Principal Organisational-Legal Forms

The State Register of Legal Entities within the Ministry of Justice maintains the corporate registry and recognises several organisational-legal forms for commercial activity. Local and international businesses overwhelmingly use the limited liability company (LLC) and the joint stock company (JSC), with the latter established as either a closed or an open corporation. The Civil Code also recognises general partnerships and limited partnerships, but these are rare in modern commercial practice because general partners have no liability shield.

Limited liability companies

The LLC is the most common vehicle, valued for its flexibility, ease of establishment and the statutory cap on member liability: participants are not liable for the company’s debts beyond their registered contributions. Under the Law on LLCs, an LLC may have no more than 49 participants; if that number is exceeded, the company must convert into a JSC or a co-operative within one year or face judicial liquidation. There is no statutory minimum charter capital unless industry-specific licensing rules impose one.

Joint stock companies

A closed JSC restricts the purchase of shares by granting existing shareholders and/or the company a right of first refusal, in accordance with the applicable statutory and charter provisions. The shareholder base is also limited to 49. Where a shareholder intends to sell its shares to a third party, the applicable pre-emption procedure must first be followed, allowing the existing shareholders and the company to exercise their respective rights before the shares may be transferred to the proposed third-party purchaser.

An open JSC, by contrast, allows shares to be transferred without the restrictions applicable to a closed JSC and may conduct both non-public and public subscriptions. An open JSC is also the mandatory corporate form for listing shares on the Armenian Securities Exchange (AMX).

The choice between a closed JSC and an LLC will generally depend on:

• the desired corporate governance structure;
• the need to accommodate multiple classes of shares and shareholders;
• the applicable rules for transferring ownership interests; and
• the possibility of raising capital through the securities market or pursuing an eventual public listing.

Tax and Regulatory Drivers

Companies generally fall under the general tax regime, with 18% corporate income tax and 20% VAT, while eligible businesses may use simplified regimes such as turnover or micro-enterprise tax. In some sectors, the general regime is mandatory by law. LLCs and closed JSCs may use turnover tax if their annual turnover is below AMD115 million, generally reducing the tax and accounting burden. Scrutiny is heavier for JSCs, whose share registers must be kept with the Central Depository of Armenia or a licensed registrar, whereas LLC participation transfers are recorded directly in the State Register, giving small and medium-sized enterprises a simpler and cheaper compliance regime.

Incorporation Requirements

Incorporation is centralised and swift. Founders must execute a foundation agreement, approve the charter and determine the initial management structure. LLCs and closed JSCs may be registered in person at the State Register, online through www.e-register.am using Armenian electronic signatures, or through an authorised representative under a paper-based power of attorney, without the founders’ personal attendance.

Procedure, Timelines and Fees

Where founders adopt the model charter templates published by the Ministry of Justice, registration is completed immediately and free of state duty. Customised charters and paper filings take up to two working days and attract a nominal duty under the Law on State Duty. Where the founder is a non-resident legal entity, the relevant corporate documents must be notarised, apostilled (where applicable) and translated into Armenian in accordance with the applicable requirements. Where a legal entity is the founder, the registration procedure generally takes up to three working days, due to the additional verification of the founding entity’s documents. The State Register issues the taxpayer identification number and the social security registry code automatically, connecting the new entity to the State Revenue Committee. No capital needs to be paid into a bank account before registration of a standard LLC or JSC.

Ongoing Compliance Obligations

Ongoing compliance is relatively light for LLCs, which must hold an annual general meeting and notify the State Register of changes to the executive body, registered address or charter. JSCs carry a heavier burden: an annual general meeting must be held within six months of the financial year end, and the share register must be maintained with the Central Depository of Armenia as the exclusive registrar. All entities must also submit annual ultimate beneficial owner (UBO) declarations and periodic tax and statistical reports.

Charter Capital and Share Structure

The capital structure of JSCs is governed by the Law on JSCs. The charter must specify the number and nominal value of the shares acquired by shareholders, and may also specify the number and nominal value of authorised shares, being those the company may place over and above the placed shares (in an open JSC, the number of authorised shares should be mentioned in the charter). Placement and payment are distinct: shares placed on foundation must be paid up in full within the period fixed by the founding decision, agreement or charter, and in any event no later than three months after state registration.

Increasing and Reducing Capital

Any alteration of charter capital requires a general meeting resolution. Capital may be increased by raising the nominal value of existing shares or issuing additional shares within the authorised limit, with the increase taking effect against third parties upon registration with the State Register. An increase through nominal value may only be made from the company’s own resources and is subject to statutory limits. Capital may not be increased through fundraising if previously issued shares remain unpaid. Capital may be reduced by lowering the nominal value of shares or repurchasing and cancelling shares. The reduction process is creditor-protective, requiring individual written notice and public announcement, and allowing creditors to demand early performance of obligations.

Convertible Loans

The Law expressly recognises convertible loan agreements for LLCs and JSCs, allowing principal and/or interest to convert into equity. LLC conversion generally requires unanimous approval, a charter-capital increase within 60 days, and charter authorisation for third-party contributions. For JSCs, unanimous approval is generally required, unless the charter permits a threshold of at least three quarters of voting shares; shares must be issued and placed within 60 days. Foreign currency amounts are converted at the Central Bank of Armenia (CBA) average rate on the conversion-request date.

Classes of Shares and Attached Rights

The Law on JSCs permits common (ordinary) and preferred shares. Common shares carry equal voting rights (subject to a charter-imposed ceiling of up to ten votes per share), dividend rights based on performance, and a proportionate share of assets on liquidation. Preferred shares confer priority to fixed or variable dividends and priority on liquidation but generally carry no vote. Preferred shareholders do acquire voting rights on matters directly affecting them, such as charter amendments restricting their privileges, or where the company has failed to pay guaranteed preferred dividends for three consecutive years.

Dividends and Distribution Procedure

Distributions to shareholders, principally dividends, are subject to solvency tests and formal corporate procedures under both the Law on JSCs and the Law on LLCs. Dividends may be declared quarterly, semi-annually or annually out of net accumulated after-tax profit. The decision falls within the exclusive competence of the general meeting, acting on the recommendation of the board of directors: the board sets the maximum amount, and the general meeting may approve or reduce it, but may not increase it.

Solvency Restrictions

A company is prohibited from declaring or paying dividends where:

• the charter capital has not been fully paid up;
• net assets are less than the charter capital plus the reserve fund, or would become so as a result of the distribution; or
• the company shows signs of insolvency or would do so as a direct consequence of the distribution.

In a JSC, payment of common dividends is additionally conditional on full payment of accrued preferred dividends, preserving strict priority between classes of capital.

