In 2016 to 2017 the economy of Armenia was characterised by the adverse macroeconomic impact, ongoing negative trends in the region, the state of the highly related Russian economy, and the economic problems of developing countries. Starting from 2009, after the global financial crisis, the economy has been gradually recovering by an average growth of 4% per year, whereas in 2016, the economic growth was only 0.2%.

In 2017, GDP growth in Armenia outperformed expectations, recording the highest rate of growth in the past decade at 7.5% after a flat economic performance in 2016. Growth was driven mainly by a recovery in the external environment and supported by a strong rebound in domestic demand.

In 2017 to 2019 Armenia was making a decent growth in the economy, averaging 6.8%. In the meantime, the economy was reasonably affected by the 2019 novel coronavirus disease (COVID-19) pandemic and the conflict with Azerbaijan. As such, the economy has faced obstacles in terms of development during 2020. In the meantime, as reported by the World Bank, the country has maintained overall macroeconomic stability and healthy external buffers throughout the crisis.

The following industries play an essential role in relation to the Armenina economy:

Information technologies are also swiftly developing in the country, with several incentives provided by the government for IT start-ups. Similarly, many investment companies (including venture capitals) actively operate in Armenia, contributing to a high growth rate of IT and IT-enabled businesses.

The official language in Armenia is Armenian. As of 1 January 2017 (calculated based on the census of 2011) the population is 2,986,100.

Business culture in Armenia is reasonably formal, and the culture is relatively close to Eastern European countries (depending on the industry).

Standard business days and hours in the country are from Monday to Friday. Certain companies also work on Saturdays. The standard business hours are from 9am to 6pm.

There are various public holidays and remembrance days that are regulated under the law and by the decisions of the government.

Two of the main events that have impacted doing business in Armenia have been the:

Armenia's "velvet revolution" change of government in 2018 brought significant changes to all aspects of life in the country, including doing business. The change of government was followed by adopting several new laws and implementing new policies and practices. Currently extraordinary parliamentary elections are scheduled to be appointed on 20 July 20 2021, on the current PrimeMminister's [technical) resignation and non-election of the new Prime Minister by his/her political majority in Parliament. Extraordinary elections are considered to be a way of resolving an ongoing political crisis in the country.

The war between Armenia and Azerbaijan had a critical impact on the country's business environment. In addition to the direct impact on the economy, the war also had a strong impact on the political environment in the country. The conclusion of the active shelling brought heated debates in the country's political environment, with claims from the opposition to withdraw the current Prime Minister and the associated political force. As a result, the Prime Minister resigned, and extraordinary elections hae been appointed. The competition is expected to be between the current political force led by Nikol Pashinyan (the current prime minister) and the second president of Armenia, Robert Kocharyan. There are also two to three other political forces having a real chance of being represented in Parliament and impacting on the future processes. The results of the elections and the impact of any potential change in government is hard to predict at the time of writing.

One of the main changes brought in by the new government was the Law on Confiscation of Illegal Property, which sets out processes for confiscating property acquired through illegal channels or illegal means. Confiscation is conducted by a civil court, with a lower burden of proof than in criminal processes. The process is directed at the illegal property rather than at the owner, and a bona fide owner is only protected in limited cases. Before commencing business relationships, acquiring a property or structuring a business in Armenia, investors should carry out extended due diligence to ensure that the business or property will not be affected by the implications of this law. However, there is no court practice yet, so the real impact will be seen within the next few years.

Amendments to the Armenian Constitution came into force in 2018, and Armenia is now a parliamentary, unitary republic with a civil law system. At the same time, Armenian legal practice also has some common-law elements, in line with developments in several major civil law jurisdictions. Since 2007, the reasoning in decisions of the Armenian Court of Cassation (including interpretations of law), the Constitutional Court and the European Court of Human Rights (ECHR) are binding on all courts. In complicated cases, it is becoming common practice for litigators to refer to the decisions of the ECHR and the Court of Cassation and the decisions of lower courts (mostly the courts of appeal).

The judiciary has three tiers:

There are also special administrative courts (based on the German example) and insolvency courts. In addition, the government has circulated draft amendments on the establishment of special anti-corruption courts.

The administrative law system is shaped by the German example, where the law on the fundamentals of administration and the administrative process forms the core, while the particularities of different processes are described in sectoral legislation. The state administration has adopted e-gov systems, although these are still in the process of further development.

The Armenian Civil Code is based on the Napoleonic Code. The Civil Procedure Code (fully revised in 2018) is based on adversarial processes, with limited exceptions (mostly on family and labour law issues).

