Armenia

Market Overview

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Global Reach Through Treaties and New Strategic Partnerships

Armenia has signed over 50 bilateral investment treaties (BITs) and double taxation treaties (DTTs) with countries worldwide, including the United States, Canada, Switzerland, and China. This network continues to expand: in 2025, a comprehensive agreement on the avoidance of double taxation entered into force with Hong Kong (China), and a landmark Agreement on Trade in Services and Investments was signed with the United Arab Emirates, solidifying ties with the Middle East․

As a member of key multilateral treaties (including the ICSID Convention, New York Convention and the Energy Charter Treaty), Armenia provides investors with legal certainty, protection, and reduced tax burdens, fostering a secure and predictable business environment.

 

Championing Open Trade

Armenia's commitment to international trade extends to its World Trade Organization (WTO) membership. This membership ensures adherence to multilateral trade rules, further solidifying Armenia's reliable and transparent trading partner position.

At the Heart of Eurasia

As a member of the Eurasian Economic Union (EAEU), Armenia enjoys tarif-free trade with Russia, Belarus, Kazakhstan, and Kyrgyzstan, a market of over 200 million consumers. The benefits of this membership are tangible: in 2025, Armenia increased its fruit and vegetable exports to EAEU markets by 15%, while fish exports grew by 21%, demonstrating the union's role as a key driver for Armenian exports.

Economy

Currency Strength

The Armenian Dram (AMD) continues to maintain a stable position, providing a predictable environment for business. As of early 2026, the exchange rate against the USD has remained within the range of 377-381 AMD, indicating moderate volatility and facilitating financial planning. According to assessments by the International Monetary Fund and global rating agencies, the flexible exchange rate serves as a crucial tool for mitigating external shocks․

Inflation Rates

As of February 2026, the 12-month inflation rate stood at 4.3%, aligning with the state budget target of 3% (±1%) for 2026. The acceleration in inflation is primarily driven by food prices (6.4%), while non-food inflation remains moderate (0.9%). The Central Bank forecasts inflation to settle within the 2.6–3.8% range by the end of 2026․

Main Trade Sectors

Armenia's economy is diversified across agriculture, mineral extraction, renewable energy, telecommunications, information technology (IT), jewellery production, banking, and tourism.

  • Services represent 52.8% of GDP and employ 51% of the active population. Within this sector, transport services (46.5% of service exports) and IT services (24.4%) are particularly significant  (arca.am).
  • Agriculture contributes 11.3% to GDP and employs 24% of the workforce.
  • Mining remains a major contributor to GDP and exports, with substantial deposits of copper, molybdenum, gold, and other metals.
  • Renewable Energy is well-developed, including traditional hydropower and emerging solar solutions. To boost this sector, legislative amendments are underway to simplify the installation of solar power plants for self-consumption on industrial lands․
  • ICT Sector continues to be a government priority. In the first half of 2025 alone, the sector's turnover grew by an impressive 30.4%.
  • Banking Sector is solid and stable, curently comprising 17 commercial banks. The IMF has recently confirmed that the system is well-capitalized and liquid, though it advises continued vigilance to ensure sustainable growth.
  • Emerging Industries: New sectors receiving state support and incentives include electric vehicle component manufacturing, clean energy solutions, and biotechnology.
Legal system

How does the legal system operate? What should clients be mindful of when doing business in your jurisdiction?

Armenia is a parliamentary, unitary republic with a civil law system, although certain aspects of Armenian legal practice have gradually incorporated common law-style elements. Since 2007, the interpretations and precedential positions of the Court of Cassation of Armenia, as well as the decisions of the Constitutional Court and the European Court of Human Rights, have been binding on Armenian courts.

Armenia uses the continental civil law system. The Civil Code of Armenia is based on the Napoleonic Code, whereas the German model shaped administrative legislation.

Judicial System

Armenia's civil court system consists of three tiers. The first tier is the court of general jurisdiction of the first instance, which is the lowest level. The second tier is the Court of Appeal, and the highest tier is the Court of Cassation, serving as the supreme authority in the system. In addition to the court of general jurisdiction, specialised courts are also allowed by the Constitution; specialised administrative, bankruptcy and anti-corruption courts are created and functioning.

In terms of the hierarchy within this three-tier structure, decisions made by the Court of First Instance can be appealed to the Court of Appeal, and decisions made by the Court of Appeal can further be appealed to the Court of Cassation.

Enforcement of foreign judgements and awards:

Foreign or international arbitration awards or a foreign court decision can be recognised and allowed to be enforced in Armenia. Court practice on the matter is quite rich and positive. In addition to international treaties allowing for such recognition and enforcement, Armenian procedural legislation has enlarged the possibilities of such recognition. Since 2018, the Armenian civil procedure code has foreseen the possibility of recognising and enforcing the foreign court order on the grounds of reciprocity, which is presumed to be present unless proven contrary.

Alternative Dispute Resolution and Arbitration

Armenia has adopted modern legislation on arbitration and mediation largely aligned with the UNCITRAL Model Law and is a party to key international instruments, including the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the 2018 Singapore Convention on International Settlement Agreements Resulting from Mediation.

