMs if the company’s constitution permits this. The Australian Securities and Investments Commis - sion (ASIC) maintains guidance for companies which sets out FAQs on fully virtual meetings and hybrid meetings, clarifying that the law does not mandate a particular meeting format. There are various factors a company would need to weigh up when deciding which meeting format is most suitable in its individual circumstances but introducing this flexibility, and removing the current uncertainty, would be a further step in modernising shareholder engagement and com - munication in the UK. Whilst corporate governance initiatives may not grab all the headlines, there are steps being tak - en in many jurisdictions which will have a mean - ingful impact on how companies are managed and administrated. The summaries presented in this Guide for individual jurisdictions provide a clear overview of the corporate governance framework being applied in those jurisdictions and also highlight some of the hot topics and trends currently being seen. The Guide will therefore be a useful resource for companies as they navigate the regulatory landscape in the jurisdictions in which they operate.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan HAP

Russia

Georgia

Armenia

Yerevan

Azerbaijan

Turkey

Iran

Contents 1. Introductory p.14

1.1 Forms of Corporate/Business Organisations p.14 1.2 Sources of Corporate Governance Requirements p.15 1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares p.16 2. Corporate Governance Context p.16 2.1 Hot Topics in Corporate Governance p.16 2.2 ESG Considerations p.17 3. Management of the Company p.18 3.1 Bodies or Functions Involved in Governance and Management p.18 3.2 Decisions Made by Particular Bodies p.18 3.3 Decision-Making Processes p.19 4. Directors and Officers p.20 4.1 Board Structure p.20 4.2 Roles of Board Members p.20 4.3 Board Composition Requirements/Recommendations p.21 4.4 Appointment and Removal of Directors/Officers p.21 4.5 Rules/Requirements Concerning Independence of Directors p.22 4.6 Legal Duties of Directors/Officers p.22 4.7 Responsibility/Accountability of Directors p.23 4.8 Consequences and Enforcement of Breach of Directors’ Duties p.23 4.9 Other Bases for Claims/Enforcement Against Directors/Officers p.24 4.10 Approvals and Restrictions Concerning Payments to Directors/Officers p.25 4.11 Disclosure of Payments to Directors/Officers p.26 5. Shareholders p.26 5.1 Relationship Between Companies and Shareholders p.26 5.2 Role of Shareholders in Company Management p.27 5.3 Shareholder Meetings p.28 5.4 Shareholder Claims p.29 5.5 Disclosure by Shareholders in Publicly Traded Companies p.30

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ARMENIA CONTENTS

6. Corporate Reporting and Other Disclosures p.31 6.1 Financial Reporting p.31 6.2 Disclosure of Corporate Governance Arrangements p.32 6.3 Companies Registry Filings p.33 7. Audit, Risk and Internal Controls p.34 7.1 Appointment of External Auditors p.34 7.2 Requirements for Directors Concerning Management Risk and Internal Controls p.35

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

HAP blends professional experience with the energy of younger talent in its provision of a wide range of legal services. It advises on all aspects of corporate governance and com - bines deep regulatory knowledge with practical insight into clients’ business needs. The firm guides companies, boards, shareholders and executives through complex compliance frame - works, shareholder relations and governance

structures, both in day-to-day operations and during critical transitions. It converts its signifi - cant academic knowledge into practical repre - sentations of institutional investors in complex insolvency proceedings. During its ten years of practice, the firm has earned its place as an ex - perienced legal services provider in corporate, commercial, administrative law, IT, IP, banking and construction industries.