There are some international treaties on the recognition of foreign judicial processes. Since 2018, Armenia also recognises foreign judicial decisions based on the principle of reciprocity in the absence of a relevant treaty. This recognition covers final decisions as well as interim measures.

There is modern arbitration (in line with the UNCITRAL model law) and mediation legislation, and Armenia has ratified the:

There are also around 40 bilateral investment treaties (BITs).

The Armenian Law on Foreign Investment also secures the general guarantees available in modern international law.

Armenia is a member of the Eurasian Economic Union (along with Russia, Belarus, Kyrgyzstan and Kazakhstan) and the World Trade Organisation. There are more than 40 treaties on the avoidance of double taxation.

Armenia is a member of the HCCH Convention Abolishing the Requirement of Legalisation for Foreign Public Documents 1961 (Apostille Convention).

The Armenian market is open to foreign investors. The Law on Foreign Investment and more than 40 bilateral investment treaties (BITs) are the primary sources of specific regulations (protection) on foreign investment. The Armenian legislation provides for most of the internationally recognised protections for foreign investors.

There are no restrictions on government authorisations that relate specifically or exclusively to foreign investors.

There are no general restrictions on foreign holdings in local companies and no requirements to have a resident shareholder or manager registered in Armenia. However, there are some specific limitations (see below).

There is no restriction on the acquisition of shares specifically applicable to foreign investors.

Here are some specific limitations that apply to certain industries:

There are no established restrictions on doing business with specific countries or jurisdictions. However, investments from certain countries can, in principle, be prohibited for state security reasons (see Question 4). Furthermore, limitations or restrictions may be applied based on international sanctions that the country may be bound by.

The circulation of foreign currency within Armenia is regulated, and there are certain restrictions on the use of foreign currency in transactions, especially for cash payments. The restrictions also apply to foreign direct investments, which must be made in local currency.

However, the exchange control regime is liberal. The national exchange rate is floating, with the Central Bank of Armenia intervening in critical situations by direct participation in the market or by reviewing the regulations.

As to the beneficial ownership, the RA Law on Combating Money Laundering and Terrorism Financing sets some cases when the beneficial owner of an entity will be reported. Mainly, such reporting is done when the company is being established, and it is registered at the State Register of Legal Entities. Whenever such a change is made at the state register (for a change of ownership or management) when the beneficial owner is changed, it again must be reported.

Furthermore, several groups of entities are obliged to report suspicious transactions, including providing details on the actual beneficiaries.

Besides the general requirements of reporting on the actual beneficiaries, mining companies also have an obligation to report in relation to real owners. These regulations have been added within the scope of EITI initiatives, and it is foreseen that this will apply to companies other than mining companies in the future.

Some incentives are offered to investors generally and in relation to specific business sectors (see below). In relation to grants, occasionally, various projects are initiated that offer grants, but these are less generic and aimed at a very particular purpose.

There are situations where incentives can be provided. For example, the government can donate land for approved investment plans.

There are several tax incentives applicable to specific sectors of the economy, for example:

Further details on incentives can be found on the of the Ministry of Economy website (https://mineconomy.am).

There are no grants or incentives that are exclusively available to foreign investors only, but the foreign investors have no specific restrictions to benefit from them.

The most common business vehicles are the:

The LLC has a simple management structure. A JSC may be preferable if the company wishes to go public and be listed on a stock exchange at a later stage or if the company requires more sophisticated corporate governance. The law also establishes mechanisms for concluding a shareholder agreement between the shareholders of a JSC.

It is also possible to establish investment funds. There are many different forms of funds, and private equity funds can serve as a good alternative to a trust or other similar structures. The trust, as a concept, is not available under Armenian law.

Both LLCs and JSCs are widely used by foreign companies. Based on the differences indicated above, the foreign companies choose the company form more acceptable for their needs.

The State Register of Legal Entities of the Ministry of Justice is responsible for registering legal entities other than financial institutions. The Central Bank of Armenia registers financial institutions.

The founder or director or another authorised person must submit the following for registration:

The registration generally takes no more than two working days after the submission of the complete package. If the founders decide to use a pre-approved standard form of documents, the registration is immediate (but the documents will be in Armenian only, and the founder and the director must be present at the registry office).

Trade name registration is made simultaneously with the registration of the entity. The suitability of a presented trade name is checked immediately and, if there are grounds to reject the registration, the founder can choose another name (no additional fee needs to be paid).