Arbitration is becoming an increasingly established dispute resolution mechanism in Armenia, with disputes being referred both to ad hoc tribunals and institutional arbitration. The legal framework is generally supportive of arbitration, and Armenian law provides mechanisms for the recognition and enforcement of arbitral awards, including, in certain cases, direct enforcement without the need for separate court recognition proceedings (mainly aimed at facilitating debt collection through arbitration without a need to get a court decision for mandatory enforcement).

Armenia is a signatory to the Singapore Convention on Mediation. Further, the domestic legislation under the Law on Mediation comprises regulations regarding the certification of mediators. In some cases, parties are required to attempt mediation before pursuing court action. However, it's important to note that mediation is not widely utilised in Armenia. Additionally, the Financial System Mediator's Office, established by the Central Bank of Armenia, handles disputes between financial institutions licensed by the CBA and their clients. Despite its name, this office functions more as a Financial Ombudsman rather than a mediation process. Nonetheless, it serves as a popular alternative dispute resolution mechanism in the financial sector, aiming to safeguard the rights of customers.

Taxation:

The following are the general types of taxes which are paid in Armenia:

  • value-added tax (20%),
  • profit tax (18%),
  • Income tax for dividends (5%) /applicable only to individuals/,
  • property tax (0,05%-1,5 % from the market value price of the property),
  • income taxes (20%; certain exceptions are applicable depending on the nature of income),
  • excise taxes,
  • turnover tax (1.5-10% of turnover for businesses that are not VAT payers) is a beneficial tax regime for small businesses.

Armenia has treaties on excluding double taxation and preventing fiscal evasion with 51 counties.

Further, Armenia is a member of the EAEU, which leads to the regulation of custom-related matters as per the EAEU customs code by the country through the implementation of similar rules into the local legal acts.

 

Corporate legislation:

Limited Liability Companies (LLC) and Closed Joint Stock Companies (CJSC) are two main types of corporate vehicles. LLCs are usually used as an SPV with one participant or for simpler arrangements. CJSCs are better fitted for situations when there is a more complex relationship between the shareholders, and the relationships thereof should be regulated. Particularly, the law on JSC indicates the option of concluding a shareholder agreement between shareholders. The legislation further regulates the shareholding option scheme of employees and foresees more complex corporate law regulations. Furthermore, based on recent amendments, the law also regulates SAFE agreements and a draft for regulating the option agreements is under consideration.

The legislation recognizes the fiduciary duties of executive bodies (including the board and the director). Furthermore It indicates certain instances where the corporate veil may be pierced (certain instances of piercing the corporate veil is also indicated under competition law legislation). The company's shareholders may be brought to liability (e.g., within bankruptcy proceedings), which are limited and are interpreted by courts in a restricted manner.

Competition law:

Commission for protection of Competition and Consumer interests of the Republic of Armenia is the main state body carrying out control over compliance with competition law requirements. The RA Law on Competition Protection indicates the main principles and regulations of the competition law.

In certain instances, the Mergers and Acquisition as a concentration are subject to declaration before the commission (depending on the volume of assets and income of the parties to the concentration). Furthermore, the legislation indicates regulations aimed at protecting consumers and competitors from unreasonable reductions or increases in prices, anti-competitive agreements, cartels, unfair competition, etc.

It is noteworthy that the legislation considers the group of persons as an economic entity, and respectively, when carrying out control over compliance of laws, considers not only the separate individual and legal entity in isolation but also individuals and legal entities having affiliation therewith jointly.

Labour law.

Armenia has been a member state of the International Labour Organisation since 1992. The main legal framework governing labour relations in Armenia consists of the Labour Code and pertinent international agreements. Labour relationships are mainly based on labour contracts, which must be concluded between the parties prior to the commencement of employment.

The legislation can generally be considered employee-centric. The legislation limits the situations and cases when the employment contract may be terminated unilaterally (which is, however, in line with similar European regulations) and only through procedures regulated by law. However, the employer is fully authorised to choose the structure of the company and the number of employees they need as an exercise of the constitutional principle of freedom of entrepreneurship/economic activity, which means, in practice, the layoffs cannot be subject to external control regarding the bases of such action. Further, the employees have the right to form representative bodies, such as trade unions or workers councils, which are elected by workers' assemblies or conferences. Additionally, the Law on Trade Unions governs and ensures the rights and activities of trade unions in Armenia. However, trade unions are not established well in Armenia, and in general, even where they are present, they are not very active in labour law-related processes.

Business Environment (Specific Considerations for Foreign Investors)

The Republic of Armenia maintains an “open-door” policy toward foreign investment and is widely regarded as having one of the more liberal investment regimes among CIS countries. Armenian legislation provides relatively straightforward procedures for establishing and operating businesses and generally affords foreign investors treatment comparable to that of domestic investors.

