ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Tachat Voskanyan, HAP
the Commission later approved the concentra - tion with certain conditions. In this case, “HAP” LLC represented “Makur Yerkat Factory” OJSC. 2.5 Labour Law Regulations According to Article 126 of the LC of RA, restructuring or a change in the organisation’s ownership does not justify terminating employ - ment contracts unless it involves staff cuts or a reduction in positions. This means that neither a new employer nor reorganisation alone can be a reason to end an employment contract. This approach protects labour rights, ensures legal certainty, and promotes stability in the job mar - ket. In case of changes in essential working condi - tions (such as the workplace, the amount and/or method of determining remuneration, benefits, working hours and rest periods, categories and names of positions, job functions or the type of employment contract) and/or a change of employer, the employer must notify the employ - ee within the time limits prescribed by the Labor Code (LC), except in the following cases: • if the base salary and/or bonuses, allowanc - es, and additional payments are increased, other conditions remain unchanged; • if the daily and/or weekly working hours are reduced, provided that the reduced working hours are fully compensated and other condi - tions remain unchanged; and • if the above conditions apply simultaneously, while other conditions remain unchanged. Regulations on collective agreements are also important. According to Article 59(4) of the LC, a company’s collective agreement remains valid even if the company changes its name, owner (participant), or head (or the employer’s representative who signed the agreement).
According to parts 6 and 7 of the same article, in case of an organisation’s reorganisation or privatisation, the collective agreement remains in force until its expiry date or the conclusion of a new collective agreement. If the reorgan - ised organisations had multiple collective agree - ments, those agreements would become invalid after reorganisation. A new collective agreement must be signed within two months, ensuring terms that are at least as favourable as previous agreements. 2.6 National Security Review No specific regulations or restrictions explic - itly address national security concerns in the context of mergers and acquisitions. However, an exception applies to the foreign investment sector. Specifically, under the legislation of the RA, certain territories or sectors may be defined where, due to national security requirements, the activities of foreign investors and enterprises with foreign investments are either restricted or prohibited. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments The Court of Cassation (CC), in its decision of 10 July 2020 (Case No EED/0057/04/17) on bank - ruptcy proceedings, established that the legisla - tor has defined the mechanisms that allow legal entities to reorganise. Among these mechanisms is the merger of legal entities. In such cases, legal entities are considered reorganised from the moment of state registration, which confirms the termination of the merged legal entity’s activ - ity. Furthermore, when a legal entity merges with another, its rights and obligations are transferred to the successor entity in accordance with the transfer act. The CC reaffirmed this position
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