ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP
the relationship is structured and the relevant rules and requirements are as follows. Relationship Between the Company and Shareholders Ownership and control Shareholders are the owners of the company. Their ownership is represented by shares (in the case of joint stock companies) or stakes (in the case of LLCs). The extent of their control over the company is typically proportional to the number of shares they own. Rights of shareholders Shareholders have various rights, including, but not limited, to the right to: • vote at general meetings, which influences decisions like electing directors or approving major corporate actions; • receive dividends; • access certain corporate information; • participate in a liquidation process if the com - pany is dissolved; and • transfer their shares, although there may be restrictions (for example, in LLCs or in closely held companies). Rules and Requirements Governing the Relationship Corporate governance The relationship is primarily governed by the company’s charter and the regulations outlined in the CC and the relevant laws. These docu - ments lay out the rules for: • shareholder meetings: the frequency and procedures for holding shareholder meetings, voting mechanisms and quorum require - ments; • dividends and profit distribution: how and when dividends can be paid to shareholders
and the decision-making process for distrib - uting profits; • dispute resolution: procedures for resolv - ing shareholder disputes, often involving the court system if disputes cannot be settled internally; • company’s financial transparency: companies are required to maintain accurate financial records and provide certain disclosures to shareholders, typically through annual reports or shareholder meetings; and • rights protection: Armenian law also protects minority shareholders by requiring certain protections in decision-making processes, ensuring that major decisions do not dispro - portionately disadvantage them. Publicly Available Record of Shareholders Public Registry The State Register of Legal Entities (maintained by the Ministry of Justice) is the key registry where information about companies is stored and shareholder information is publicly avail - able for LLCs. The data on the participants of LLCs is public, but in the case of JSCs, there is no public data on the shareholders. 5.2 Role of Shareholders in Company Management Shareholders have certain rights and powers but their direct involvement in the management of day-to-day operations is generally limited. The degree of shareholder involvement can vary depending on the type of company, the share - holder agreement and the company’s governing documents. The involvement shareholders may have is as follows.
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