ARMENIA Trends and Developments Contributed by: Tachat Voskanyan and Artashes Petrosyan, HAP
Conversely the number of shareholders in a CJSC is limited and the law stipulates that a company must have no more than 49 share - holders. If the number of shareholders exceeds the statu - tory limit, the company must take one of the fol - lowing measures. • Reorganise as an OJSC, in compliance with the applicable corporate regulations. • Reduce the number of shareholders to meet the legal threshold. Failure to comply with either measure may result in liquidation by court order. The shareholders of a CJSC have a pre-emptive right to acquire shares sold by other sharehold - ers. If a shareholder does not exercise this right within the charter’s timeframe, the company may acquire the shares at an agreed price. If the com - pany declines or disagrees on price, the shares may be sold to a third party. For JSCs, the public issuing of stocks is car - ried out by the Armenian Stock Exchange (the “AMX” ), which is the operator of the regulated securities market in Armenia. It enables the execution of shares, government and corporate bonds, foreign exchange, repo agreements and currency swaps through its automated plat - forms. To understand the main features of a JSC it is necessary to discuss the management of this type of company. The supreme management body of a JSC is the general meeting of shareholders (the “GSM” ).
The GSM of a JSC has the power: • to amend the charter and authorised capital; • elect members of the company’s board of directors (BoD) and audit committee (auditor); • terminate the BoD’ and auditor’s powers early; • form executive bodies of the company and terminate their powers early; • approve the company’s annual reports; and • make a decision to reorganise or liquidate the company. The GSM is therefore the supreme governing body of a JSC. It defines strategy, approves financial reports and elects executives. Its dis - tinctiveness lies in its exclusive power to amend the company’s charter and to facilitate the dis - solution of the company. A BoD is established in a company with more than 50 shareholders. When establishing a BoD its jurisdiction must be defined by the company’s charter. The executive body of the company may be collegial (board, management) or sole (direc - tor, general director). The executive body man - ages the current activities of the company and is accountable to the BoD and the GSM. The JSC model enables owners to manage a company through a general meeting of a JSC and provide ongoing management at the same time. The law stipulates two types of shares: common (ordinary) and privileged. The owner of a com - mon (ordinary) share has the right, in line with the law and the charter to participate in the meet - ing and vote on all issues within its jurisdiction. Meanwhile, the management of the company
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