For JSCs, registration of shares at the central depository is compulsory in addition to state registration. The registration is made through an authorised account holder, which later serves as an agent for other share transactions. The list of the authorised operators can be found online on the Central Depository of Armenia website (https://cda.am).

Changes to a company's executive bodies, shareholders and charter (including the registered address) must be reported to and registered at the state authority. Some companies may have additional reporting rules under the banking and capital market legislation.

There are no general mandatory maximum or minimum requirements in relation to a company's share capital. However, some mandatory minimum requirements are imposed for companies in specific sectors, such as banks and insurance companies.

In general, the share capital of a business partnership or company can be paid in through:

Restrictions on Rights Attaching to Shares. The holder of ordinary shares cannot be granted additional voting rights inconsistent with the nominal value and quantity of the ordinary shares they own. The company cannot guarantee the payment of dividends for ordinary shares. Preference shares do not grant voting rights unless this is provided for in the company statutes.

Automatic Rights Attaching to Shares. Company shareholders have the right to:

In LLCs only, shareholders are entitled to leave the company at any time, regardless of the other shareholders' consent. The LLC is obliged to compensate the market price of the shares of a shareholder informing on their exit within six months after such notification. A JSC does not have a similar obligation.

In both LLCs and JSCs, the existing shareholders have a right of first refusal if other shareholders decide to sell their shares.

LLCs and JSC have almost the same management structure:

There are no restrictions on foreign managers. In practice, many companies with foreign investment have foreign managers or directors.

There is also no requirement for the management to be physically present in Armenia. Banks can provide e-banking solutions, while communications and official correspondence can be undertaken by accounting or legal firms supporting the business.

Members of the executive body and board of directors are bound by fiduciary duties towards the company and can be held liable for damages caused to the company by their actions.

Directors and officers who control the actions of the company and have intentionally caused the company's bankruptcy can be held jointly and severely liable for the company's obligations towards its creditors that exceed the company's assets.

In a company bankruptcy, the managers can be held personally liable for company obligations that arise after the company was insolvent (where the obligations exceed the company's assets).

A parent company is not liable for the obligations of its subsidiary unless there are grounds for piercing the corporate veil on the basis of dominant control by the parent company over the subsidiary. In principle, a parent company that has the right to give obligatory instructions to a subsidiary company can be jointly and severally liable with the subsidiary company for transactions concluded by the latter in the performance of those instructions. However, this liability has never been imposed in practice.

The Law on Environmental Impact Assessment and Expert Examination is the main legislation relating to environmental protection. The law applies to those carrying out proposed activities that may have an impact on the environment and human health. Therefore whenever the action of a company falls within the scope of activities indicated under the law, they must be aware of the requirement to carry out an environmental assessment and expert examination.

The main laws regulating labour relationships are the:

Armenia has also ratified several international bilateral and multilateral treaties and conventions, and is active and continually co-operating with international and regional organisations in the area of labour rights protection. Under the Armenian Constitution, in case of conflict between international conventions and internal Armenian legislation, the former will prevail. The Revised European Social Charter and the Constitution of the World Health Organisation are the main international agencies.

Foreign nationals and stateless persons require a work permit to work in Armenia but otherwise generally have the same labour rights in Armenia as citizens.

Armenian legal acts regulating labour relations apply to Armenian citizens working abroad for an Armenian employer, regardless of whether the work is performed in Armenia or on assignment in another state.

Labour law regulations do not contain any conflict of law provisions, and the general principle of choice of law is not applicable to the labour relationship. Therefore, foreign law only applies to labour relations in Armenia if this is specifically provided for by Armenian law or by the international treaties Armenia has entered into (Article 8, Labour Code).

Under the Labour Code, employment relations between an employee and an employer arise when there is either an:

(Article 14, Labour Code.)

All employers must sign an employment contract with every new employee and for every relevant order for employment (Article 412, point 1, Tax Code). Otherwise, sanctions can apply to the employer.

The employment contract must:

(Article 84, Labour Code.)

Besides the mandatory terms, any other lawful term may be included in the contract. However, those terms should not determine less beneficial conditions for the employee than similar terms prescribed by law. In such case, the terms prescribed by law which are more beneficial will be applicable regardless the contract terms.

A collective labour agreement may be applicable, but signing one is not mandatory. If the parties decide to sign the collective agreement, it may provide more favourable conditions for employees than those defined by the Labour Code. The terms of any contract or agreement that are less favourable to employees than the Labour Code regulations have no legal effect.