Authors

Hayk Hovhannisyan of HAP has more than 25 years of multi- jurisdictional experience in corporate, transactional and dispute-related matters. He has a particular focus on cross-

Suren Sloyan of HAP focuses on the resolution of civil and labour disputes. He has additional experience in legal analysis for private law reform initiatives. His areas of interest

border set-ups and transnational business structures. He is widely recognised as one of Armenia’s leading experts in international arbitration and complex corporate transactions. He is also a former member of the Supreme Judicial Council of Armenia and was elected in 2018 by the National Assembly to contribute his legal and academic expertise to the oversight of judicial reforms, particularly in e-justice and international co-operation. His tenure reflects his broader commitment to the rule of law and institutional development. He holds a PhD in Jurisprudence and is recognised for his ability to bridge academic insight with practical strategy, making him a trusted advisor in matters of corporate governance, regulatory compliance and institutional risk management.

and research include corporate law and international trade law, informing a well- rounded practice that bridges individual and corporate legal needs. He is involved in drafting procedural documents, legal opinions and correspondence with state authorities. He is also involved in researching complex legal questions across multiple areas of law. His strong academic foundation supports his practical work, having graduated with honours from the Faculty of Law at Yerevan State University with a bachelor’s and a master’s degree.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

HAP 4/3 Adonts street Yeraz business centre 3rd floor Yerevan Armenia Tel: +374 9140 3605 Email: hayk.hovhannisyan@hap.am Web: www.hap.am

1. Introductory 1.1 Forms of Corporate/Business Organisations

Closed JSC (CJSC) In CJSCs, shares are distributed among a lim - ited number of shareholders and are not freely traded. They are suitable for large businesses seeking investment. Co-Operatives Co-operatives can be formed by individuals with shared economic interests. They are typically used in agriculture, housing and small-scale production. Individual Entrepreneur (IE) An Ie, is a business which is owned and oper - ated by one individual. In an Ie, the owner has full control but also unlimited personal liability for debts. There is simplified registration and tax treatment for IEs. This structure is ideal for new businesses because of its straightforward man - agement and operational simplicity. Contract of Joint Activity Without Forming a Legal Entity IEs and/or commercial organisations and/or citi - zens engaged in agricultural production can pool their resources and act jointly without establish - ing a separate legal entity for the purpose of making a profit or achieving other lawful objec - tives.

Businesses may operate in various organisation - al and legal forms in Armenia. The organisational and legal form is chosen taking factors such the scope of liability, the number of participants and the applicable tax regime into account. The main forms of corporate and business organisation in Armenia include the following. Limited Liability Company (LLC) An LLC is the most common and flexible busi - ness structure. Under this structure, sharehold - ers are only liable to the extent of their contribu - tions to the charter capital. There is no minimum charter capital requirement and this form of organisation is suitable for small and medium- sized enterprises (SMEs). Joint Stock Company (JSC) JSCs can be open or closed. Open JSC (OJSC) In OJSCs, shares are freely transferable and can be publicly traded.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

The Law on Limited Liability Companies (LLLC) The LLLC governs the operations of LLCs. It focuses on shareholder rights, management structures and decision-making processes. It provides a framework for the internal govern - ance of LLCs, ensuring clarity in the roles and responsibilities of owners and managers. The Law on Bankruptcy The Law on Bankruptcy governs insolvency pro - ceedings and the restructuring of companies. It establishes the rights and obligations of credi - tors as well as the roles of corporate manage - ment during insolvency, ensuring a structured process for debt resolution and corporate recov - ery. The Law on State Registration of Legal Entities The Law on State Registration of Legal Entities establishes requirements for the registration of companies and their ongoing obligations under Armenian law, including compliance with gov - ernance standards. Armenian Securities Market Legislation Armenian securities market legislation includes regulations on public companies and the gov - ernance of stock exchanges, market participants and the protection of shareholders in publicly traded companies. These legislative sources together shape the corporate governance framework in Armenia, ensuring that companies operate transparently, remain accountable to stakeholders and comply with domestic and international legal standards.

