Incorporating in Armenia

Laws

Armenia enacted investor friendly incorporation laws which have been regularly amended. The main act regulating most of the aspects of corporate formation and activities is the Law on Corporations dating from 2001. Armenian law provides for fast incorporation, low maintenance fees and use of corporate form to engage in any legitimate business, such as investing, trading, and property holding. Unlike foreign natural persons, corporations are allowed to own interest in land.

Limited Liability 

Armenian corporations enjoy limited liability and are not responsible for debts of their shareholders. Shareholders, in their turn, are not responsible for debts of the corporation, and the doctrine of corporate veil piercing is not applicable in Armenia.

Formation 

A corporation is formed by filing a statute (articles of incorporation) with the State Registry. Armenian law provides for same day company incorporation and the whole process can take as little as 30 minutes. Moreover, it is possible to submit all necessary documents online. It is therefore not necessary for incorporators to come to Armenia as long as they have a local agent in Armenia or a proper e-signature certificate. Articles of incorporation must be filed in Armenian but the use of parallel languages is not restricted. A single shareholder is sufficient to create a corporation. It is not necessary for a corporation to have directors but it must have an executive officer who can be the shareholder himself. Shareholders and the executive officer can be corporate entities. The corporation must maintain a registered office (legal address) in Armenia but no local secretaries are required. The corporation's life can be specified in the articles of incorporation. Armenia is party to the Apostille convention and incorporation documents are eligible for an apostille. Registration fees do not depend on the value of share capital and amount to approximately $45. Armenian law does not recognize migration of domicile.

Trade Name 

Trade names are registered in Armenian but it is lawful to use their translations into other languages. Corporations are required by law to use endings stating the limited liability. Trade names shall not contain words like "bank" or "insurance," unless the corporation has a proper license. Words "Armenia" or "Armenian" can be used only after a formal authorization by the Government is granted. It is possible to check the availability of names online.

Share Capital Requirements 

Corporations may issue shares in variety of forms and classifications: preferential or common, voting or non-voting. Bearer shares and no par value shares are not authorized. There are no minimum or maximum limits on the amount of share capital. Share capital can be paid in Armenian currency or by transferring other non-cash assets. Share register must be kept and maintained by a licensed registry other than the corporation.

Privacy and Confidentiality 

Nominal shareholders are allowed, and particulars of beneficial or nominal shareholders and directors are not part of public record. However, articles of incorporation, information on executive officer, local address and share capital are available to public.

Maintenance and Administration 

A corporation must at least have an executive officer. Company staff, local directors and secretaries are not required. The executive officer and directors can be corporate entities. Officers, directors and employees can be foreign citizens and residents of any country. Registration fees are paid only once, and no annual fees are payable to the Registry. Books and records must be maintained but there are no requirements for filing them with the Registry, except for amendments to articles of incorporation and changes of executive officers. There are no requirements for annual audits. Annual meetings can be anywhere in the world, and shareholder can be represented by proxies.

Taxation 

Entities incorporated in Armenia are taxed on their worldwide income, and the standard corporate tax rate is 20%. Foreign tax credits are available. Incomes and expenses are recognized on accrual basis. As a general rule, dividends are exempted from taxation.

Parliament Rejected Bill Restricting Cash Payments

The Parliament rejected a draft bill, which sought to extend restrictions on cash operation to natural persons. The bill was introduced by the Government with a view to combat tax evasion. Its provisions would prohibit cash payments in excess of 3 million drams (approx. $7,700), including payments for real estate transactions. Currently such restrictions are imposed only on business by virtue of the Law on Cash Operations.

Chain Stores to Be Restricted in Number

The Government introduced a draft bill seeking to restrict the number or supermarkets in Yerevan and other regions. The bill is aimed at protecting interests of small and medium traders and makes building new supermarkets contingent upon authorization by municipal authorities. Representatives of chains consider the bill to be premature given the relatively small share of supermarkets in the trade volume (10-15%).

Appraisal Licensing Eliminated

The Parliament eliminated licensing requirements for real estate appraisal. Instead a requirement for certification was introduced. Individual wishing to obtain a certificate have to pass an exam and pay a fee of 20,000 drams. Under old law appraisers had to pay 150,000 drams annually to keep the license active. Appraisers are also required to purchase professional responsibility insurance. Amendments provide for restrictions on interested transactions with related parties. Individuals without a certificate are prohibited from signing appraisal reports, under penalty of a fine of 100,000 drams.

Law on Advocacy Amended

Law 339-N, 8 Dec. 2011

The following amendments were made to the Law on Advocacy:

• Persons other than advocates are prohibited from representing clients in courts on a regular basis or on a fee basis, unless such persons represent their close relatives without compensation or represent legal entities predominantly owned by close relatives
• Persons other than advocates are prohibited from representing clients in criminal cases
• Attorneys admitted to practice in foreign countries can represent clients after being accredited with the Chamber of Advocates
• Public authorities are required to respond to an advocate's request for information not later than ten days after receiving such a request
• Advocates are entitled to private meetings with defendants without restrictions as to the number or duration of such meetings
• The following persons are entitled to free representation by a public defender:
• Disabled people
• Unemployed people
• Pensioners living alone
• Veterans
• Members of families below a certain poverty level
• People not having sufficient income who do not live with employed family members, do not own real property except for a primary residence, and do not own a car, except for one of less that one million drams in worth
• Refugees and people granted asylum
• Parentless children
• Family members of fallen soldiers
• Convicted criminals
• Legal entities are prohibited from using the words "advocate," "advocacy" and their derivative in their names
• To become eligible for the bar exam candidates must complete an educational program with the Advocacy School.