Armenian employers can only conclude an employment contract with a foreign worker based on a work permit issued to the foreign worker by the relevant authorised body (Article 22 (2), Law on Foreigners). However, the work permit requirement is waived for managers of companies with foreign investment. Article 23 prescribes the exclusions where foreign nationals can work without work permits. The procedure of the submission of the work permit is regulated by Governmental Decree No 493. The procedure includes different phases with different terms which altogether last for no more than 20 days, which starts with the initiation process and lasts until the issuance of the work permit. The state fee for the issuance of a work permit is AMD25,000

A foreign national must have a residence permit to legally stay in Armenia for more than 180 days per year. However, staying in Armenia is not a compulsory condition for working in Armenia, as, for example, the work can be done at a distance. Under the Law on Foreigners, there are three types of residence permits, each of which has its own conditions:

The Labour Code regulates employees' rights to represent themselves and to protect their interests. Employers and employees can freely and voluntarily establish and join trade unions and employers' associations in the manner established by the law. Employees can be represented by trade unions, employee representatives and representative bodies elected by staff meetings/assemblies.

Employees can sue employers for alleged violations of their employment rights. This process is free of state fees for employees. Another dispute resolution process is to come into force from June 2021. The state body responsible for the supervision of the labour relations will be authorised to solve labour disputes and apply sanctions.

Article 23 (1) of the Labour Code sets out the rights of employee representatives. Employee representatives may also be granted additional powers under a relevant collective agreement, to the extent this does not contradict the legislation (Article 23 (3), Labour Code).

An individual employment contract may be terminated:

A dismissal at the employer's initiative will be unfair unless it is justified under one of the following grounds:

(Article 113(1), Labour Code.)

Statutory Minimum Notice. Notification and other procedural requirements vary depending on the ground of dismissal. For instance, if the employment contract is terminated for the reasons above relating to the employee's breach, the employer can terminate the contract without notification and no severance fees are due. However, if the employment contract is terminated for redundancy reasons, a notification must be sent at least two months before termination.

In general, if the termination on the employer's initiative is in violation of the employer's employment obligations in regard to the employment relations termination process, a notification must be sent at least 14 to 60 days in advance, depending on the working experience of the employee at the workplace.

Severance Payment. Different amounts of severance fees must be paid for terminations for reasons of redundancy, unsuitability, reassignment, incapacity or old age. No matter how many days the penalty is paid for, the penalty to be paid for each overdue notice period is calculated based on the employee's average daily wage.

The employer must make a final settlement with the terminated employee on the day of termination, unless another period is prescribed in the employment contract.

Grounds for Unfair Dismissal. A dismissal will be unfair unless specified as one of the grounds in Article 113 (1) of the Labour Code (see above).

Remedies. An employee whose rights are violated can apply for:

If the proceedings confirm material or procedural violations, the employer must pay the employee's prior average daily salary for the whole period of forced non-working, or the difference in salary if the employee received reduced remuneration. If the court cannot reinstate the employee for economic, technological or organisational reasons, the employer must also pay compensation for non-reinstatement of between one and 12 months' average salary of the employee. The amount is decided for each case individually. The compensation for non-reinstatement is calculated by multiplying the monthly average salary with the number of months decided by the court.

The employment contract is deemed to be rescinded from the day of entry into legal force of the court judgment (Labour Code).

It is prohibited to terminate the agreement at the employer's initiative in the following circumustances:

(Article 114, Labour Code.)

If an organisation is liquidated or there is a reduction in the number of employees, and the dismissal is for more than 10% of the total number of employees or more than ten employees (a collective redundancy) the employer must submit data in relation to the number of the dismissed employees (disaggregated by profession, gender and age) to the relevant state governing body and to the employees' representatives (Article 116, Labour Code).

The data submission should be executed no later than two months before the termination of the employment contract.

Tax issues relating to taxation of labour compensation and other equivalent payments are regulated by the Tax Code. The tax base for an employee consists of labour compensation and other equivalent payments received by the employee. The concept of tax residence is recognised. A resident is considered to be a natural person who either:

The location where the family or economic interests of the individual are concentrated is deemed to be their centre of vital interests. A centre of vital interests of an individual is generally where:

All other persons are recognised as non-resident.

A resident is taxable on all relevant income received both within and outside Armenia.

A non-resident is taxable on income received from Armenian sources only.

In general, the employer acts as a tax agent and calculates and transfers income tax to the state budget for both resident and non-resident employees. The employee is the taxpayer and not the employer, which has responsibility as tax agent only. Tax residents and non-residents pay income tax for their employment remuneration and other equivalent payments at the same rate. Resident and non-resident employees also pay mandatory social contribution payments based on the amount of salary.