Repurchase, Redemption and Cancellation

Share repurchases, redemptions and cancellations are closely regulated. A JSC may repurchase its own shares either to reduce charter capital or to hold them as treasury shares, which must be sold or cancelled within one year. Repurchase is prohibited where the company is insolvent or where the transaction would take net assets below the statutory minimum.

The law also applies financial assistance rules, prohibiting a company from lending, guaranteeing or granting security to a third party for the purpose of financing the acquisition of its own shares.

The UBO Disclosure Regime

Beneficial ownership disclosure is a cornerstone of Armenia’s corporate transparency and anti-money laundering framework. Under the Law on State Registration of Legal Entities and the Law on Combating Money Laundering and Terrorism Financing, every company registered must identify and keep current records of its UBOs. A UBO is any natural person who ultimately owns or controls the entity through a direct or indirect holding of 20% or more of its shares or voting rights, or who otherwise exercises dominant influence over the entity’s management and decisions.

Initial Declaration and Reporting of Changes

A UBO declaration must be filed with the State Register of Legal Entities on incorporation, stating the UBO’s full name, citizenship, date of birth, residential address, identity document details and the exact legal basis and percentage of ownership or control. Where the ownership structure changes (for example, on a share transfer that alters the identity of the beneficial owners), an updated declaration must be filed within 40 days of the change becoming known, or of when it ought to have been known, to the executive body.

Annual Confirmation and Sanctions

Separately from ad hoc reporting, every registered legal entity must carry out an annual review of its beneficial ownership and file an annual confirmation or updated declaration with the State Register by February 20th each year, reflecting the position as at December 31st. Failure to comply, filing false information or missing the annual deadline can result in administrative fines, suspension of state services and, in serious cases, grounds for the State Register to seek judicial liquidation of the entity.

Statutory Framework

Corporate governance rests on a statutory framework supplemented by voluntary best-practice codes. The principal legislative acts are the Civil Code, the Law on JSCs and the Law on LLCs. Together they establish the mandatory corporate organs and delineate their competences:

• the general meeting of shareholders (or participants) as the supreme organ;
• the board of directors (supervisory board) as the oversight body; and
• the executive body, comprising a general director or a management board, responsible for day-to-day operations.

The 2024 Corporate Governance Code

In 2024, the Ministry of Economy approved the Corporate Governance Code, replacing earlier guidelines and aligning the jurisdiction more closely with the OECD Principles of Corporate Governance. It applies to all commercial organisations on a voluntary basis but is strongly promoted for listed entities, state-owned enterprises and financial institutions.

‘Comply or Explain’

The operational hallmark of the 2024 Code is the ‘comply or explain’ principle. A company that adopts the Code must either implement its recommendations in full or disclose and justify each deviation in its annual corporate governance declaration. This gives smaller and family-owned businesses the flexibility to scale governance to their operations while giving investors and regulators the transparency needed to assess risk profile and internal controls.

Fiduciary Duties of Loyalty and Care

Directors and executive officers owe fiduciary duties of loyalty and care to the company and its shareholders. Under the Civil Code, the Law on JSCs and the Law on LLCs, they must act in good faith, professionally and reasonably, and in the best interests of the company. The duty of loyalty requires directors to avoid actual and potential conflicts of interest, to refrain from competing with the company and to prioritise corporate opportunities over personal gain; the duty of care requires diligent preparation for and active participation in board oversight.

The Standard of Care

The statutory standard of care is that of a reasonably prudent person in comparable circumstances. Courts have increasingly applied these standards in corporate disputes, moving away from purely formalistic review of board resolutions, and now examine whether a decision rested on adequate information, professional advice and a reasonable belief that the action would benefit the company. This approach mirrors the business judgement rule, shielding directors from liability for honest, informed commercial risks that produce losses, absent bad faith or self-dealing.

Personal Liability

Directors may incur personal, joint and several liability to the company and, in defined cases, to third-party creditors. Liability is triggered by wilful misconduct, gross negligence or transactions concluded in breach of fiduciary duty, such as unauthorised related-party transactions or unlawful dividend distributions. Under the Law on Bankruptcy, where insolvency is caused directly by the acts or binding instructions of a director or controlling shareholder, the court may impose subsidiary liability, making those persons personally answerable for the company’s outstanding debts if corporate assets prove insufficient.

Formation and Composition of the Board

The board of directors is the principal supervisory organ, and its formation is mandatory for any JSC with 50 or more shareholders. A board is optional for LLCs and smaller JSCs, and its supervisory functions are typically exercised directly by the general meeting. There is no legal local residency requirement for board members, so foreign nationals may sit on the boards of domestic companies, which facilitates foreign direct investment and cross-border group structures.

Independence Standards

Independence criteria appear in the Law on JSCs and are elaborated in the 2024 Corporate Governance Code. An independent director must have no familial, financial or material commercial relationship with the company, its controlling shareholders or its executive management, and must not have been employed by the company in the preceding three years. The Code recommends that at least one-third of the board be independent, and in any event no fewer than two members.

Listed Companies and Financial Institutions

The regulatory divide between private companies and listed entities or institutions supervised by the CBA is sharp. Under CBA regulations and AMX listing rules, listed companies must:

• maintain a higher proportion of independent directors;
• establish audit, nomination and remuneration committees chaired by independent members; and
• comply with disclosure rules on board remuneration and evaluation.

The Code also encourages boards to consider gender, professional background and age diversity in nomination processes. For regulated financial institutions, members of management are subject to CBA registration or approval requirements.

The Emerging ESG Framework

ESG considerations are moving from voluntary corporate social responsibility towards structured regulatory requirements – a shift led by the 2024 Corporate Governance Code and by sector-specific regulation. The Code introduces sustainable corporate development as an express concept, expecting companies to integrate environmental protection, social responsibility and ethical governance into core business strategy rather than treating them as reporting exercises.

Climate-Related and Sustainability Disclosure

Comprehensive climate-related financial disclosure aligned with the TCFD or ISSB frameworks is not yet mandatory for private companies, but listed entities and financial institutions face expanding ESG disclosure duties. The CBA and the AMX require listed issuers to include non-financial disclosures in annual reports covering environmental impact, energy consumption, employee health and safety, and anti-corruption measures, largely in response to demand from international institutional investors for standardised sustainability data.

Directors’ Duties and Stakeholder Interests

The scope of directors’ duties has widened accordingly. In assessing the best interests of the company, directors are expected to look beyond short-term shareholder return and weigh the long-term effect of decisions on employees, communities, creditors and the environment. Judicial practice supports this multi-stakeholder reading, treating environmental and social compliance as elements of the duty of care.