Participants may contribute professional exper - tise, skills, business reputation and connections as well as capital. During joint activities, each participant may act on behalf of all, unless otherwise specified in the contract, which may require joint action by all parties. This form of organisation is particularly effec - tive when an individual has skills or expertise but lacks financial assets. Each of these business forms should be care - fully evaluated to determine the most appropri - ate legal entity for establishment based on the specific needs and goals of the business. 1.2 Sources of Corporate Governance Requirements The primary legislative sources of corporate gov - ernance requirements for companies in Armenia are as follows. The Civil Code of Armenia (CC) The CC defines the concept of a legal entity, its types, legal capacity, liability, redomiciling pro - cedure, reorganisation procedure, liquidation procedure and other general principles. The Law on Joint Stock Companies (LJSC) The LJSC regulates the structure, governance and operational processes of JSCs. It outlines the rights of shareholders, the duties of the board of directors (BoD) and the requirements for financial transparency and disclosure. It also sets out provisions for annual meetings, dividend distribution and financial reporting obligations.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

1.3 Corporate Governance Requirements for Companies With Publicly Traded Shares Companies with publicly traded shares in Arme - nia must adhere to specific corporate govern - ance requirements to ensure transparency, accountability and protection of shareholder interests. These requirements are designed to align with international corporate governance practices and Armenian law. Corporate Governance Requirements for Publicly Traded Companies in Armenia Publicly traded companies in Armenia are pri - marily governed by the LJSC, the Law on the Securities Market and regulations set out by the Central Bank of Armenia (the “CBA” ) and the Central Depositary of Armenia. These legisla - tive provisions are intended to ensure effective governance, safeguard shareholder rights and maintain market integrity. Mandatory v Voluntary Requirements Mandatory requirements The mandatory requirements are as follows. • Compliance with the relevant laws and other legal acts. • Regular disclosure of financial statements and material events to ensure transparency. • Holding annual general meetings (AGMs) and ensuring minority shareholder rights. • Establishment of key board committees. • Conducting external audits and providing transparent financial reporting in line with regulatory standards. Voluntary requirements The voluntary requirements are as follows.

• Adherence to the Corporate Governance Code, which provides recommendations for best practices but is not legally required. • Non-binding recommendations for the com - position of the BoD (eg, the percentage of independent directors). While mandatory requirements ensure legal compliance, shareholder protection and finan - cial transparency, voluntary corporate govern - ance practices, like following the Corporate Governance Code, enhance reputation, investor trust and risk management. 2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance Armenia’s corporate governance landscape is undergoing significant transformation with a pronounced emphasis on sustainability and green initiatives. Key developments include the following. National Sustainable Finance Roadmap In October 2023, the CBA introduced the Nation - al Sustainable Finance Roadmap (the “Road- map” ), underscoring a strategic commitment to sustainability within the financial sector. The Roadmap is structured around four key pillars: • mobilising sustainable finance: facilitating capital flow towards industries aligned with Armenia’s low carbon ambitions and intro - ducing innovative financial instruments such as green, blue, social, sustainability and sustainability-linked loans and bonds; • enhancing markets: establishing a Central Sustainable Finance Database and designing frameworks to monitor progress in sustain - able finance initiatives;

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

2.2 ESG Considerations ESG reporting issues in Armenia are primarily regulated by the Corporate Governance Code, which was updated in July 2024. The Corporate Governance Code emphasises the importance of corporate governance principles for sustain - able private sector development, accountability and decision-making transparency. Companies adhering to the Corporate Governance Code have to prepare and publish an annual report. This has to include a corporate governance report and an annual corporate governance dec - laration and has to be published on their website by June 30 of the following year. This reporting follows the “comply or explain” principle, which allows organisations to either comply with the Corporate Governance Code’s provisions or explain their reasons for non-compliance. Despite the structured framework, companies face several challenges in ESG reporting. These are as follows. • Lack of awareness: many stakeholders, including BoD members and executives, may not fully understand their roles and respon - sibilities within the corporate governance framework, leading to ineffective decision- making and accountability issues. • Enforcement deficiencies: while legal frame - works exist, the enforcement and monitoring mechanisms are often inadequate. Regulatory bodies may lack the necessary resources and authority, resulting in organisations view - ing compliance as a formality rather than a necessity. • Standardisation and consistency: the absence of standardised ESG reporting frameworks leads to inconsistencies. Compa - nies might adopt different frameworks, mak -

