5 Important Issues to Consider When Registering a Company in Armenia

Registering a company in Armenia is a pivotal step in the journey of establishing a business․ Navigating the process of company registration in Armenia requires a keen understanding of the legal, economic, and administrative landscape. As an aspiring entrepreneur or a business expansion strategist, being well-versed in these matters is essential to ensure a smooth and successful incorporation journey.

In this article, we will delve into five important issues that require attention when registering a company in Armenia.

1. What are the common types of companies in the Republic of Armenia?

The legislator provided for the following types of legal entities created for the purpose of engaging in business activities:

  • Cooperatives, which is a voluntary association based on the membership of individuals and legal entities, created for the purpose of meeting the material and other needs of the participants through the pooling of property fees of its members.
  • Partnerships that can be formed in the form of a general partnership or a trust partnership.
  • Companies that can be created in the form of a limited or additional liability company or a joint-stock company. A company can be created by one person.

The most common types of legal entities in Armenia are limited liability company (LLC) and joint-stock company, which, in turn, can be close or open (CJSC, OJSC).

The main difference between limited liability companies and joint-stock companies is the form of participation in the charter capital, particularly, the charter capital of limited liability companies is divided into shares, and in the case of joint-stock companies, it is divided into stocks. From this point of view, in the case of joint-stock companies, the legislator has established the possibility to provide for different types and classes of stocks in the charter, with which the rights given to the shareholders are also different.

At the same time, the legal requirement to maintain the company register by another body is also different for these companies. The registry of the participants of the limited liability company is maintained by the RA Legal Entities Registry Agency, while in the case of joint-stock companies, the registry is maintained by the Central Depository of the RA through account operators and is confidential to third parties.

You can find out more details about limited liability and joint stock companies’ registration here.

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Being one of the leading law firms in the field of corporate and business law in Armenia, MB Legal is ready to assist you in all legal issues of implementing your business idea, from company registration and obtaining the necessary permits and licenses to current legal services.

2. What taxation regimes are provided by the legislation of the Republic of Armenia?

According to RA Tax legislation, there are general and special tax systems.

Companies are taxed under the general taxation system

  • With Value Added Tax (VAT) and/or
  • With profit tax.

As for the special system of taxation, it includes:

  • turnover tax system and
  • the micro-enterpreneurship system.

Within the framework of the turnover tax system, organizations are taxed with a turnover tax that replaces VAT and/or profit tax at a rate of 5%, if their annual turnover does not exceed AMD 115 million, and within the micro-entrepreneurship system, companies are exempt from paying VAT and profit tax if the annual turnover does not exceed AMD 24 million.

You can get acquainted with the taxation of the most common transactions in Armenia with another article published on our website.

3. How to open a bank account for the company?

Before opening a bank account, it is necessary to carefully research and choose a bank that will be more suitable to the needs of your company and will provide the necessary services for your business activity. Usually, when opening a bank account for a company, it is necessary to submit company registration documents, company address and identification documents of persons authorized to act on behalf of the company, as well as other additional documents according to the bank’s requirements. In this process, the presence of a person authorized to act on behalf of the company is mandatory.

You can see the answers to the questions related to opening a bank account and getting a card in Armenia in our previous publication.

woman holding a pen and a contract form

4. What basic requirements are provided by the labour legislation of the Republic of Armenia?

While registering a company in Armenia it is necessary to take into consideration a number of imperative requirements provided by labor legislation. First of all, it is important to correctly draw up the employment contracts concluded with the employees and which should include the mandatory conditions defined by the RA Labor Code, e.g. the amount of the basic salary and the way to determine it, the working time regime, the date of starting work, the title of the position and/or work functions, the type of annual leave etc.

As for signing an employment contract with foreigners, it is required to obtain a work permit.

The employer is obliged to provide a safe working environment and to ensure the minimum requirements for health protection of employees. In addition, the legislator has provided for other guarantees, such as minimum wages, maximum working hours, and in case of exceeding this time, the obligation to provide proportional compensation by the employer, annual minimum paid leave, and in the case of some professions, also additional and extended paid leave, etc.

There are also strict requirements for terminating the employment contract at the initiative of the employer, establishing an exhaustive list of grounds for terminating the employment contract and clear deadlines for notification thereof.

5. How to select the right legal and accounting firms to work with?

Remember that working with reputable legal and accounting firms can help you navigate the complexities of operating a business in Armenia and ensure compliance with local laws and regulations. It’s advisable to conduct thorough research and possibly consult with other businesses in Armenia to get recommendations for suitable firms. It is necessary for the law firm to have extensive experience in the fields of corporate and financial law, to be aware of the business practices used by state authorities, and to be well versed in the acts regulating tax relations.

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Our team, being one of the leading law firms in the field of corporate and business law in Armenia, is ready to assist in all legal issues of implementing your business idea, from company registration and obtaining the necessary permits and licenses to current legal services.

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