Best Practices for Board Oversight

Boards should:

• delegate sustainability oversight to a dedicated ESG or risk committee;
• commission periodic environmental and social risk audits;
• ensure full compliance with environmental impact assessment obligations under the Law on Environmental Impact Assessment and Expertise; and
• maintain internal whistle-blowing channels.

Treating ESG as a strategic matter rather than a compliance burden improves resilience, widens access to international financing and reduces regulatory exposure.

Definition of a Related Party

Related-party transactions (RPTs) and conflicts of interest are governed by preventative and remedial rules in Chapter IX of the Law on JSCs and the corresponding provisions of the Law on LLCs. A related party is defined broadly to include board members, executive officers, shareholders holding 20% or more of the voting shares, and their close relatives and business affiliates. Such persons must disclose any direct or indirect interest in a proposed transaction to the board without delay.

Approval Requirements

The approval regime protects minority shareholders against asset diversion and transfer pricing. In a JSC with fewer than 500 shareholders, an RPT must be approved by a majority of the disinterested, non-executive directors; in a JSC with 500 or more shareholders, approval rests exclusively with the independent, disinterested directors. Where the transaction exceeds 10% of the company’s book assets, or where every board member is interested, the matter must go to the general meeting and be approved by a majority of the disinterested voting shares.

Disclosure, Valuation and Consequences

An approved RPT must still be concluded at fair market value, supported by an independent appraiser’s valuation. JSCs must disclose related-party transactions in their annual reports, identifying the related party, the nature of the interest and the terms. A transaction concluded in breach of these rules may be declared void by a court on the petition of the company or of shareholders holding at least 1% of the shares, and the interested parties are liable for the resulting damage and must account to the company for any profit.

Voting Rights

Shareholders in JSCs hold a broad suite of statutory rights. The principal right is the vote, with each common share carrying one vote on all matters put to the general meeting. Shareholders are also entitled to dividends in proportion to their holding and, on dissolution, to a pro rata share of the remaining liquidation assets under the Law on JSCs.

Access to Information

Access to information is a further statutory right. A shareholder of any size may inspect core corporate documents, including the charter, the registration certificate, minutes of general meetings and annual financial statements. Shareholders holding 5% or more of the voting shares may demand an independent audit of the company’s financial and business operations at their own cost, and may access more detailed internal records such as minutes of board and management board meetings, which are otherwise closed.

Approval of Fundamental Changes

Fundamental corporate changes require elevated majorities, protecting minorities against unilateral action by controllers. Charter amendments, capital reductions, major transactions involving assets exceeding 50% of book value, reorganisations and voluntary liquidation all require approval by three-quarters of the voting shares represented at the general meeting. Shareholders who vote against or abstain on such matters may require the company to buy back their shares at fair market value.

Statutory Remedies

Statutory remedies address mismanagement and majority oppression. Shareholders holding at least 1% of the shares may bring a derivative claim against directors or executive officers to recover loss caused to the company by breach of fiduciary duty. Any shareholder may sue to invalidate a resolution of the general meeting or of the board adopted in breach of the law or the charter, provided the claim is brought within the applicable limitation period.

Board Representation

Shareholders holding at least 10% of the voting shares are entitled to appoint themselves or their representatives to the board of directors without election by the general meeting, as provided by the Law on JSCs.

Share Repurchase Rights

Shareholders may also require the company to repurchase their shares at fair market value in a broad range of cases provided by the Law on JSCs, including:

• certain fundamental corporate decisions;
• amendments restricting shareholder rights;
• persistent corporate governance failures;
• prolonged failure to distribute dividends;
• abuse of rights by the controlling shareholder; and
• other cases determined by the court.

Use of Shareholder Agreements

Shareholder agreements (SHAs) are recognised and are widely used by local and international investors to tailor governance and operating rules. The charter remains the public, foundational document filed with the State Register, while the SHA is a private contract addressing matters such as voting arrangements, board representation, funding commitments, dividend policy and dispute resolution. SHAs are enforceable if their terms do not contravene mandatory provisions of law or reduce statutory minority protections.

Share Transfer Restrictions

Transfer restrictions are a central feature. SHAs commonly contain rights of first refusal and first offer, tag-along rights protecting minorities, and drag-along rights facilitating exit. The Law on LLCs and the rules governing closed JSCs already provide a statutory right of first refusal, but an SHA allows the parties to refine procedural timelines, fix valuation formulas such as EBIT multiples, or bar transfers to competitors. For JSCs, these restrictions should be reflected in the charter and noted in the share register in order to ensure enforceability.

Dispute Resolution and Oppression Claims

The law offers both judicial and extrajudicial mechanisms for shareholder disputes and oppression claims. Disputes may be resolved through the state courts or, where agreed by the parties, through mediation or commercial arbitration. Chapter 25 of the Civil Procedure Code created a dedicated proceeding for corporate disputes (those arising from the creation or management of a legal person or from participation in its charter capital), covering, among others:

• challenges to decisions of management bodies;
• the liability of directors;
• title to shares;
• the convening of general meetings; and
• the expulsion of a participant.

Under the Law on LLCs, participants holding at least 10% of the charter capital may petition the court to expel a participant whose acts or omissions seriously obstruct the company’s operations or cause material damage. In JSCs, the principal remedy is the derivative claim available to holders of at least 1% of the shares, alongside actions to invalidate transactions concluded in conflict of interest.

Winding-Up and Dissolution

Winding-up is a remedy of last resort. Under the Civil Code and the Law on Bankruptcy, shareholders may petition the court to dissolve and liquidate a company where deadlock among shareholders or management has paralysed operations, or where net assets remain negative over consecutive years. Parties frequently designate commercial arbitration as the exclusive forum, relying on the Law on Commercial Arbitration to obtain confidential, binding awards enforceable internationally under the New York Convention.

Principal Laws and Regulations

M&A are governed by the Civil Code, the Law on JSCs, the Law on Limited Liability Companies and the Law on Protection of Economic Competition. For transactions involving listed companies, the Law on Securities Market and the regulations of the CBA also apply. The framework accommodates both private transactions structured as share or asset acquisitions, and public M&A in the form of tender offers, mergers of listed companies and hostile takeovers.

Statutory Forms of Reorganisation

Corporate law permits five forms of reorganisation:

• merger;
• accession (absorption);
• division;
• separation; and
• conversion.

A merger consolidates two or more entities into a newly created legal entity, while an accession involves the absorption of one or more companies by an existing company, which survives. Both require a merger or accession agreement, approval by a 75% majority at the general meeting of each participant, and the transfer of all assets and liabilities by way of a transfer act.