Investment protection is governed primarily by the Law on Foreign Investments, which provides a number of guarantees to foreign investors, including protection against unlawful expropriation, compensation mechanisms, and the ability to rely on international dispute resolution instruments. Armenia is also a party to several international investment protection frameworks and bilateral investment treaties, and has ratified the ICSID Convention, enabling investors to bring claims before international arbitration forums. In recent years, however, Armenia has been involved in several investment arbitration proceedings before ICSID and other arbitration institutions, where investors have alleged failures by the state to adequately protect their investments.

Another development relevant for investors is the introduction of legislation on the confiscation of property of illegal origin. Under this framework, assets may be subject to confiscation proceedings if they are determined to have been acquired through unlawful means by previous owners. As a result, when acquiring assets in Armenia, investors are generally advised to conduct appropriate legal due diligence to assess potential risks associated with the property or the target company. While such due diligence may not fully eliminate all risks, it may help identify potential exposure and inform risk-mitigation strategies prior to completing a transaction.

Key Factors to Consider When Starting Your Business in Armenia

-  LLC Registration: A limited liability company can be registered through an accelerated process in less than an hour (provided the founders and director are present in Armenia in person).

-  Standard Registration: The standard registration process for LLCs and CJSCs usually takes 1–2 days.

-  No Local Participation Requirement: With very few exceptions (mostly licensed media activities and certain regulated sectors), companies in practically all sectors are allowed to have 100% foreign participation, meaning there is no requirement for a local shareholder or partner.

-  Foreign Directors: Directors, board members, and other employees may be foreign citizens (note that employment and residence permit requirements may still apply), and they are not required to reside in Armenia.

-  No Minimum Capital: There is no minimum charter capital requirement for any type of company (with very few sector-specific exemptions, mainly in the financial sector).

- Substance Considerations: While companies may technically be established remotely or through proxies, maintaining a degree of local substance is often important for practical business operations. In particular, opening and maintaining bank accounts, employing foreign staff, and obtaining residence permits (where applicable) typically requires some level of local presence or operational activity in Armenia.

- Land Ownership: The only exception is that foreign citizens and stateless persons have no right to own agricultural land or forests in Armenia. However, foreigners may use land through long-term lease contracts. Importantly, this limitation does not apply to fully foreign-owned companies incorporated in Armenia, meaning land can be owned through an SPV without restriction.

Benefits and Incentives for Doing Business in Armenia

The Armenian legal framework is generally favorable to foreign investors and provides a number of statutory protections for foreign investment. The Law on Foreign Investments establishes core guarantees relating to market access, national treatment, protection from expropriation, and the transfer of profits and other funds.

  • Broad Access to Investment Forms: Foreign investors may invest in Armenia in a wide range of forms, including currency, movable and immovable property, securities, monetary claims, intellectual property, contractual rights, and other forms not prohibited by law.
  • 100% Foreign Ownership: Foreign investors may establish enterprises wholly owned by them, as well as branches, representative offices, and subsidiaries, or acquire existing businesses in Armenia.
  • Equal Treatment: The legal regime applicable to foreign investments may not be less favorable than that applicable to Armenian citizens, companies, and organizations.
  • Restrictions Only by Law: Any prohibition or restriction on foreign investment may be imposed only in the manner prescribed by Armenian legislation. The law also contemplates that certain areas may be restricted on national security grounds.
  • “Grandfathering” Clause: If legislation regulating foreign investment changes, then, at the foreign investor’s option, the legislation in force at the time the investment was made may continue to apply for five years from the date of investment.
  • Protection Against Nationalization and Seizure: Foreign investments are not subject to nationalization. Seizure is permitted only as an exceptional measure during a state of emergency, by court decision, and with full compensation.
  • Compensation for State Actions: Foreign investors are entitled to judicial compensation for losses, including lost profits, caused by unlawful actions or failures of state bodies or officials. The law also provides for prompt compensation and interest accrual in relevant cases.
  • Profit Repatriation and Capital Mobility: After payment of taxes and other mandatory charges, profits remain at the foreign investor’s disposal, and foreign investors are guaranteed the right freely to export their property, profits, income, compensation amounts, and other lawfully obtained funds.
  • Bank Accounts in Armenia: Foreign investors have the right to open current, settlement, and other accounts with Armenian banks in accordance with Armenian law.
  • Business Activity and Licensing: Foreign-invested enterprises may engage in any type of economic activity not prohibited by law, although certain regulated activities remain subject to licensing requirements.
  • Customs Incentives: The law provides certain customs-related incentives, including customs duty exemptions for specific goods imported to contribute to charter capital, as well as for certain property imported under international treaties and for foreign employees’ personal-use property.
Targeted Tax Incentives:

The Armenian government offers a number of targeted tax and quasi-tax support measures for selected sectors and activities, particularly in the technology and export-oriented space. Notable measures include the following:

  • IT Tax Certification Regime: Certified IT companies and individual entrepreneurs may benefit from a 10% personal income tax rate for eligible employees under the state support regime for the IT sector.
  • High-Tech Employment Support: Businesses operating in the high-tech sector may receive state support equal to 60% of personal income tax paid for qualifying foreign migrant employees and 60% of personal income tax paid for qualifying newly hired employees.
  • Training Incentive for High-Tech Companies: High-tech companies may also receive support equal to 50% of the personal income tax of qualifying retrained employees, subject to the program’s certification and eligibility conditions.
  • Export Support: Armenian resident companies and registered sole proprietors exporting qualifying Armenian-origin manufactured goods to the EU, the UK, and Canada may receive compensation equal to the importing country’s customs duty, subject to a cap of 20% and other program conditions.