• embedding sustainable finance: developing a robust supervisory framework within the CBA, guiding financial market participants in integrating environmental, social, and govern - ance (ESG) factors into their core processes; and • building awareness and capacity: raising awareness and enhancing knowledge on sustainability risks and opportunities among financial market participants and the wider public. These pillars collectively aim to ensure that ESG considerations are central to financial decision- making, reflecting Armenia’s dedication to sus - tainable practices. The Green Agenda Project The Green Agenda Project was launched in December 2023 and represents Armenia’s com - mitment to aligning with the European Green Deal and the EU-Armenia Comprehensive and Extended Partnership Agreement (the “CEPA” ). This initiative seeks to harmonise national poli - cies with leading European standards, propel - ling Armenia towards a more sustainable and prosperous future. Key objectives of the Project include: • developing a climate neutrality roadmap. • delivering investment-ready projects that promote sustainability. • raising public awareness about the green economy; and • enhancing stakeholder capacities for the green transition. The Project underscores Armenia’s dedication to adopting sustainable policies and practices and aims to enhance the quality of life for its citizens as well as strengthen trade and economic rela - tions with EU member states.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

Executive Body (Director or Management Board) The executive body (director or management board) is responsible for daily operations. It can consist of a sole director (CEO) or a collective management board. It implements the decisions of the general meeting and/or the BoD. 3.2 Decisions Made by Particular Bodies Specific corporate bodies in Armenia have defined decision-making powers and specific decisions are reserved exclusively for particular bodies. Typical decisions made by each corporate body are as follows. General Meeting of Shareholders (JSC)/ Participants (LLC) The general meeting of shareholders is the supreme governing body and is responsible for key strategic and ownership-related decisions. It makes exclusive decisions which cannot be delegated to other bodies. It can amend the charter (including changing the company name, registered capital, business activities). It is also responsible for reorganising or liquidating the company, approving annual financial statements and profit distribution and deciding on increases or decreases of charter capital. Additionally, it is responsible for appointing or removing BoD members (if applicable) and appointing/dismissing the executive director if there is no BoD. It can also approve major trans - actions exceeding a certain threshold and take merger, acquisition and restructuring decisions. The BoD The BoD can:

ing it challenging to compare and assess ESG performance accurately. • Stakeholder engagement: effectively engag - ing diverse stakeholders, such as investors, customers, employees and regulators, each with unique expectations, poses a significant challenge in ESG reporting. • Regulatory compliance: keeping abreast of evolving regulations, especially for companies operating in multiple jurisdictions, adds com - plexity to ESG reporting efforts. 3. Management of the Company 3.1 Bodies or Functions Involved in Governance and Management The governance and management of a company are primarily regulated by the CC, the LJSC or the LLLC. The principal bodies involved in corporate gov - ernance typically include the following. General Meeting of Shareholders (for JSCs) or Participants (for LLCs) The general meeting of shareholders (for JSCs) or participants (for LLCs) is the supreme govern - ing body of the company. It makes key decisions such as approving financial statements, distrib - uting profits, appointing/removing directors and amending the company charter. The BoD The BoD carries out the general management of the company’s activities, except for those mat - ters that are reserved for the competence of the meeting by the law and the company’s charter.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

• determine the main directions of the com - pany’s activities; • convene annual and extraordinary sharehold - ers’ meetings; • approve the agenda of meetings; • approve the year, month, date for compiling the list of shareholders entitled to participate in the meetings and resolve all issues related to the preparation and convening of meetings and reserved for the BoD’s jurisdiction; • approve the administrative and organisational structure of the company; • approve the annual budget and the imple - • establish branches and representative offices, which will be institutions of the company; and • other powers granted by law․ Executive Body (CEO/Management Board) The executive body (CEO/management board) is responsible for the daily operational manage - ment and execution of the company’s strategy, signing contracts and managing business opera - tions and managing employees and implement - ing policies. It is also responsible for: • handling financial transactions within limits set by the BoD or general meeting; • representing the company before third par - mentation of the annual budget; • approve the company’s staff list;