Under the Tax Code, the income tax rates for employees are as follows:

Under the Law on Funded Pensions, the following rates are set for mandatory social payments are as follows:

Every month, tax agents calculate the income tax due. By the 20th day of the next month, tax agents must electronically submit to the tax office a summary income tax return and pay the amount of income tax to the state budget. There are some exceptions. For example, organisations implementing projects under treaties signed and ratified on behalf of the Armenian state are exempt from withholding income tax on incomes paid to individuals at source. In such cases, these organisations can choose to act as tax agents on the basis of a declaration filed with the tax office, or otherwise individuals can choose to pay and submit tax returns themselves under the same terms and conditions.

The same filing requirements are set for mandatory social payments.

See above, Tax Resident Employees.

Employers do not pay taxes but act as tax agents (see above, Tax Resident Employees).

Under the Tax Code, all companies who are registered in Armenia or whose place of residence is Armenia are deemed to be residents. All other companies are deemed to be non-residents.

Non-tax resident businesses can operate in Armenia with or without establishing a permanent establishment (a branch is included in the notion of the permanent establishment). In both cases, the object of taxation is the taxable profit received from Armenian sources. Non-tax residents who operate in Armenia through a permanent establishment must pay and submit tax returns, and can deduct losses attributable to income derived from Armenian sources. Income received from Armenian sources by non-tax residents is taxable at source, and the Armenian source entities must withhold and pay VAT and profit taxes on behalf of the non-tax residents.

Under the Tax Code, taxpayer companies can choose between two taxation regimes:

For residents, the object of taxation is the taxable profit received within and outside Armenia. For non-residents, the object of taxation is the taxable profit received from Armenian sources only. Taxable profit is gross income less expenses, and is taxed at:

If a non-resident engages in economic activity without a permanent establishment, taxation of the income derived by the non-resident in Armenia from Armenian sources must be performed by a tax agent at the income source. Armenian residents must submit tax returns on the calculation and payment of income to non-residents before the 20th day of the first month following the quarterly reporting period.

Under the Tax Code, residents and non-residents who engage in economic activity through a permanent establishment must submit tax returns and pay profit tax before the 20th April following the yearly reporting period.

VAT is an indirect tax imposed on transactions. The VAT rate is 20%. If a foreign entity conducts VAT-taxable entrepreneurial activities in Armenia (including importing goods) but is not registered as an entity conducting entrepreneurial activities in Armenia, Armenian VAT payers that are parties to contractual relations with the foreign entity must act as tax agents. Tax returns must be submitted before the 20th day of the first month following the reporting period (quarterly or monthly).

Turnover tax applies to the marketing turnover and other income received from supplied products and rendered services. Income received from trade activities or from rendering services is taxed at 5%. Non-resident companies cannot be regarded as a turnover taxpayer. Reporting periods for calculation and payment of turnover tax are quarterly. The submission of the tax return and payment of turnover tax must be made before the 20th day of the following first month of the reporting period.

Dividends paid to foreign corporate shareholders are taxed at 5%.

Dividends received from foreign companies are added to the tax base of a profit tax taxpayer company.

Dividends received by natural persons are taxable at 5%.

Interest paid to foreign corporate shareholders is taxed at 10%.

Royalties paid to foreign corporate shareholders are taxed at 10%.

The thin capitalisation rules set maximum amounts above which the deduction of paid interest is not allowed. It is not possible to deduct paid interest for the use of loans or credits above an amount exceeding twice the bank interest rate established by the Central Bank of Armenia (currently 12%, so an amount exceeding 24% is not deductible).

Interest paid on loans from financial organisations is not deductible if it exceeds twice the debtor company's equity capital. For a loan from a non-financial organisation, interest is not deductible if it exceeds nine times the equity capital. Interest paid on loans from financial organisations is not deductible if it is less than would be the case if the loan was made on arm's length terms.

There are no controlled foreign company rules under domestic law.

Under the Tax Code, transfer pricing rules are applicable for taxpayers who pay VAT, profit tax and/or royalties for the use of natural resources. Transactions between interconnected persons of these taxpayers are regarded as supervised transactions. If the amount of all supervised transactions of the taxpayer exceeds AMD200 million for the current year, transfer pricing rules can apply. In principle, for tax purposes, a transfer price must match either:

VAT, and in certain cases excise tax, is applicable to the imports of goods. The VAT rate is 20%. A zero VAT rate is applicable to the export of goods or the rendering of services outside Armenia. VAT is applied based on the customs value of the imported goods. The purchase price is the main option for deciding the customs value but there can be some problems with this in practice. Customs authorities have a list of fixed prices and even if the documents necessary for clearance are in place, they may require additional documents or state reasons why the submitted documents are not sufficient. For the reporting obligations, see Question 21, VAT.

