ARMENIA Trends and Developments Contributed by: Tachat Voskanyan and Artashes Petrosyan, HAP
While the primary aim of a co-operative is to improve the welfare of its members by meet - ing their needs it also functions as a commercial organisation, operating in the market and engag - ing in entrepreneurial activities. Like any commercial organisation, a co-operative seeks to generate financial income, which is dis - tributed based on the members’ participation fee. The Armenian Civil Code stipulates the regula - tion of legal relations related to the property of the co-operative. A member of a co-operative is obliged to pay the share premium in full before the co-operative can be registered. If losses are incurred through additional pay - ments, the members of the co-operative are obliged to cover them. However, the law also obliges the members to pay the participation fee of other members, where there is a failure to fulfill this obligation. The supreme governing body of a co-opera - tive is the general meeting of its members (the “GMM” ). The GMM has exclusive jurisdiction to. • amend the co-operative’s charter; • form a supervisory board; • terminate the powers of its members; • admit and dismiss members of the co-opera - tive; and • approve the co-operative’s annual reports. At the same time legislative regulations specify a supervisory board must be established. This will exercise control over the activities of the co- operative’s executive bodies if the co-operative has more than 50 members.
The law gives members the option to withdraw from the co-operative. If they do withdraw, the value of their share will be paid to members or given property corresponding to it. At the same time, members may be expelled from the co-operative following a decision of the GMM if they have failed to fulfill or improperly fulfilled obligations. The co-operative may be voluntarily reorganised or dissolved by a decision of the GMM. A commercial co-operative facilitates the crea - tion of an organisation where members can joint - ly engage in commercial activities, enabling the generation of economic profits, while enhancing organisational efficiency through the collaboration of resources, workforce or other joint initiatives. A co-operative is suitable for businesses where members can pool investments, utilise technolo - gies, infrastructure or supply chains, thereby increasing competitiveness and reducing costs. The main advantage of a co-operative lies in the joint use of resources, which provides an economic benefit and greater control over the organisation’s operations. However, it is important to consider the risks, particularly the legal limitations of liability. Conclusion This guide has outlined the primary characteris - tics of the main corporate and business organi - sations. Each business has its own characteris - tics and depending on the form of the business, it is essential to select the type and structure of the organisation carefully and appropriately to ensure the development of the business can be supported in the best possible way.
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