Commonly Used Deal Structures

Share purchases and accessions dominate in practice. Share purchases are favoured for private acquisitions because they avoid transfer tax exposure and the need to novate contracts and licences individually, while accession is typically used for group consolidation. Armenia has no statutory scheme of arrangement or court-sanctioned plan for squeezing out minorities. Instead, squeeze-outs in JSCs proceed through tender offers: under the Law on JSCs, an acquirer reaching 95% of the voting shares may compulsorily purchase the balance at fair market value, while shareholders holding no more than 5% may require the company to repurchase their shares.

Recent Regulatory Developments and Case Law

Recent developments have centred on merger supervision and transparency. The Competition Protection Commission (CPC) has intensified its oversight of concentrations, lowering filing thresholds and tightening reporting requirements, while mandatory UBO disclosure (see 1.5 Control Person Reporting) has reduced the use of nominee holdings in transactions. The courts have also been active, with recent decisions confirming that accession agreements cannot be used to defeat creditor rights, and that creditors must be formally notified and given the opportunity to demand early repayment.

Public Acquisitions and Disclosure

Public acquisitions are subject to strict disclosure timelines. A party intending to acquire a significant shareholding in a listed company must declare its intention and publish a prospectus approved by the CBA, and the target’s board must issue a formal recommendation to shareholders on the offer price and terms. This dual oversight is intended to secure fair treatment of minority investors and to prevent insider trading and greenmailing during a bid.

Escrow and Warranty Protection in Private M&A

In private M&A, escrow arrangements and warranty and indemnity insurance are increasingly built into deal structures. Escrow accounts, typically operated through domestic commercial banks, hold back part of the purchase price against post-closing liabilities and tax indemnities. Courts have shown themselves willing to enforce contractual indemnities and post-closing covenants where these are clearly drafted in the share purchase agreement and do not conflict with mandatory public policy under the Civil Code.

Regulatory Framework and Supervisory Bodies

Capital markets are governed by the Law on Securities Market, with the CBA acting as the single integrated financial regulator. The CBA’s tasks include:

• licensing market participants, including investment companies, custodians and the exchange;
• registering securities;
• approving prospectuses; and
• enforcing the market abuse regime.

Listed securities trade on the AMX, which works alongside the Central Depository of Armenia for clearing and settlement.

Public Offerings and Prospectus Requirements

An initial or follow-on public offering requires a prospectus to be prepared under the Law on Securities Market and CBA regulations, setting out the issuer’s financial condition, corporate governance, risk factors and the rights attaching to the securities. The prospectus must be registered and approved by the CBA – a process that typically takes 20 to 30 working days from submission. Once approved, it must be published on the issuer’s and the underwriter’s websites, and the securities must be admitted to trading on the AMX within the prescribed timelines.

Prospectus Exemptions

The Law on Securities Market provides exemptions allowing capital to be raised without a full public offering. These cover:

• offers addressed solely to qualified investors;
• offers addressed to fewer than 150 non-qualified investors;
• offers with a minimum subscription per investor of at least the AMD equivalent of EUR100,000; and
• small offers where the total consideration does not exceed the CBA-defined threshold over a 12-month period.

Exempt issuers must still file a simplified notification with the CBA within 15 days of completing the offering.

Resale Restrictions

Securities placed under an exemption are subject to resale restrictions preventing circumvention of the disclosure rules. They may not be resold to the public nor admitted to a regulated market unless a prospectus is subsequently registered or the secondary transfer itself falls within an exemption, such as a transfer between qualified investors. A non-compliant resale is treated as an unauthorised public offering: the transactions are void, the issuer and underwriters face administrative fines, and investors may demand rescission and restitution.

Stock Exchange Listing Requirements

AMX listing requirements operate alongside CBA regulation. Issuers must satisfy qualitative and quantitative criteria set by both, including a minimum free float, minimum market capitalisation and a record of profitable operations or sound corporate assets. AMX rules also give effect to the Corporate Governance Code, requiring premium-tier issuers to establish board committees and publish regular compliance declarations.

Periodic Financial Reporting

Issuers listed on the AMX are subject to continuous disclosure obligations designed to maintain market transparency. Under the Law on Securities Market and CBA normative acts, such issuers must prepare and publish annual audited financial statements, together with quarterly or semi-annual interim reports. Annual statements must be prepared in accordance with International Financial Reporting Standards and audited by an independent licensed audit firm.

Material Events and Inside Information

Listed entities must also disclose material events and inside information as they arise. A material event is any development, decision or occurrence that could reasonably be expected to affect the market price or value of the issuer’s securities significantly. This includes:

• changes in executive management;
• major acquisitions or disposals;
• the commencement of material litigation;
• default on debt obligations;
• changes in controlling shareholdings; and
• decisions on dividend distribution.

Timing and Manner of Disclosure

Disclosure must be made immediately – generally within 24 hours of the event or of the issuer becoming aware of it – and in a manner ensuring rapid, comprehensive and non-discriminatory public access. The issuer must publish an announcement on its corporate website, submit the disclosure to the CBA and distribute it through the AMX’s official disclosure channels. Delayed disclosure of inside information is permitted only in exceptional circumstances, and requires prior notification to and approval from the CBA.

The Market Abuse Prohibition

Market abuse, comprising insider dealing and market manipulation, is strictly enforced in order to preserve market integrity and to protect public investors. Under the Law on Securities Market, inside information is precise, non-public information relating directly or indirectly to one or more issuers or financial instruments which, if made public, would be likely to have a significant effect on the price of those instruments or of related derivatives.

Prohibited Conduct

A person in possession of inside information is prohibited from:

• dealing, directly or indirectly, in the securities to which the information relates;
• disclosing that information to another person other than in the normal course of employment or professional duties; or
• recommending or inducing another person to deal on the basis of such information.

Issuers must also maintain a current insider list and formally notify those persons of their obligations and of the penalties for breach.

Enforcement Powers of the CBA

The CBA holds broad enforcement powers. It may:

• conduct on-site inspections;
• require the production of telephone and data traffic records;
• suspend trading in the affected securities on the AMX; and
• impose administrative fines on individuals and companies.

Where an investigation discloses elements of criminal conduct, the CBA must refer the matter to the Prosecutor General’s Office for prosecution under the Criminal Code, which provides for imprisonment and asset forfeiture in serious cases.

Notification Thresholds

The Law on Securities Market requires the disclosure of substantial shareholdings in listed companies. Any natural or legal person who directly or indirectly acquires or disposes of voting shares in a listed domestic company must notify both the issuer and the CBA when its holding of voting rights reaches, exceeds or falls below the statutory thresholds, which are set at 5%, 10%, 20%, 50% and 75% of total voting rights.