There are some additional procedural requirements for imports and exports from the countries of the Eurasian Union. For example, to apply for zero-rate VAT for exports made from Armenia to the territory of another union member, relevant information on the import of goods and payment of VAT in that other union member state must be provided.

There is a wide network of international treaties for the avoidance of double taxation and the prevention of tax evasion concluded with 46 countries, including Germany, Ireland, the UK, Russia, Cyprus and Malta. Negotiations on the conclusion of a double-taxation elimination treaty with the US are currently ongoing. The final list is available on the Armenian State Revenue Committee website (www.petekamutner.am).

Armenia joined the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting in 2017.

The Law on the Protection of Economic Competition prohibits restrictive agreements and practices. The law defines restrictive agreements and practices as those that indirectly result or may result in the restriction, prevention or prohibition of competition, including:

Restrictive agreements and practices can include, among other things:

The Law on the Protection of Economic Competition sets substantial fines for the implementation of restrictive agreements and practices. An economic entity can be fined up to 10% of the income received during the preceding year. The Criminal Code of Armenia also sets out criminal liability for setting unfair monopoly prices and for agreements and practices that restrict competition.

The regulations are applicable to foreign companies that operate in the Armenian market (such as by establishing an Armenia-resident company, using a permanent establishment in Armenia or by other means). If an Armenian-resident economic entity owned by a foreign company is engaged in restrictive agreements, the legal consequences may also be applicable to the foreign company, as these two entities may be regarded as a single "group of persons".

The Law on the Protection of Economic Competition prohibits the abuse of a dominant or monopoly position, including:

The Law on the Protection of Economic Competition sets substantial fines for the abuse of a dominant position. An economic entity can be fined up to 10% of its income received during the previous year.

Mergers and acquisitions are subject to merger control if they qualify as notifiable concentrations. Notifiable concentrations must obtain consent from the State Commission of Protection of Economic Competition (SCPEC) under the Law on the Protection of Economic Competition. Concentrations include the:

A concentration is notifiable (before being executed) if either:

Whether foreign-to-foreign mergers and acquisitions are defined as a concentration (and therefore whether there is an obligation to submit a declaration) depends on whether they are operating in the Armenian market. The regulations are applicable if foreign companies operate in the Armenian market (such as by establishing an Armenia-resident company, using a permanent establishment in Armenia or by other means). There is no distinction between resident and non-resident companies when defining the notion of economic entity, so the main test for deciding whether the concentration must be notified is whether the foreign entity operates in the Armenian market.

The Subsoil Code envisages limitations to the transfer of subsoil use rights. Particularly, an application to the relevant authority must be made for getting the consent to finalise the transaction. If these requirements have not been complied with, the relevant authorities may seek a judicial declaration of the unlawful transaction as null and void. Furthermore, such pre-closing limitations are also a factor in the energy sector. The Law on Energy provides that the consent of the Public Services Regulatory Comssion (PSRC) must be obtained prior to the conclusion of a transaction that deems the alienation or pledge of shares of a licensed entity. Failure to comply with this requirement, or the requirements provided by the PSRC, may result in the imposition of penalties. Moreover, the PSRC may seek a judicial declaration of the unlawful transaction as null and void.

The Law on Electronic Communications also determines certain pre-closing limitations. The law obliges the person who wishes to provide public electronic communications services, except for services that require the possession and operation of an electronic communications network, to notify the regulator in writing of the activity. Where (after the notice and hearing) the regulator finds that a licensee has failed to comply with any of the provisions of the law, the regulator is authorised to order the breaching licensee to pay a penalty between AMD2 million and AMD 4 million. Where the regulator finds that such violation has been committed intentionally or with the licensee's knowledge, or where the violation has been committed more than once within one year, it may order the offending licensee to pay an additional fine or penalty of AMD4 million.

As a general observation in Armenia, legal entities are currently not subject to criminal liability, only natural persons can be held individually criminally liable for corruption crimes. However, the newly passed Criminal Code also prescribes criminal liability for legal entities. The new Criminal Code will enter into force in July 2022, and specific parts of it (for example, in relation to criminal liability for legal entities) in 2023.

The Criminal Code of the Republic of Armenia criminalises both active (that is, giving a bribe) and passive (that is, taking a bribe) bribery.

Under Armenian regulations, briery is any:

Bribery intermediation is also criminisalised.