Note, that Irazekum.am publishes all available incentives and the platform is periodically updated (available only in Armenian.

Current Opportunities and Future Prospects

What opportunities exist for clients looking to invest in your jurisdiction?

Armenia offers significant investment opportunities in both traditional and emerging sectors. Key developments to watch include:

- The World’s Largest AI Cluster: In partnership with Firebird and the U.S. government, the second phase of the Artificial Intelligence Mega-Project launched in 2026. This will establish Armenia as home to one of the world's largest AI GPU clusters. Valued at $4 billion, this is one of the most significant tech investments in the country's history, creating unprecedented opportunities for research, life sciences, robotics, and applied AI solutions.

- Emerging High-Tech Sectors: Beyond major industries, the government is providing targeted support to innovative directions such as electric vehicle components, clean energy solutions, and biotechnology.

- Shift to a Cashless Economy: Starting April 1, 2026, the mandatory non-cash payment system for pensions and benefits is being introduced. This not only expands the use of banking services but also stimulates the demand for e-commerce and digital financial tools among the broader population.

- Universal Healthcare Rollout: The practical implementation of universal health insurance has begun (2026-2028), creating new opportunities in the insurance and private medical services market.

Top tips to takeaway "What to know before Investing"

Depending on the nature and volume of investment, it is important to retain relevant consultants (or at least to receive general advice from them) to assist the investors throughout the process of investment and subsequent implementation of the projects:

  • It is critical to hire a [local] tax and accounting consultant at all times to ensure that accounting and tax reporting obligations and the related payment obligations are duly complied with.
  • Depending on the nature of the project, it is recommended to have a legal consultant,
  • When acquiring assets [depending on the value and nature thereof] it is recommended to conduct a prior legal due diligence to mitigate any risks associated with the transaction,
  • If the investment plan may have any environmental law-related implications, it is recommended to hire not only a relevant legal practitioner but also a consultant of ecology or of a respective field to evaluate the feasibility of the project from the perspective of environmental law requirements.
  • When concluding M&A transactions it is recommended to ensure that Competition law requirements are met and when applicable the consent of the anti-monopoly body is granted before concluding such transactions.

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Corporate Governance in Armenia: Legal Framework and Practice