Form and Content of the Notification

Notification must be given in the CBA-prescribed form within four working days of the transaction date, specifying:

• the shareholder’s name;
• the transaction date;
• the previous and current percentages of voting rights; and
• where the holding is indirect, the chain of controlled undertakings through which the shares are held.

The issuer must then publish the information through the AMX’s official disclosure platforms within three working days of receipt.

Consequences of Non-Compliance

The consequences of non-disclosure are severe. A shareholder who fails to report the crossing of a threshold in time is deprived of the voting and dividend rights attaching to the undeclared shares until the obligation is discharged. The CBA may also impose administrative fines and order divestiture of the undeclared shares, and resolutions of the general meeting adopted with the votes of non-compliant shares may be invalidated.

Internal Controls and Compliance Programmes

Internal control and compliance programmes are mandatory for financial institutions and strongly recommended for all commercial companies under the Civil Code and the Corporate Governance Code. Under the Law on JSCs, the board of directors approves the company’s internal control and risk management frameworks and appoints an independent internal auditor, who reports to the board’s audit committee to ensure objective oversight of financial operations and regulatory compliance.

The Whistle-Blowing Framework

Whistle-blowing is governed by the Law on the Whistle-Blowing System. Mandatory participation in the state-run system applies principally to public sector bodies and state-owned enterprises, but the Corporate Governance Code expects listed companies and larger private enterprises to operate internal reporting channels. Those channels must guarantee the confidentiality of the whistle-blower’s identity, provide secure reporting mechanisms such as dedicated electronic portals, and protect employees against retaliation.

Managing Compliance Risk

Companies are advised to structure compliance around three lines of defence:

• operational management;
• a dedicated compliance officer; and
• an independent internal audit function.

The programme should include:

• a code of ethics;
• regular compliance training;
• periodic risk assessments focused on AML/CFT;
• anti-bribery and data privacy; and
• a defined corrective action protocol.

A structured framework of this kind reduces regulatory exposure, protects corporate reputation and mitigates directors’ personal liability.

Governing Law and Types of Security

Secured transactions and debt financing are governed principally by the Civil Code, the Law on State Registration of Rights to Property and the Law on State Registration of Movable Property Rights. The framework gives lenders a predictable environment and supports a range of security interests. The most common in commercial practice are pledges of movable property, covering equipment, inventory, receivables and shares, and mortgages over real property.

Perfection and Priority

Perfection determines both enforceability and priority. A real estate mortgage is perfected by a notarised mortgage agreement, followed by state registration with the Cadastre Committee. A movable property pledge, including a pledge of shares, bank accounts or contractual rights, must be registered with the State Register of Legal Entities in the case of corporate shares, or recorded in the movable property registry, in order to secure statutory priority. Priority between competing secured creditors is determined strictly by the date and time of registration.

Acquisition Financing and Security Packages

Acquisition financing packages typically combine asset-backed pledges with corporate guarantees. A standard package includes:

• a mortgage over target real estate;
• a pledge over the shares of the target;
• a pledge of the target’s bank accounts and receivables; and
• parent or affiliate guarantees.

Lenders commonly use intercreditor agreements to organise subordination, payment waterfalls and joint enforcement, although registered security remains the basis of statutory priority. Convertible loans are available for LLCs and JSCs; see 1.3 Share Issuances.

Recent Legislative Developments

Recent reforms have improved the financing environment. Electronic registration of movable property pledges and mortgages has streamlined perfection, reducing transaction costs and closing timelines. Amendments to the Civil Code have also clarified the enforcement of share pledges, permitting out-of-court enforcement and direct transfer of ownership of the pledged shares to the lender on default, provided such mechanism is expressly agreed in the pledge contract.

Secured Creditors in Insolvency

The position of secured creditors in insolvency has likewise been reinforced. Under the Law on Bankruptcy, assets subject to a registered pledge or mortgage are carved out of the general liquidation pool, and the secured creditor holds a priority claim over the proceeds of the sale of the collateral, subject only to direct administration and preservation costs.

Principles of Contract Formation

Commercial contracts are governed by the Civil Code, which adheres to freedom of contract, private autonomy and the equal standing of the parties. Parties may conclude contracts freely, combine elements of different contract types into mixed contracts and set their own terms, provided they do not contravene mandatory statutory norms. Contracts are interpreted according to the literal meaning of the words used and, in case of ambiguity, by reference to the mutual intention of the parties and the contract as a whole.

Essential Terms and Formal Requirements

Valid formation requires agreement on all essential terms, reached in the form prescribed by law. Unlike common law systems, civil law does not require consideration: a unilateral promise or an agreement without mutual exchange of value is enforceable provided the requirements as to form and capacity are met. The parties must have full civil capacity, and the contract must be in the proper form, generally in writing as a single signed document or by exchange of electronic communications, or notarised where the law so requires.

Grounds for Invalidity

Invalidity is structured around void and voidable transactions. A contract is void where it contravenes a mandatory statutory prohibition, lacks required state registration or notarisation, or is concluded for an unlawful purpose. A contract is voidable, and may be set aside by a court, where it was concluded under the influence of fraud, duress or material misrepresentation, or where it is an unconscionable transaction concluded by taking unfair advantage of the other party’s extreme necessity or distress.

Good Faith and Interpretation

Enforceability and interpretation are shaped by the overarching duty of good faith, which applies to negotiation, conclusion and performance alike. Liability may be limited or excluded by agreement, but any clause excluding liability for intentional breach is void. Unconscionable terms in standard-form contracts of adhesion may also be challenged by the weaker commercial party where they are disproportionately one-sided and deprive that party of rights conventionally granted in comparable transactions.

Remedies for Breach

The Civil Code gives the non-breaching party a range of remedies aimed at restoring it to the position it would have occupied had the contract been performed. The principal remedies are:

• specific performance;
• recovery of damages, covering both direct loss and lost profit; and
• contractual penalties or liquidated damages, which must be agreed in writing to be enforceable.

Termination and Wrongful Termination

A contract may be terminated by agreement, by court order on the application of one party following a material breach, or unilaterally where the law or the contract expressly confers that right. A material breach is one that deprives the innocent party of what it was reasonably entitled to expect under the contract. Wrongful unilateral termination, without statutory or contractual basis, is itself a material breach and exposes the terminating party to liability for all resulting direct and indirect loss.

Force Majeure

Force majeure is recognised as an exemption from liability for non-performance. The event must be extraordinary and unavoidable in the circumstances, such as a natural disaster, military action or government prohibition. Force majeure does not terminate the contract; it suspends liability for delay or non-performance while it continues. Where the event persists so that performance becomes permanently impossible, the contract terminates for frustration of purpose, and both parties are released from liability.

