The Republic of Armenia has adopted a new law regulating SAFE (Simple Agreement for Future Equity) agreements, providing a new mechanism for startup financing. Effective from May 30, 2024, the law allows investors to inject capital into a company’s equity in exchange for future shares.
Main Provisions of the SAFE Agreement (Article 38.2 of Law on Joint Stock Companies)
- The investor commits to investing the specified amount, and the company commits to issuing shares upon fulfillment of conditions.
- The investor transfers the funds, and shares are issued upon condition fulfillment.
- The company must issue shares within 60 days upon condition fulfillment.
- Preemptive rights of shareholders do not apply.
- Investment relations are regulated by the Central Bank’s laws.
- SAFE agreements may include terms for fund return and interest payments.
- SAFE agreements are considered securities.
This law enhances the investment environment and provides new opportunities for startup financing in Armenia.
For more details, visit ARLIS.
