ANIF welcomes the Armenian Government’s Decree on Making Amendments to the RA Law on Joint Stock Companies and Other Related Legal Acts

The Decree 475-N on making amendments and additions to the RA Law on Joint Stock Companies and other related legal acts co-authored by Armenian National Interests Fund CJSC (ANIF) was approved by the Armenian Government on 08.04.2021.

ANIF welcomes the Government’s Decree, with a strong belief, that once approved by the National Assembly, the respective package will bring significant changes to the field of joint stock companies, greatly contributing to the development of corporate governance and capital markets in Armenia.

The Decree proposes:

– to establish additional protection tools for majority and minority shareholders – the Decree envisages balancing the interests of shareholders, and introducing the widely accepted protection tools, squeeze out and sell out rights to allow that

– to issue ordinary shares of different classes, which is impossible under the current legislation

– to make Company’s General Meeting of Shareholders, Board of Directors, Executive Body power delegation process more flexible

– to allow for employee share scheme –this is one of the innovations defined by the draft law for the legislation of the Republic of Armenia, as according to the current regulations the employee share scheme in Armenia is possible by applying very strict regulations only at the expense of repurchased shares

– to eventually resolve the legal fiction of paid statutory capital being paid at the time of registration

– to eliminate the requirement that the bonds issue without collateral is allowed at least 3 years after the state registration of the Company, provided that the Company’s balance sheets of 2 years are approved in accordance with the established procedure -this is an artificial barrier for start-ups to raise additional funds through bonds issue

The provision on keeping the fractional shares presented in the draft is essential from the point of view of protection of the rights of minority shareholders. Another innovation is the regulation of companies with negative equity, which is especially important for companies engaged in research or implementation of long-term programs.

ANIF is convinced that as a result of adoption of the Decree, the corporate sector in Armenia will become more accessible and attractive to both local and foreign investors, while ensuring effective mechanisms for the protection of shareholders’ rights.

We would like to thank our colleagues from the Ministry of Justice of RA, ADWISE Business and Legal Consulting and others involved in the project for the extensive work and kind collaboration.