Hardship and Changed Circumstances

The law also recognises hardship, permitting modification or termination where circumstances change materially. The change must be so fundamental that, had the parties foreseen it, they would not have concluded the contract or would have done so on entirely different terms. If the parties cannot agree an adjustment, either may apply to the court to modify or terminate the contract, and the court will balance the equities to avoid unfair prejudice.

Assignment of IP Rights

Intellectual property is governed by the Civil Code, the Law on Copyright and Related Rights, the Law on Trade Marks and the Law on Geographical Indications. IP rights may be assigned or licensed by written agreement. Assignments of trade marks, patents and industrial designs must be registered with the Intellectual Property Agency of the Ministry of Economy to take effect against third parties, whereas copyright assignments require no registration and are effective on signature.

Licensing

Licences may be exclusive, sole or non-exclusive. Licences of registered IP such as trade marks and patents must also be registered with the Intellectual Property Agency to be enforceable. Trade secrets and confidential proprietary information are protected under the Civil Code and the Law on Protection of Economic Competition; because no registration is available, commercial parties must rely on well-drafted non-disclosure agreements and internal security measures.

Ownership of IP Created in a Commercial Relationship

Ownership of IP created within a commercial relationship follows statutory defaults. For employee-created works, copyright and patent rights vest in the employer unless the employment contract provides otherwise, although the employee retains the non-transferable moral right of authorship. For commissioned works, rights remain with the creator, and the commissioning party receives a licence to use the work for its intended purpose, unless the commission contract expressly transfers ownership.

Remedies for Infringement

Remedies for infringement are readily available. A right holder may seek an injunction restraining the infringing activity, demand seizure and destruction of counterfeit goods and production equipment, and recover damages. In copyright and trade mark disputes, right holders may claim statutory compensation instead of proving actual loss, which is an efficient tool against commercial piracy. The Customs Service also applies border measures to intercept and seize counterfeit imports.

Principal Consumer Protection Laws

Consumer protection is governed by the Law on Protection of Consumer Rights and the Law on Trade and Services. These establish non-excludable consumer rights that override contrary contractual terms, so any clause restricting or waiving them is void. The framework also imposes mandatory disclosure duties on sellers, requiring clear and accurate information in Armenian on pricing, specifications, origin and safety.

Cooling-Off Periods

Mandatory cooling-off periods apply to certain transactions. In distance and off-premises contracts, including e-commerce, consumers may withdraw and return the goods within 14 days without giving reasons and without penalty, subject to limited exceptions. Sellers must notify consumers of this right; failure to do so extends the withdrawal period to three months.

Misleading Advertising and Unfair Practices

Misleading advertising and unfair commercial practices are prohibited. Under the Law on Advertising and the Law on Protection of Economic Competition, advertising or marketing that misleads consumers as to the characteristics, geographical origin, price or availability of a product is treated as unfair and anti-competitive. Regulators monitor campaigns closely in the pharmaceutical, tobacco, alcohol and financial services sectors, where strict labelling and warning requirements apply.

Enforcement

Enforcement lies principally with the CPC and the market supervisory body, alongside consumer claims in court. The CPC may:

• open administrative investigations;
• conduct test purchases;
• issue binding orders to cease unfair practices; and
• impose administrative fines.

Consumers may also use the Financial System Mediator, which is an independent out-of-court body providing a free and binding mechanism for claims against banks, insurers and investment firms.

Legal Framework and Regulator

Merger control and antitrust are governed by the Law on Protection of Economic Competition, enforced by the CPC as an independent administrative authority. The law regulates concentrations, which comprise:

• mergers of independent companies;
• accessions (absorptions);
• the direct or indirect acquisition of 20% or more of the shares or voting rights of another company; and
• the acquisition of more than 20% of a company’s assets.

Notification Thresholds

A concentration must be notified to and cleared by the CPC before implementation where the participants’ financial metrics exceed the statutory thresholds, which are based on the combined or individual asset values or revenues of the participants in the financial year preceding the transaction. The CPC applies a substantive test, assessing whether the concentration would create or strengthen a dominant position, or would otherwise significantly restrict or prevent competition in the relevant market.

Review Process and Substantive Test

Review proceeds in two phases: a preliminary assessment completed within 90 days of a complete filing, followed where necessary by a detailed investigation of up to a further 90 days for complex transactions. Failure to notify a reportable concentration before implementation is a serious violation: the CPC may declare the transaction void, order divestiture or the splitting of the merged entities, and impose fines of up to 10% of the non-compliant company’s annual revenue.

Anti-Competitive Conduct and Penalties

Anti-competitive conduct is actively pursued, including cartels, price-fixing, market sharing, bid-rigging and abuse of dominance. The CPC has extensive investigative powers, including unannounced dawn raids, inspection of corporate premises and compelled production of internal communications. Companies face substantial financial penalties and public censure, and their directors may incur criminal liability under the Criminal Code for intentional distortion of the market.

A Liberal Investment Regime

Armenia maintains a liberal and open investment regime, regulated principally by the Law on Foreign Investments. The law applies the principle of national treatment, guaranteeing foreign investors the same rights to establish businesses, acquire assets and invest capital as domestic persons. Foreign individuals and legal entities may own 100% of the shares or participatory interests in Armenian companies, with no general requirement for a local shareholder or director, except in a limited number of regulated sectors. The law also:

• provides statutory guarantees against nationalisation and expropriation;
• ensures unrestricted repatriation of profits, capital and assets; and
• protects investors against adverse legislative change for a period of five years.

Investment Review and Approval

There is no general foreign investment review or approval process for standard private acquisitions, which makes Armenia one of the more accessible jurisdictions in the region. Sector-specific rules do apply in strategically sensitive industries, and foreign persons are barred from owning land, holding it instead through leasehold or by using a domestic company (see 11.1 Requirements for Land Ownership).

Regulated Sectors

Regulated industries such as telecommunications, broadcasting, financial services, energy and medical/pharmaceuticals require licences from bodies such as the Public Services Regulatory Commission (PSRC), the CBA, the Ministry of Health and the Commission on Television and Radio of the Republic of Armenia (CTR). Broadcasting is subject to a specific ownership restriction under the Law on Visual Media: foreign shareholding in a television or radio broadcasting company may not equal or exceed 50% of the voting rights. These limits are enforced at the licensing stage, and an unauthorised transfer of control results in revocation of the licence.

National Security Review

A targeted national security review applies to investments in critical infrastructure, defence and public utilities. Under recent legislative amendments, any foreign investment resulting in direct or indirect control over a utility provider, such as an energy, gas or water supply company, or over a licensed telecommunications operator, requires prior approval from the PSRC and the Ministry of Hi-Tech Industry, which assess the effect of the transaction on national security and public order.