It will take decisions by a vote of the total num - ber of participants in the company by majority unless the law or the articles of association of the company provide for a greater number of votes to make the decision. Amendments to the articles of association and authorised capital require at least a two-thirds majority unless stated otherwise. Reorganisation and liquidation decisions must be unanimous. Decisions of the general meeting of shareholders are adopted by open voting, unless otherwise stipulated by the company’s charter. BoD The BoD is responsible for overseeing the company’s corporate strategy and supervising executive management. The decision-making process of the board is typically governed by the company’s charter and internal board regu - lations. Meetings of the board may be held on a regular basis or convened as extraordinary ses - sions, depending on the needs of the company and procedural rules. For the board to make valid decisions, a quo - rum is generally required. This usually means that more than 50% of the BoD members must be present. Decisions are adopted by a majority vote of the members present, unless the com - pany’s charter prescribes a higher voting thresh - old. In cases where votes are equally divided, the chairperson of the board may hold a casting vote. All board resolutions must be properly docu - mented in the minutes of the meeting and signed by all attending board members. The board may delegate certain decision-making powers to specialised committees or to executive manage - ment, depending on the nature of the matter and

ties, courts and regulators; and • other powers granted by law․ 3.3 Decision-Making Processes

General Meeting of Shareholders/Participants The general meeting of shareholders is the supreme governing body and makes major deci - sions. It will have quorum if it is attended by par - ticipants who hold more than half of the votes of the total number of members of the company.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

the delegation provisions set out in the charter or board policies. Executive Body (Director or Management Board) The executive body (director or management board) is responsible for the company’s day- to-day operations and for implementing strate - gic decisions adopted by the shareholders or BoD. The scope of the executive body’s author - ity is defined in the company’s charter and in the employment contract of the CEO or general director. Within this framework, the CEO or gen - eral director may act independently on behalf of the company, provided they stay within the limits of their authority. Where a collegial management board is established, decisions may be made collectively in line with internal regulations. The executive body is accountable to the BoD (if one exists) or directly to the shareholders. It has to report on the company’s performance and major actions taken. Executives authorised under the charter or by resolution may enter into binding agreements and represent the company in legal and business matters. The structure and functioning of a BoD in Arme - nia is governed by the LJSC and the LLLC, among other regulations. The structure of a BoD varies depending on the type and size of the company. A BoD is a supervisory body responsible for overseeing management and board members are elected by shareholders at the general meet - ing. 4. Directors and Officers 4.1 Board Structure

In JSCs, the establishment of a BoD is manda - tory if the number of shareholders exceeds 50. BoD members may or may not be company employees. However, executive management (eg, the CEO) cannot simultaneously be the board chair. 4.2 Roles of Board Members As in most corporate governance systems, a BoD consists of various members with distinct roles and responsibilities. The following is an overview of the key positions and their functions. Chairperson of the Board The chairperson of the board leads the board and ensures effective governance. They set the board meeting agenda and preside over meet - ings. They also act as a liaison between the board and executive management and represent the company in high-level matters. Additionally, they ensure the board follows corporate govern - ance principles. Board Members (Directors) Board members (directors) participate in stra - tegic decision-making and oversee the com - pany’s financial and operational performance. They ensure compliance with laws and ethical standards and may be executive (involved in daily management) or non-executive (independ - ent oversight). Independent Directors Independent directors are not affiliated with the company’s management or major shareholders and so can provide objective and unbiased opin - ions. They enhance transparency and protect minority shareholders’ rights. Additionally, they often serve on audit or risk committees.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