In Armenia, corporate governance has evolved into a structured legal framework that blends specific corporate regulation with civil-law principles. Rather than acting as a purely theoretical framework, corporate governance directly shapes how companies are managed, how decisions are made, and how accountability is enforced. At its basis, corporate governance in Armenia is not treated as an independent field distinct from civil law. Rather, governance rules derive from general contractual and organizational principles governing legal entities, complemented by corporate statutes regulating internal management structures. This integrated framework ensures that corporate relations remain fully enforceable within the broader civil-law system. Legal framework The primary legal basis for corporate governance is established by Chapter 5 of the Civil Code of the Republic of Armenia, which outlines the characteristics of legal entities, their governing bodies, and the distribution of rights and obligations among participants. The Code incorporates core values that serve as safeguards against arbitrary or detrimental corporate behaviour, such as good faith, reasonableness, and the prohibition of abuse of rights. Specialized governance rules are further detailed in the Law of the Republic of Armenia on Joint-Stock Companies and the Law of the Republic of Armenia on Limited Liability Companies. These statutes regulate voting mechanisms, managerial authority, fiduciary duties, capital structure, and procedures for decision-making. Together, these laws form a cohesive governance framework that balances flexibility in corporate organization with enforceable legal discipline. Governance Bodies and Decision-Making Structure Corporate entities operate through a hierarchy of governing bodies designed to separate ownership control from operational management. The general meeting of shareholders (GMS) is the supreme decision-making authority, responsible for foundational matters such as charter amendments, appointment of executives, approval of annual results, and corporate restructuring. The meeting should be held annually, and if necessary, extraordinary meetings may be held more often. Procedural reforms have expanded flexibility by recognizing remote participation and electronic voting, provided that transparency and verification standards are met. These changes are intended to facilitate efficient governance while preserving the integrity of shareholder decision-making. The Board of Directors is the central governing body of a company that is responsible for overseeing management and protecting the interests of shareholders and other stakeholders. Its role combines strategic leadership, supervision, and accountability. A company with more than 50 shareholders should have a BoD unless it is a regulated comp-any, such as a financial institution, for which having a BoD is a must. The board of directors is also bound by fiduciary obligations, most notably the duty of care and the duty of loyalty. Directors are expected to fulfil these responsibilities by acting with diligence, making wise choices, avoiding conflicts of interest, and putting the company's interests ahead of their own. Fiduciary standards strengthen confidence in corporate governance frameworks and provide a moral and legal basis for board conduct. The Executive The executive body is the managerial organ of a company responsible for conducting its day-to-day operations and implementing the decisions of GMD and BoD. Its primary responsibility is operational management, which includes planning business operations, assigning resources, managing staff, and making sure internal business procedures run smoothly. In Armenia, this function is performed either by a single Chief Executive Officer (CEO) or a managment board. Protection of Participant Right Effective governance depends on enforceable participant rights. According to Armenian law, LLC members and shareholders have proportional voting rights, access to corporate information and legal remedies against unlawful decisions. Courts increasingly rely on general civil-law principles, including good faith and reasonableness, and, where appropriate, proportionality when evaluating corporate disputes, reflecting a judicial commitment to substantive fairness alongside formal compliance. A more predictable dispute-resolution environment and increased investor confidence have resulted from recent developments that have strengthened protections against decisions that unfairly disadvantage minority participants and clarified the processes for contesting invalid corporate acts. Fiduciary Duties and Liability Standards Fiduciary duties are imposed on controlling participants and corporate officers. Armenian legislation addresses conflicts of interest, misuse of corporate opportunities, and negligent management. Liability clauses have been strengthened to guarantee that governance lapses have significant repercussions, such as loss reimbursement and the reversal of damaging transactions. By embedding these standards within the civil-law system, Armenian law ensures that corporate authority is exercised responsibly and remains subject to judicial oversight. Digitalization of Corporate Procedures Modern governance increasingly relies on digital infrastructure. Electronic documentation, digital communication with participants, and remote governance procedures are recognized by Armenian law as long as authenticity and accountability measures are taken. These changes facilitate accessibility and efficiency in business operations while lessening administrative burdens. Digitalization also enhances transparency by creating verifiable audit trails and improving record management. Practical Challenges and Ongoing Development Despite legislative progress, effective corporate governance ultimately depends on consistent enforcement and corporate culture. Challenges remain in ensuring uniform compliance with managerial duties, improving governance literacy among participants, and strengthening internal controls. Nevertheless, Armenia’s recent reforms demonstrate a clear policy direction: governance rules are increasingly aligned with modern commercial expectations while remaining grounded in civil-law principles. Conclusion In Armenia Corporate governance represents a dynamic interaction between statutory regulation, civil-law doctrine, and evolving business practice. Legislative developments over the past several years have clarified managerial accountability, enhanced the protection of participants/shareholders/stockholders, modernized procedural rules, and strengthened transparency requirements. Governance bodies operate within a structured legal hierarchy that promotes balanced authority, enforceable obligations, and fair participation. As Armenian corporate law continues to develop, its governance framework supports legal certainty, investor confidence, and sustainable corporate growth, which are considered essential components of a modern economic system.
Poghosyan Legal Consulting - February 20 2026
Press Releases

Correlation between martial property rights and corporate law in the Republic of Armenia