Investment Incentives

Armenia offers a range of incentives to attract foreign direct investment. Operators in free economic zones are exempt from corporate income tax, VAT, customs duties and property tax. Companies in the hi-tech sector may qualify for tax holidays and reduced payroll tax rates, and the government provides support and grants for large-scale agricultural and manufacturing projects. Recent policy has focused on digitising the investment environment and strengthening investor support through the Enterprise Armenia agency.

The Data Protection Framework

Privacy and data protection are guaranteed by the Constitution and regulated by the Law on Protection of Personal Data, which largely follows the GDPR. The Personal Data Protection Agency under the Ministry of Justice supervises compliance, investigates complaints and imposes administrative sanctions.

Consent and Processing Obligations

Controllers must ensure lawful, proportionate and purpose-limited processing and data accuracy. Express written or electronic consent is generally required, unless processing is necessary for a contract, a legal obligation or the protection of vital interests. Special categories of data require specific consent and enhanced security.

Cross-Border Transfers and Localisation

Armenia has no strict data localisation requirement. Data may be stored abroad if transfer rules are met. Transfers to countries with adequate protection, including EU/EEA states and parties to Convention 108, require no prior authorisation. Transfers elsewhere require prior Agency approval or the data subject’s explicit, informed consent.

Data Breach and Security Requirements

Controllers must implement appropriate measures against unauthorised access, alteration and leakage. Where a material breach creates significant risks for data subjects, organisations should promptly notify the Agency and affected individuals, describing the breach and mitigation measures.

The AML/CFT Framework and Reporting Entities

Armenia’s AML/CFT framework is established by the Law on Combating Money Laundering and Terrorism Financing and follows the FATF Recommendations. Reporting entities comprise financial institutions, including banks, credit organisations and securities dealers, together with designated non-financial businesses and professions such as notaries, lawyers, independent accountants, audit firms and real estate agents.

Customer Due Diligence and Reporting

Reporting entities must:

• conduct customer due diligence, verifying the identity of customers and their ultimate beneficial owners;
• monitor transactions on an ongoing basis to detect unusual or suspicious activity;
• retain due diligence and transaction records for at least five years; and
• file suspicious transaction reports with the Financial Monitoring Centre of the CBA, which acts as the national financial intelligence unit.

Sanctions Compliance

Sanctions compliance is a regulatory priority. Reporting entities must freeze the funds and financial assets of persons designated on national or international sanctions lists, including those of the UN Security Council, without prior notice. Armenia also operates export controls on dual-use items and military equipment, which require licences from the Ministry of Economy. Breach of AML/CFT and sanctions obligations carries administrative penalties, licence revocation and criminal prosecution under the Criminal Code.

Anti-Corruption and Anti-Bribery

Anti-corruption obligations are enforced by the Anti-Corruption Committee and the Corruption Prevention Commission. Companies may not offer, promise or give bribes or improper advantages to public officials or private counterparties. To manage this risk, businesses should maintain anti-corruption compliance programmes covering gifts and hospitality, whistle-blowing channels, due diligence on third-party intermediaries and periodic compliance audits.

Environmental Impact Assessment

Environmental regulation is governed principally by the Law on Environmental Impact Assessment and Expertise and the Law on Atmospheric Air Protection. Any commercial or industrial project falling within the statutory categories, such as mining, energy generation, manufacturing or large-scale construction, must undergo an environmental impact assessment (EIA) and obtain a positive expert opinion from the Ministry of Environment before operations begin.

Contaminated Sites and Environmental Liability

Under the polluter pays principle, companies bear strict liability for environmental damage, including the clean-up and remediation of contaminated sites and the payment of ecological damage compensation. Armenia has no domestic carbon pricing or carbon tax mechanism at present, but it participates in international climate initiatives and is developing rules to monitor and limit greenhouse gas emissions, particularly for heavy industry and energy operators.

Health and Safety Obligations

Health and safety obligations arise under the Labour Code, which requires employers to provide safe and healthy working conditions, and imposes full liability for occupational hazards. Employers must adopt workplace safety policies, conduct regular training and supply protective equipment. The Health and Labour Inspectorate enforces these obligations, conducting inspections, investigating workplace accidents and imposing sanctions or ordering the suspension of operations in serious cases.

Licensing and Industry-Specific Regulation

Sector-specific regulation has a direct bearing on transactions. Armenia operates a strict licensing regime under the Law on Licensing for sectors including energy, financial services, pharmaceuticals and telecommunications. Licensed energy sector entities are regulated by the PSRC, and any change of control requires prior PSRC approval. The Ministry of Health regulates drug registration and clinical trials, while the CBA monitors capital adequacy and shareholder suitability in the financial sector.

Absence of a Dedicated AI Framework

Armenia has no standalone legislative act or regulatory framework dedicated to the governance of artificial intelligence. The rapid adoption of AI across the technology and financial sectors has, however, prompted policymakers and regulators to review existing frameworks to ensure they can address the specific issues raised by automated decision-making.

Application of General Law to AI Systems

In the absence of AI-specific statutes, the use of AI systems is governed by general principles of law, data protection and consumer rights. The Law on Protection of Personal Data applies directly where an AI application processes personal information, imposing transparency obligations on controllers. Where an AI system makes automated decisions that significantly affect a data subject, such as credit scoring, the organisation must inform the individual, explain the logic involved and provide a right to human intervention.

Liability, Transparency and Non-Discrimination

Organisations deploying AI are also subject to general liability and non-discrimination principles under the Constitution and the Civil Code, and must design and train algorithms so as to prevent unlawful bias and discriminatory outcomes. As Armenia positions itself as a hi-tech hub, the Ministry of Hi-Tech Industry is working with international bodies on strategic guidelines and policy frameworks for AI ethics, focused on accountability, safety and transparency.

The Crypto-Assets Regime

Armenia has established a structured compliance regime for digital assets under the Law on Crypto-Assets. The statute governs the issuance, exchange and custody of crypto-assets and brings virtual asset service providers (VASPs) under the direct regulatory and supervisory authority of the CBA.

Authorisation and Operational Requirements

Any entity intending to provide crypto-asset services in or from Armenia must obtain authorisation and register with the CBA. VASPs must meet operational requirements, including minimum capital buffers, IT and cybersecurity protocols and customer disclosure rules, and must publish detailed White Papers for asset-referenced or utility tokens they issue or admit to their platforms.