Gifts and Gratuities. The Law on Public Service provides that public servants must not accept or agree to accept any gift is it is connected with their official duties. The concept of a "gift" will imply to any advantage related to property interests that would not reasonably be granted to a person not holding the position in question. It also includes ceded claims, surrender of claims without compensation or at an apparently disproportionately low price, property transferred without compensation or property sold at an apparently disproportionately low price, services rendered or work carried out at an apparently disproportionately low price, as well as preferential loans, gratuitous use of another's property, and other actions, as a result of which a person derives benefit or advantage.

Gifts that are allowed to be received in connection with the performance of their official duties by persons holding public positions and public servants are as follows:

Gifts will be the property of the state/community and registered as such if the value of the gifts (including ceremonial gifts) received during state/official/work visits or state/official/public events is more than AMD60,000.

Definition and Legal Requirements. Patents can be granted for technical solutions in any domain that concerns a product, use or method. There are three conditions for the patentability of the invention:

Registration. Patents are registered by the Intellectual Property Agency of Armenia. The agency website has guidance on the procedure and necessary form samples (www.aipa.am).

Enforcement and Remedies. If the object of the protection is a product, the right holder has an exclusive right to prohibit any third party from manufacturing, using, introducing to market, offering for sale, or importing or obtaining the product for any of those purposes. Similar prohibitions can be imposed if the object is a method. The infringement of a patent can result in civil and criminal liability.

Length of Protection. Patents are protected for 20 years from their application.

Definition and Legal Rquirements. A trade mark is a mark that is used to distinguish the products and/or services of one person from the products and/or services of another. There are very detailed regulations on the circumstances where the registration can or must be rejected, such as the mark being:

Protection. Trade marks are registered by the Intellectual Property Agency of Armenia. The agency website has guidance on the procedure and necessary form samples (www.aipa.am). For unregistered trade marks, the only protection available is refusal by the agency to register any mark that is confusingly similar to the unregistered trade mark being used in Armenia or outside of its territory, where the applicant is not acting in good faith.

Enforcement and Remedies. The right holder of a registered trade mark has a right to prohibit:

Length of Protection and Renewability. The length of protection is ten years from the application and can be renewed indefinitely for ten years at a time.

Definition. A registrable design is a solution in connection with the appearance of the object that is new and unique.

Registration. Designs are registered by the Intellectual Property Agency of Armenia. The agency website has guidance on the procedure and necessary form samples (www.aipa.am).

Enforcement and Remedies. A right holder has a right to prohibit any use of the design without their permission. Infringement can result in civil liability.

Length of Protection and Renewability. Length of protection is five years from the application. It can be renewed further for five years at a time but for no more than 25 years in total.

Definition and Legal Requirements. An unregistered design is a design that is protected by the law even though it is not registered.

Enforcement and Remedies. No specific remedies are explicitly prescribed by law for unregistered designs. However, there is general protection under unfair competition or other general concepts.

Length of Protection. Under the Law on Copyright and Related Rights, the length of protection is three years from when the design was made public in Armenia.

Definition and Legal Requirements. Copyright protects unique results of creative work that are both:

Protection. Copyright does not require registration.

Enforcement and Remedies. The author has the exclusive right to use their creation as they wish and to prohibit or authorise its use by a third party. The infringement of copyright can result in civil and criminal liability.

Length of Protection and Renewability. The tangible rights of the author are protected during their lifetime and for 70 years after their death. The intangible (personal) rights do not have any time limit for protection.

Under an agency agreement, the agent undertakes an obligation to conduct legal or other actions in accordance with instructions given by the principal in return for remuneration, either on their own behalf but at the principal's expense or on behalf of the principal and at the principal's expense. There is no restriction on the nationality of the parties. The agency agreement can be exclusive or non-excusive. It must have a written form. There is no obligation for notary verification or registration.

The Civil Code of Armenia does not specifically regulate distribution agreements.

Under a franchising agreement, a right holder allows its exclusive rights to be used by another party in its commercial activities. The parties must be commercial organisations or sole proprietors. There is no restriction on their nationality. The contract must be in written form and be registered by the right holder. If the right holder is registered in a foreign state, the contract must be registered by the user. If the agreement concerns the use of an object protected by a patent or trade mark, the permission for use must be registered by the authority that registers patents and trade marks in the relevant jurisdiction (this is the Intellectual Property Agency of Armenia in Armenia). Franchising agreements can be exclusive or non-exclusive.