In the framework of this article, we will consider the relationship between family and corporate law, in particular, we will examine the following legal issue: is the share of a participant in an LLC a joint property of spouses? According to Article 26 of the Family Code of the Republic of Armenia, relations related to the common joint property of spouses are regulated by the Civil Code, as well as by the marriage contract concluded between the spouses. According to Part 1 of Article 201 of the Civil Code of the Republic of Armenia, property acquired by spouses during marriage is their joint property, unless otherwise provided by law or by a contract concluded between them. It is noteworthy that the legislation of the Republic of Armenia, unlike the legislation of the Russian Federation, does not disclose what the property acquired by spouses during marriage (common property of spouses) includes. Thus, the Family Code of the Russian Federation stipulates that a share in the authorized capital of a commercial company acquired during marriage, regardless of whose name it is registered in, is the joint property of the spouses. To understand whether, in the light of the legislative regulations of the Republic of Armenia, the share of one of the spouses in the company can be considered joint ownership or not, it is necessary to refer to the Law on Limited Liability Companies of the Republic of Armenia. A limited liability company is an economic company by uniting shares, that is, a company in whose activities the degree of participation of a person is determined by the percentage of that person’s share in the total authorized capital. The number of votes of a company participant at the general meeting is determined by the number of shares held in the authorized capital. This follows from the interpretation of Article 35 of the Law on Limited Liability Companies of the Republic of Armenia. According to Article 10 of the Law on Limited Liability Companies of the Republic of Armenia, the founding document of the company is the charter approved by its founders. Amendments made to the charter of the company are subject to state registration. Registration of amendments to the charter of the company's participants is not an end in itself; in any case, when a new participant is involved in the company, this must be included in the charter. Regardless of the relationship between the company's participants or future participants, the right of the person acquiring the share arises only from the moment of making amendments to the charter and registering it. Of key importance is that the company's charter is approved unanimously by the participants, which implies that changes to it, including changes in the composition of the participants, must be made by the general meeting. According to the RA Law on Limited Liability Companies, there are restrictions in the case of alienation of a participant's share. The fate of the alienated share depends on the will of the LLC participants. The latter can, by charter, establish and prohibit the alienation of the share to third parties. In this case, the share is acquired by the company. So, in the end can the share owned by one of the spouses in the company be considered joint property or not? The RA Court of Cassation noted in its precedent decision EKD/ԵԿԴ/4634/02/16: “A share is the basis for the origin of corporate relations between a company and a company participant, through which the scope of mutual rights and obligations of the company and the company participant between each other is determined. However, according to the assessment of the Court of Cassation, in addition to being an object of a corporate nature, a share is also the basis for the emergence of other property (including property rights). In particular, a share entitles the participant to receive a part of the profit from the company's activities, to receive a share from the remaining property of the company in the event of its liquidation, and to receive its value in the event of the alienation of a share. The above gives the Court of Cassation grounds to conclude that a share includes both purely civil and corporate elements. Therefore, in order to assess the extent to which a share can be considered property acquired during the joint life of the spouses, it is necessary to separate these two key elements of the share. Thus, from a corporate perspective, a share cannot be considered common joint property, considering that a spouse cannot be considered a participant in the company by force of law without the consent of the other participants in the company and without fulfilling obligations to the company. Moreover, in the case of a contrary interpretation, the interests of not only the other participants in the company, but also the company's counterparties, who do not have complete information about the composition of the company's participants, are violated. We believe that the Court of Cassation has effectively separated the company's property, that is, the share owned by the participant, and the benefits resulting from it, with this decision. From the above-mentioned comments of the court, the following conclusion can be drawn: the income or property resulting from the participant's share will be considered joint property, but the right to dispose of the share is the property right of the participant's spouse only. The share of a participant in an LLC acquired during marriage is common joint property, but this applies only to the property component of the share. From the point of view of civil law, considering the share to be the common joint property of the spouses does not affect the right to participate in the management of the company. Thus, summarizing the above analyses, it is necessary to emphasize that for the performance of actions of a generally corporate nature, such as attending the general meeting, participating in the discussion of agenda items and voting when making decisions, or deciding to leave the company, the consent of the spouse who is not a participant in the LLC is not essential, but when performing certain corporate functions, the clearly expressed consent of the spouse who is not a participant is important to the extent that there is management of the spouses' common joint property.
Poghosyan Legal Consulting - January 23 2026

