5 Essential points for company registration in Armenia

Navigating Entity Registration in Armenia: Key 5 Points You Can't Miss.

Registering a business can be overwhelming. There are so many points to cover, from choosing a location for your business to managing the step-by-step legal process for entity registration in Armenia. 

Choosing Armenia for company registration has become a popular decision among foreign entrepreneurs due to the absence of nationality restrictions and minimum capital requirements. A residence permit isn’t necessary, either. 

Here, we cover 5 important legal points related to setting up a successful business in Armenia. 

Naming your business 

For state registration approval, submit a business name meeting legal criteria. Ensure uniqueness, avoiding resemblance to existing businesses to prevent confusion. The name must align with public interests, humanity principles, and morality.

The usage of the words “Arm,” “Armenia,” and “Armenian” and their translations in the name requires a permit and an annual state fee of 600,000 AMD. Application forms need to be filled in Armenian. The founders of legal entities and authorized persons can make the requests. 

Upon approval by the Intellectual Property Office, the name is documented in the State Register of Legal Entities. If rejected, you can submit a new request at no additional cost.

Choosing the legal type of your business 

There are different aspects to consider when deciding on the business structure of your entity: number of owners, tax burden, liability protection, paperwork, etc. 

In Armenia, company registration is free of charge, whereas the registration fee for a sole entrepreneur is 3,000 AMD.

Here are the types of businesses to consider. 

Limited Liability Company (LLC)

Small businesses often register as LLCs due to simple registration processes and limited personal liabilities related to the company’s debts and obligations.

In Armenia,  both individuals and legal entities, residents and foreigners, can apply to register an LLC. The number of participants in a company may not exceed 49.

Owners, directors, submit passports, and IDs. Foreign founders: provide notarized copies. Include company details - name, address, invested capital, and each founder's share.

The in-person process of submitting the documents to the relevant authority takes about 10-15 minutes, and the actual state registration of the company takes 1 business day.

Private Entrepreneurship

You can register as a sole proprietor (individual entrepreneur) in Armenia without forming a company. Here, one person owns and manages the business, taking personal responsibility for any liabilities. The registration is quick and easy, and once done, you'll receive a tax ID.

Joint-Stock Company – Open and Closed

This is a form of organization where investors or shareholders with a common purpose provide financing to the company. 

Open Joint-Stock Company (OJSC) is public, which means there is no limit on the number of shareholders. The entity is allowed to offer shares to the public through open subscriptions or the stock exchange.

A closed Joint-Stock Company (CJSC), on the other hand, is private, meaning company shares are not publicly listed. It can have no more than 49 shareholders. 

A Joint Stock Company can also be set up by one person. In this case, the person would be the sole shareholder, owning all the shares of the company.

Business Partnership 

A partnership involves two or more people. Two types exist: full partnership and limited partnership. In a full partnership, partners co-own the company, sharing equal decision rights. In a limited partnership, one is a general partner managing, while the other is limited, participating but not deciding.

Branches and Representative Offices 

Global companies operate in Armenia, and foreign ones can open branches or representative offices. These offices conduct business for the parent entity, but it's crucial to know they aren't seen as independent legal entities.

The difference between a branch and a representative office is that a branch may perform commercial activities, while a representative office has limited functions and can’t engage in profit-generating activities.

Paying Taxes

Tax matters in Armenia are overseen by the unified tax system. Companies face varied tax regulations based on their structure and specialties. Special tax regimes, government aid programs, and tax-free benefits are available for small companies, IT startups, and those in free economic zones. 

Entities with a permanent establishment (PE) are liable for corporate income tax (CIT), and for tax residents, their worldwide income is taxable. The standard CIT (Corporate Tax Rate) is 18, and VAT (Value Added Tax) is 20%. 

The tax system in Armenia is being reformed constantly to support businesses and ensure efficient economic growth. 

Business Licensing 

In Armenia, licensing activities are regulated by the Law on Licensing. Specific permits may be required for various sectors.

The list includes: 

• healthcare

• banking and finance 

• education 

• security 

• trade sector 

• energy 

Licenses can be issued through simple and compound procedures. A simple license shall be issued after three days upon submission of the application without the decision of the licensing commission. 

A compound license shall be issued after 30 days upon the application submission based on the conclusions of licensing commissions.

Employment Լegislation 

When hiring, grasp local employment laws in Armenia. The Labor Code governs work relations, and employers must furnish a written employment statement. Contracts adhere to labor laws, covering aspects like working hours, minimum wage, employee tax, health and safety policies, annual leave, and employer liability insurance. Contracts can be for a defined or indefinite period.

Foreign citizens in Armenia work under similar regulations on receipt of relevant visas and permits.