Executive Directors Executive directors are typically members of senior management (eg, CEO, CFO) and con - tribute insights on daily operations. They also implement the board’s strategies and policies. Non-Executive Directors (NEDs) Non-executive directors (NEDs) do not engage in day-to-day operations. They provide strate - gic guidance and external perspectives and help with risk management and accountability. 4.3 Board Composition Requirements/ Recommendations The composition and structure of a BoD in Armenia is primarily governed by the LJSC, which outlines specific requirements and rec - ommendations to promote effective corporate governance. Mandatory Board Establishment The board must be established in a company with 50 or more shareholders. If a board is not established in a company with up to 50 share - holders, its powers are exercised by the general meeting. Board Composition Requirements Independence In OJSCs, at least one-third of the board mem - bers must be independent. The LJSC specifies criteria to determine a director’s independence to ensure that these members do not have sig - nificant ties to the company that could impair their impartiality. Separation of roles To prevent conflicts of interest, the roles of the chief executive officer (CEO) and the chair of the board cannot be held by the same individual in OJSCs. This separation ensures a clear distinc -

tion between the management and oversight functions within the company. 4.4 Appointment and Removal of Directors/Officers The appointment and removal of directors and officers of a company are primarily governed by the LJSC and LLLC, along with the company’s charter. Appointment of Directors and Officers In LLCs, the general meeting of participants appoints the director(s). In JSCs, the BoD (if one exists) or the general shareholders’ meet - ing appoints the executive director or manage - ment board. Types of Directors/Officers The executive director or CEO is the primary managing officer of the company. The BoD (if applicable) is a corporate governance body that is usually found in JSCs. Other Officers These include the chief financial officer (CFO) or other executives, depending on the company’s structure. Appointment Process The general meeting (or the board, if applicable) votes on the appointment. A contract is signed with the director, outlining duties, remuneration and term of service. Removal of Directors and Officers The general meeting of participants/sharehold - ers has the power to dismiss a director. In some cases, the BoD may also remove the executive director (CEO), depending on the company’s charter.

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ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP

There are certain legal restrictions on who can serve as a director in Armenia. General Requirements The director must be a legally competent natu - ral person. Foreign nationals can be appointed unless restricted by specific laws. Certain industries, such as banks or financial institutions, may have additional regulatory requirements for directors. Special Rules for Government Officials Some government officials cannot serve as directors of private companies. This is to prevent conflicts of interest. 4.5 Rules/Requirements Concerning Independence of Directors The framework governing the independence of directors and the management of potential con - flicts of interest in Armenia encompasses various mandatory legal requirements. Board Composition and Independence OJSCs are required to ensure that at least one- third of their board members are independent. The law specifies the criteria for determining a director’s independence to promote transpar - ency and accountability. Separation of Leadership Roles In OJSCs, the roles of the board chair and the CEO cannot be held by the same person. This separation aims to prevent conflicts of interest and promote effective oversight. Approval of Transactions with Potential Conflicts Procedures have been revised to enhance trans - parency in transactions that may involve con - flicts of interest. These revisions ensure that the

essential terms of the transactions are clear, decision-makers remain independent and actual or potential conflicts are eliminated. 4.6 Legal Duties of Directors/Officers The main legal duties of directors and officers of a company are primarily governed by the CC, LJSC, LLLC and other related regulations. These duties include the following. Fiduciary Duties Directors and officers have a fiduciary responsi - bility to act in the best interests of the company and its shareholders. This includes: • acting in good faith and honestly; • avoiding conflicts of interest; and • not using corporate opportunities for personal gain. Duty of Care and Diligence Directors and officers must exercise reasonable care, skill and diligence while performing their functions. This includes: • making informed business decisions; • ensuring compliance with legal and regulatory obligations; and • overseeing financial management and risk assessment. Duty to Act Within Powers Directors and officers must act within the author - ity given by: • the company’s charter (articles of associa - tion); • the decisions of the general meeting of share - holders; and • applicable laws and regulations.

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