ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Tachat Voskanyan, HAP
in its decision of 30 October 2024 (Case No ED/8248/02/20) on a civil matter. The CC ruled that when one company merges with another, making the second company a new creditor, the debtor is not affected unless official - ly notified of the change. The new creditor can claim interest or penalties for contract breaches only if the debtor was properly informed about the succession. 3.2 Significant Changes to Takeover Law In RA, the primary legal acts regulating merg - ers and acquisitions of companies are The Civil Code of the RA, The Law “On Joint Stock Com- panies” (JSC), The Law “On Limited Liability Companies” , The Law “On Securities Market” and other sector-specific legal acts. In recent years, there have been no significant changes to these laws. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies In RA, increasing shares before making a takeo - ver offer is not common. An offer proposes buy - ing or selling securities through communication directed at individuals. According to the Law “On JSC” , a company has the right to increase its Charter capital by increasing the nominal value of the shares or placing additional shares. According to the Law on Limited Liability Companies, the General Meeting can decide to increase the Charter Cap - ital through additional contributions from partici - pants if at least two-thirds of participants vote in favour unless the company’s charter requires more votes. For joint-stock companies, the main method is issuing additional shares; for limited
liability companies, it is additional contributions from participants. The next common method is individual agree - ments and preliminary negotiations between companies. This is particularly prevalent in mining, telecommunications, and banking sec - tors, where shareholders often sell their shares through contractual agreements. Securities listed on the stock exchange can only be traded with the approval of the market opera - tor, following the Law “On the Securities Market,” related regulations, and stock exchange rules. 4.2 Material Shareholding Disclosure Threshold Under Armenian law, anyone (or an affiliated person) planning to acquire or increase shares in an investment company to reach at least 20%, 50%, or 75% of voting rights must get prior approval from the CB’s Board (CBA). To get approval, the applicant must submit a request to the CBA. After approval, they must notify the CBA if: • selling shares reduce their voting rights below 10%, 20%, 50%, or 75%. • the sale decreases their voting rights by 10% or more. To get prior approval for acquiring a significant share in an investment company, the applicant must submit documents and information to the CB through the investment company, proving the legal source of the funds. 4.3 Hurdles to Stakebuilding First, it should be noted that the stock market in the RA is relatively small, and companies’ shares are rarely traded on the stock exchange, which often complicates stakebuilding.
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