AML/CFT Obligations for Service Providers

The Law on Crypto-Assets applies Armenia’s AML/CFT regime directly to the virtual asset sector. VASPs are reporting entities and must perform full customer due diligence, identify beneficial owners and operate automated transaction monitoring to detect and report suspicious activity, integrating digital asset operations into the formal financial sector.

Electronic Documents and Digital Signatures

Separately, businesses must comply with the Law on Electronic Document and Electronic Digital Signature, which establishes the legal equivalence of a qualified electronic signature to a handwritten one and enables paperless contracting and corporate filings. Entities engaging in distance contracts, online commerce or regular interaction with government portals must obtain an authorised electronic signature from a designated national certification authority.

The Labour Code

Employment relations are regulated principally by the Labour Code, which sets minimum standards for working conditions, employee rights and employer obligations. The Code is protective of employees and its provisions are non-excludable: any term of an employment contract less favourable than the statutory standard is void. Employment contracts must be concluded in writing and may be signed either on paper or electronically.

Core Working Standards

The Labour Code sets core working standards, including:

• a 40-hour standard working week;
• mandatory rest periods;
• overtime payable at a premium rate; and
• a minimum of 20 working days’ paid annual leave.

The minimum monthly wage is set by the Law on Minimum Monthly Wage. Employers are responsible for calculating and withholding payroll taxes, including income tax and social security contributions, and for reporting to the State Revenue Committee.

Grounds for Termination

Termination is closely regulated and permitted only on defined statutory grounds, which include:

• liquidation of the company;
• redundancy;
• the employee’s long-term illness or poor health;
• lack of professional qualification; and
• material or repeated breaches of labour discipline.

Unilateral termination by the employer for convenience is not permitted and constitutes wrongful dismissal.

Redundancy and Wrongful Dismissal

On redundancy, the employer must give at least two months’ written notice and pay statutory severance. An employee who is wrongfully dismissed may challenge the termination in court, and the court may order reinstatement, payment of full back wages for the period of forced idleness and additional compensation. Constructive dismissal (where an employee is forced to resign by the employer’s unlawful conduct or a hostile working environment) is also recognised, with the burden of proof falling on the employer.

Structuring Executive Compensation

Structuring executive pay requires a balance of corporate flexibility, tax planning and statutory compliance. Under the Law on JSCs and the Labour Code, packages typically combine a fixed base salary with performance-based bonuses, fringe benefits and equity incentives. Employee share ownership plans and stock option grants are increasingly common, particularly in the technology sector, and are usually implemented through authorised option pools.

Change-of-Control Provisions

Executive contracts frequently include change-of-control provisions guaranteeing enhanced severance where employment is terminated or the role materially altered following an acquisition or merger. For tax purposes, all cash compensation, including bonuses and severance, is subject to flat-rate income tax, currently 20%, and social security contributions, while equity grants can be structured to improve the executive’s tax position under specific rules.

Non-Compete and Non-Solicitation Covenants

Post-employment restrictive covenants are difficult to enforce. Under the Constitution and the Labour Code, every citizen has an unqualified right to free choice of labour and professional activity, and courts routinely invalidate broad post-employment non-compete clauses as an unlawful restriction of that right, even where the executive received compensation for the restriction.

Confidentiality Covenants

Confidentiality and non-disclosure covenants, by contrast, are readily enforceable both during and after employment. Employers may enforce strict confidentiality agreements, and unauthorised disclosure of trade secrets by a former executive can give rise to injunctive relief, damages under the Civil Code and criminal liability under the Criminal Code for industrial espionage. Non-solicitation of clients and employees occupies a grey area, although narrow and reasonable clauses are sometimes upheld where tied to the protection of confidential data.

Forms of Land Ownership

Under the Land Code, land ownership takes three forms:

• state ownership;
• municipal (community) ownership; and
• private ownership by individuals and legal entities.

Ownership of real property, and the transfer, pledge or lease of land and buildings, must be registered with the Cadastre Committee to be valid and enforceable, with priority determined strictly by the timing of registration.

Foreign Ownership of Real Estate

Armenia is liberal towards foreign investment in real estate, allowing foreign individuals and companies to purchase, hold and sell buildings, residential houses and commercial structures without prior licensing, residency requirements or discriminatory taxation. Armenia generally permits foreign individuals and companies to acquire, hold and dispose of real estate. Although foreign citizens and stateless persons are generally restricted from owning land, Article 4(3.1) of the Land Code provides exceptions for household and gardening plots, as well as land intended for the construction and maintenance of private residences, public or production facilities and apartment buildings. Accordingly, foreign ownership of land is permitted for these categories, subject to applicable registration and land use requirements.

The Agricultural Land Restriction and Leasehold

The restriction is given effect through defined mechanisms. Foreign persons may hold land only under leasehold rights of up to 99 years or rights of use. In practice, foreign investors incorporate a domestic Armenian company, which is treated as an Armenian entity even if it is wholly foreign-owned and may freely own non-agricultural commercial, industrial and residential land.

Transaction Formalities and Land Registration

Commercial real estate transactions are regulated by the Civil Code, the Land Code and the Law on State Registration of Rights to Property. A transaction requires a written contract, which must be notarised and then registered with the Cadastre Committee within 30 business days of signing in order to transfer legal title.

Due Diligence

Thorough due diligence is essential. Buyers should obtain an up-to-date clean title certificate from the Cadastre Committee, disclosing registered owners, cadastral dimensions and any encumbrances, mortgages, easements or pending litigation. Environmental risk also warrants attention: certain commercial and industrial sites require clearances under the Law on Environmental Impact Assessment and Expertise, and a new owner may assume liability for pre-existing contamination.

Commercial Mortgage Financing

Commercial mortgage financing is perfected by a notarised mortgage agreement registered with the Cadastre Committee, with priority between mortgages determined by the chronological order of registration. On default, lenders may enforce through judicial foreclosure or, where expressly agreed, through an out-of-court process allowing the lender to sell the property or take title directly.

Commercial Leases

Commercial leases are governed by the Civil Code and require notarisation and registration with the Cadastre Committee where the term is one year or longer. Registration protects the tenant, making the lease enforceable against third parties and allowing it to survive a subsequent transfer of ownership. Leases commonly address:

• rent adjustment mechanisms;
• renewal rights;
• assignment and subletting, which conventionally require the landlord’s prior written consent; and
• default remedies.

Recent Regulatory Developments

Regulatory developments have focused on spatial planning, zoning and taxation. Urban development legislation has tightened building code and zoning compliance, preventing land allocation or construction that bypasses approved municipal spatial plans. The move under the Tax Code from low cadastral values to market-based valuations for property tax has increased the holding cost of premium commercial assets, prompting investors to focus on operational efficiency and sustainable yields.