The Civil Code regulates services provided through electronic platforms, and the grounds for liability for the providers of such services and other related issues. After recent simplifications of the licensing regulations, trading and/or service provision through an electronic platform is not subject to licensing, but entrepreneurs who wish to operate such a platform must still notify the relevant competent state body under the Law on Notification of Exercise of Activity. This notification is a simplified procedure with the sole purpose of creating a public electronic registry containing information on market actors who engage in certain activities (including trade by electronic means). Entities and individuals entitled to engage in activities subject to notification can commence their activities within five working days of submission of the notification, unless the right to engage in the activities is denied. The competent authority can only deny this right if the formal notice requirements were not complied with (such as a failure to submit all the required documents or the entity not being entitled to carry on the activity under its constitutional documents).

A state fee must also be paid. Under the Law on Notification of Exercise of Activity and Law on Trade and Services, trade through electronic means is also considered as an "organising trade". The Law on State Duties establishes AMD1 million per year as a state duty for this activity.

Under the Law on Electronic documents and Electronic Digital Signature, electronic documents have the same status and legal protection as paper documents and can be signed using a digital signature.

An operator of a website or an electronic application serving as a platform for third parties to conclude and implement contracts (electronic trading platform operator) will not be liable for obligations arising from contracts concluded between third parties (Article 416.2, Civi Code). This is unless otherwise provided for by law, under the contract concluded between the electronic trading platform operator and the third party.

It is assumed that competition or consumer protection law will also apply to online businesses as there is no limitation on the form of the business.

The Law on Advertising allows advertising on digital media. However, there are no specific rules with respect to the digital advertising.

The Law on Advertising also applies to direct marketing. The Law on Advertising sets out requirements on the content of advertisements and their circulation. There are restrictions in relation to, among other things, the advertising of:

Advertisements must be either in Armenian, or accompanied by Armenian translation, except for trade marks and registered brands.

In 2019, the Law on Advertising was amended by lottery regulations, according to which TV lottery broadcasts are only allowed between 10PM and 7AM.

An offer, containing all the essential conditions of a contract, which imply the will of an offeror to enter into a contract with each offeree on the conditions specified in the offer, will be deemed to be a public offer (Article 453, Civil Code).

Sale promotions are also regulated by this rule and there is no specific regulations.

Regulation (EU) 679/2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation (GDPR)) is not applicable in Armenia. However, Armenian data protection legislation reflects most of the GDPR's main principles and rules.

Armenia has ratified the Convention for the Protection of Human Rights and Fundamental Freedoms 1950 (European Convention on Human Rights). Therefore, Article 8 of the European Convention on Human Rights applies to personal data protection in Armenia.

The Constitution of Armenia protects the right to protection of personal data. General rules concerning the processing of personal data are set out in the Armenian Law on Protection of Personal Data (Data Protection Law), which was adopted in 2015. There are also several sectoral-specific data protection laws:

Moreover, the Data Protection Law does not apply to the following, which are subject to their own separate regimes:

The Code on Administrative Offences imposes administrative liability for violating the general rules on personal data protection and processing, and defines the relevant administrative offences. The Criminal Code imposes criminal liability for violating the general rules on personal data protection and processing, and defines the relevant criminal offences.

The Law on Protection of Rights of Consumers grants consumers the right to safe products and services. A consumer has a right to full compensation for damages, regardless of whether the consumer was in direct contractual relations with the seller or service provider. The consumer can demand reparation of damages caused by product defects from the seller or the manufacturer. Damages caused by defects in works and services must be compensated by the seller or provider.

Main Activities. The State Commission for Protection of Economic Competition:

Main Activities. Environmental regulation is carried out by the Ministry of Environmental Protection and Inspectorate for Natural Protection and Subsoil. The former manages the creation of and compliance with state policies with respect to the environment. This includes preparing drafts of changes to the legislation and solving further sector-based general issues. The Inspectorate further ensures compliance of applicable environmental protection and sector-related legislation, initiates inspections for monitoring compliance with applicable legislation and exercises penalties and other sanctions towards the breaching entities.

Main Activities. The Central Bank of Armenia: issues licences to companies in the financial sector, including banks, insurance companies, investment funds and other financial institutions. It adopts legal acts regulating the financial sector, including activities of entities licensed in the sector and carries out supervision towards compliance with legislation and legal acts in the sector.

Main Activities. The Public Services Regulatory Commission issues licences to entities operating in certain sectors, including water, energy, telecommunication and postal services It also adopts legal acts regulating these sectors and carries out supervision towards compliance thereof.

There is nothing else considered important relating to doing business in Armenia.