ON EXTENSIVE AMENDMENTS OF THE LAW OF REPUBLIC OF ARMENIA ON JOINT STOCK COMPANIES

Significant amendments of regulations of the joint-stock companies’ activities have come into force on July 10, 2021.

 

The amendments not only introduce entirely new concepts to the Armenian legislation such as the squeeze-out/sell-out procedures (compulsory sale/buyback of shares) or the possibility of holding fractional shares of a company but also make changes to such essential regulations, as, for example, the employees stock ownership plan, mandatory requirement of replenished charter capital at the moment of registration of the company, etc. Also, as a result of the amendments package, several regulations have been removed.

 

  1. In particular, the following new concepts have been introduced in the RA law on Joint Stock Companies (hereinafter also referred to as the “Law”):
  • The squeeze-out/sell-out procedures (compulsory sale/buyback of shares) have been defined by the law;
  • It is now possible to issue different classes of ordinary nominal shares;
  • It is now possible to hold fractional shares;
  • Several exceptions have been introduced to the requirement of valuation by an independent appraisal of the property being invested in the company as a payment for placement of newly issued shares;
  • the charter capital of the company now can be increased based on the resolution of the executive body of the company;
  • other amendments related to the extent and delegation of powers of governing bodies of the company have been introduced to the Law.

 

  1. Some of the existing regulations have been amended as follows:
  • Regulations/limitations related to the major transactions have been “liberalized”;
  • Process and possibility of delegating powers of the General Meeting of Shareholders to the Board and to the executive body have also been “liberalized”;
  • Regulations related to the employee stock ownership plans have been amended and detailed;
  • the process of registering data in the shareholders’ register of the company has been revised/amended.

 

  1. And, finally, the following regulations/concepts have been removed: 
  • The requirement of having completely replenished charter capital of the company at the moment of its registration has been removed;
  • The mandatory requirement of liquidation of the company with negative charter capital, or with assets lower than the defined charter capital has been removed and now the company have the possibility to continue its activities in certain cases;
  • The legal prohibition on the issuance of unsecured bonds by newly registered companies has been removed;
  • Appointment a controller of the company is no longer mandatory.