The Civil-Law Nature of Shareholders’ Agreements under Armenian Law

Corporate legal relations in the Republic of Armenia are primarily governed by the Law of the Republic of Armenia on Joint-Stock Companies, Chapter 5 (“Legal Entities”) of the Civil Code of the Republic of Armenia, and other applicable normative legal acts. One of the key instruments regulating relations among shareholders is the Shareholders’ Agreement (SHA). An SHA is a private contractual arrangement that establishes rights and obligations among its parties and supplements the company’s charter. Shareholders’ Agreements were formally introduced into Armenian corporate legislation on 19 April 2019 through amendments to the Law on Joint-Stock Companies. Under Armenian law, an SHA may be concluded between shareholders, between shareholders and the company, and may also include prospective shareholders who subscribe to the company’s shares. Unlike a company’s charter, an SHA is not subject to public disclosure and remains confidential. This allows the parties to regulate sensitive commercial matters and personal data without public exposure. At the same time, an SHA may regulate matters that are either insufficiently addressed or not regulated at all by the charter, provided that it does not contradict mandatory provisions or the charter itself. Another distinguishing feature of the SHA is its flexibility, as amendments do not require compliance with formal statutory procedures. Although shareholders’ agreements have been applied in practice in Armenia for approximately seven years, Armenian case law has not yet developed a substantial body of landmark judicial decisions addressing fundamental issues relating to such agreements. This raises the question of whether a shareholders’ agreement constitutes a civil-law contract, thereby falling within the definition of a contract under Article 436 of the Civil Code of the Republic of Armenia and subject to general contractual principles. Such classification would imply the applicability of mechanisms securing performance, civil-law liability for breach, and the creditor’s right to claim damages arising directly from non-performance. Alternatively, the question arises whether a shareholders’ agreement should be regarded as a corporate-law transaction, which would suggest that, in cases of non-performance, the breaching party may not be subject to adverse legal consequences. This article addresses several interrelated issues, including the structure of a shareholders’ agreement, its legal nature (civil-law versus corporate-law), mechanisms for securing performance of obligations assumed under the agreement, and the procedure for its amendment. Structure of a Shareholders’ Agreement A shareholders’ agreement typically defines the rights and obligations of shareholders and establishes rules concerning the sale of shares, the company’s operations, and decision-making processes. Its primary purpose is to enable shareholders to regulate and organize specific internal relationships among themselves. A shareholders’ agreement may include various contractual rights, including the right of first refusal, pre-emptive rights, piggyback rights as well as put/call option rights. Right of First Refusal (ROFR) The right of first refusal requires a shareholder intending to sell their shares to first offer them to existing shareholders or to the company. This mechanism enables shareholders to control the composition of the shareholder base and serves as a reasonable means of preventing the transfer of shares to competitors, provided that it does not impose excessive burdens or delays. The right of first refusal may take two forms: hard and soft. A Hard ROFR requires the selling shareholder to obtain a bona fide offer from a third party prior to offering the shares to existing shareholders. By contrast, a Soft ROFR allows the selling shareholder to first offer the shares to existing shareholders and, if the shares are not purchased, to sell them to a third party on the same or more favorable terms. Hard ROFR provisions may complicate the sale of shares, as potential third-party investors may withdraw from the transaction. Soft ROFR provisions are less restrictive and provide greater flexibility, as they apply prior to identifying a third-party buyer. Accordingly, where a right of first refusal is included in a shareholders’ agreement, the soft variant generally offers a more balanced approach. Pre-emptive Rights Pre-emptive rights allow shareholders to participate in future financing rounds and are commonly included in early-stage shareholders’ agreements. These rights enable existing shareholders to acquire newly issued shares and protect their ownership interests against dilution. While pre-emptive rights may serve the interests of shareholders, they may also hinder a company’s ability to attract external investment. The participation of non-professional investors in financing rounds may complicate the establishment of an ownership structure that is attractive to venture capital investors, potentially limiting the company’s growth prospects. Piggyback Rights Piggyback rights require a selling shareholder to allow other shareholders to sell their shares proportionally alongside the shares offered for sale. One drawback of piggyback rights is that they may delay potential transactions, as they require advance notice to other shareholders and the identification of a purchaser willing to acquire shares from multiple sellers. Piggyback rights are typically structured as tag-along or drag-along rights. Tag-along rights allow minority shareholders to participate in a sale initiated by a majority shareholder by selling their shares to third parties on the same terms. Drag-along rights allow majority shareholders to compel minority shareholders to sell their shares simultaneously to a third party, thereby ensuring the completion of the transaction. Call/Put option Rights In the context of shareholders’ agreements, call and put options function as contractual exit mechanisms rather than financial derivatives. A call option grants one party—typically a promoter or majority shareholder—the right to purchase the shares of another shareholder under predefined conditions. The primary objectives of a call option include consolidation of control, facilitation of minority exits after a specified period, and protection against undesirable shareholders. A put option grants one party—typically an investor or minority shareholder—the right to sell their shares to another shareholder. Its purpose is to provide an exit mechanism, protect minority shareholders, and mitigate investment risk. Enforcement of Obligations under a Shareholders’ Agreement Pursuant to Part 6 of Article 38.1 of the Law, a shareholders’ agreement may provide mechanisms to secure performance of obligations arising from the agreement, as well as civil-law liability measures for non-performance or improper performance. The explicit reference to civil-law liability confirms the civil-law nature of the shareholders’ agreement. Furthermore, Article 368(1) of the Civil Code establishes permissible methods for securing the performance of obligations, while Article 348 prohibits unilateral refusal to perform contractual obligations. Accordingly, the question arises whether a shareholder who has assumed an obligation to participate in the company under a shareholders’ agreement may unilaterally withdraw by failing to perform such obligation. Such an outcome would undermine the legitimate expectations of shareholders who have duly performed their obligations and would result in adverse legal consequences for them. Even in the absence of specific statutory enforcement mechanisms, shareholders may, at the negotiation stage, include contractual provisions that ensure proper performance. One such mechanism is the call option. For example, where two shareholders hold 60% and 40% of the shares respectively, the agreement may provide that if the 40% shareholder fails to make the agreed investment within a specified period, the 60% shareholder acquires the right to purchase those shares for a nominal price (e.g., USD 1). In such a case, the exercising party issues a call option notice requiring the sale of the shares. Amendment of a Shareholders’ Agreement The parties to a shareholders’ agreement may amend it by mutual consent. Amendments do not require the execution of a new agreement; rather, the parties execute a deed of variation, which must be signed by all shareholders. Upon execution, the agreed amendments become an integral part of the shareholders’ agreement. Conclusion Despite the specific nature of its parties, a shareholders’ agreement under Armenian law constitutes a civil-law contract. Consequently, general contractual principles apply, including freedom of contract, enforceability of obligations, and liability for breach. No person may be compelled to become a party to a shareholders’ agreement or to assume obligations without their free and informed consent. The precise position of the shareholders’ agreement within the Armenian legal system remains somewhat ambiguous. While it operates within the framework of corporate law, the Law of the Republic of Armenia on Joint-Stock Companies explicitly refers to the Civil Code (Article 38.1, Part 6), and corporate disputes arising from shareholders’ agreements are adjudicated within civil procedural proceedings.
Poghosyan Legal Consulting - January 6 2026

Termination of Employment Contract and Protection of Employees’ rights In Armenia

