Wondering how company formation works in Armenia? Read this.

The most common question that people ask us is how to form a company in Armenia? We wanted to explain what it takes to form a company in Armenia and to show you that some things are much simpler than you think and others are not.

First of all, let us clarify that the most common types of companies are either limited liability companies (LLCs) or closed joint-stock companies (CJSCs). Now, this article is not about the differences between these two entities, as that question will be discussed in detail in our upcoming articles. We want to focus on the procedure, timelines, costs of forming a company in Armenia, and some relevant consideration of whether you need a lawyer at all for that process. 

We want to let you know that, as a rule, forming a company in Armenia is free. Yes, you read it correctly. The company formation itself is free. You have to go to the State Register, use their default template and form a company at no cost. This usually takes 2 working days for the State Register to complete the registration of your company. However, things get more complicated when you have a foreign founder, who does not understand Armenian, or when you want to form a board of directors, or when you want to set up custom clauses in your charter. These are just some of the cases when you will need a lawyer to look into your case and advise on company documentation. Below we lay the three most fundamental cases that will you to seeking advice from a lawyer.

1.     Having a foreign founder – one of the most obvious reasons that you might want to use legal services is when you need bilingual company documentation. In such a case we are mainly speaking about the founding decision and the charter of the company.

2.     Wanting to form a board of directors – this is another case, which actually partially falls under the 3rd point below. If you want to have a board of directors as a governing body in your company, you have to set out specific provisions in your charter.

3.     Wanting to include specific provisions in your charter:

a.     you may want to set different authorization levels for certain decisions in the company. For example, you want to set that transactions above 100,000 USD are subject to the approval of the general meeting.

b.     Additionally, you may want to allocate certain powers to the board, powers that by default belong to the general meeting.

c.     Another case for this is changing the voting thresholds that are by default set by the law. For example, you can stipulate that a quorum is present when 60% of voting shares are present.

d.     Voting cap – another very important case. You can also set out voting caps in your charter to protect minority shareholders or to have more balanced decision-making in the company. For example, you can set in the company charter that the maximum number of votes a shareholder can have is 40/100. Thus, even if the shareholder owns 70% of the shares he/she will only have 40 votes out of 100.

If your case is one of the abovementioned cases, we will be pleased to undertake the process of your company formation or the respective changes in your charter.