  What are the grounds for termination of employment contract in Armenia?   According to the Labor Code of Armenia (hereinafter also referred as “The Code”): The employment contract is terminated: by the agreement of the parties. at the initiative of the employee. at the initiative of the employer.   How is an employment contract terminated by mutual agreement of the parties? When terminating an employment contract by mutual agreement, one party to the employment contract submits a written proposal to the other party to terminate the contract. If the other party agrees to the proposal, they must notify the proposing party of their consent within seven days. If the parties agree to terminate the contract, they conclude a written agreement specifying the date of termination of the contract and other terms (including compensation, etc.). If the party that received the proposal to terminate the contract does not notify its consent to terminate the contract within the seven-day period, the proposal to terminate the employment contract shall be deemed rejected.   Can the employer terminate an open-ended employment contract? The employer has the right to terminate an open-ended employment contract with the employee, as well as a fixed-term employment contract before the expiration of its term, in specific cases established by law.   Are there legitimate reasons for an employer to terminate an employment contract in Armenia? According to the Code: The employer has the right to terminate the employment contract in the following cases։ Liquidation (termination of activity) of the employer, When the number of employees is reduced. Non-compliance of the employee with the position held or the work performed. Reinstatement of the employee to the previous job. Regular non-fulfillment by the employee of the duties assigned to him by the employment contract or internal disciplinary without a valid reason. Loss of trust in the employee. Long-term incapacity of the employee (if the employee has been temporarily incapacitated for more than six months in a row or for more than 180 days during the last twelve months, excluding days of pregnancy and maternity leave). The employee being at the workplace under the influence of alcohol, drugs, or psychoactive substances. Non-appearance of the employee during the entire working day (shift) due to a disreputable reason. An employee's refusal or avoidance of mandatory medical examination. The foreigner's residence status is revoked or invalidated. an employee fails to perform his work duties for more than 10 working days (shifts) in a row or during the last three months for more than 20 working days (shifts) as a result of not being allowed to work in case of non-submission by the employee of the documents that are a necessary condition to attend work during the state of emergency declared due to infectious diseases in the Republic of Armenia or the prescribed quarantine.   What conditions must an employer meet before terminating an employment contract in Armenia? Employers are required to provide advance notice to employees before dismissal in situations outlined within the Labor Code. In the case of termination due to the liquidation (termination of activity) of the employer or when the number of employees is reduced, the employer must provide employees with two months of prior notice. In the cases of non-compliance of the employee with the position held or the work performed, reinstatement of the employee to the previous job or when the number of employees is reduced the employer may terminate the employment contract if, within the scope of available opportunities, they have offered the employee alternative work that matches their professional qualifications, skills, and health condition, and the employee has refused the offered work. If the employer does not have any relevant opportunities, the contract is terminated without offering the employee alternative work. In case of non-observance of the notice period, the employer is obliged to pay the employee damages for each overdue day of notice, which is calculated based on the employee's average daily wage.   Under what circumstances can an employer terminate an employee without prior notice? The employer is entitled to terminate the employment contract without giving notice to the employee in instances specified by the Code. These include the following cases: Reinstatement of the employee to the previous job. Regular non-fulfillment by the employee of the duties assigned to him by the employment contract or internal disciplinary without a valid reason. Loss of trust in the employee. The employee being at the workplace under the influence of alcohol, drugs, or psychoactive substances. Non-appearance of the employee during the entire working day (shift) due to a disreputable reason. An employee's refusal or avoidance of mandatory medical examination.   Are there any notification requirements? According to the Code, In the notice of the termination of the employment contract, the following are mentioned: the basis and reason for dismissal, in the case of offering another job to the employee, the name of the position, the amount of salary or the lack of possibility to offer another job. year, month, date of dismissal.   Are there any mandatory severance payment provisions upon the termination of employment? In accordance with the Code, employees have the right to receive severance payments upon termination in these cases: Liquidation (termination of activity) of the employer. When the number of employees is reduced. Non-compliance of the employee with the position held or the work performed. Reinstatement of the employee to the previous job. Long-term incapacity of the employee (if the employee has been temporarily incapacitated for more than six months in a row or for more than 180 days during the last twelve months, excluding days of pregnancy and maternity leave).   How would you define a labor dispute and how can they be resolved? A labor dispute is a disagreement between an employee or a former employee, who has previously had an employment relationship with a given employer, and the employer, which arises or has arisen during the fulfillment of rights and obligations set by labor legislation, other normative legal acts, internal legal acts, or the individual or collective labor contract. Labor disputes are subject to examination in court. Labor disputes may also be subject to mediation.   May labor disputes be referred to resolution by an arbitral tribunal? Labor disputes may be referred to an arbitral tribunal for resolution if an agreement has been concluded between the employee and the employer, or if a collective agreement provides for the possibility of referring the dispute to arbitration. An arbitration agreement does not limit the employee’s right to refer a dispute arising from the employment contract to a court, except where the arbitration agreement was concluded after the dispute arose and the parties unconditionally agreed to submit the dispute to resolution by an arbitral tribunal.   In what cases and within what time limit does an employee have the right to apply to the court?   If the employee disagrees with the modification of working conditions or the termination of employment relations, the employee has the right to apply to the court within two months from the date of receipt of the individual legal act on the modification of working conditions or dismissal, and, in cases prescribed by law, within two months from the date on which the employment contract is deemed terminated by operation of law.
Poghosyan Legal Consulting - December 18 2025