Establishing a business can feel like a daunting task with numerous aspects to consider. This process can be quite intricate: from selecting an ideal business location to navigating the detailed legal procedures of registering an entity in Armenia.

Recently, many foreign entrepreneurs have found it comfortable to register their companies in Armenia because there are no restrictions based on nationality, and one does not need much money to start his/her business. Plus, one does not have to get a residence permit in other to establish an entity in Armenia.

Below, 5 crucial legal aspects are presented concerning the establishment of a business in Armenia.

Selecting a name for your legal entity

To get approval for your business name, one must follow certain rules. The name should be unique, not already used by another business and should not cause any confusion in the public. Consider picking a simple name for your business to reach and attract more people and clients.

If your business name includes Armenian identification words like "Arm," "Armenia," or their translated versions, you need a special permission. There's a yearly state fee of 600,000 AMD for using one of these words in the firm name of the company. Forms for this should be filled out in Armenian, and either the founders or their authorized individuals are allowed to submit the request.

Choosing the legal type for your business

When deciding on the legal structure of your business in Armenia, various factors come into play, such as the number of the owners, tax implications, liability protection and paperwork requirements.

Let’s consider the following business types:

1. Limited Liability Company (LLC):

Ideal for small businesses due to simplified registration and limited personal liabilities. Both individuals and legal entities, whether residents or foreigners, can register an LLC with a maximum of 49 participants.

2. Private Entrepreneurship:

A fast and easy registration process for individuals considering operating as sole proprietors. Involves a single person owning and managing the business, assuming personal responsibility for any liabilities. Upon registration, the individual receives a tax ID.

3. Joint-Stock Company (Open and Closed):

Involves investors or shareholders collectively financing the company. Open Joint-Stock Company (OJSC) has no limit on the number of shareholders and can offer shares to the public. Closed Joint-Stock Company (CJSC) is private, with a maximum of 49 shareholders.

4. Branches and Representative Offices:

Foreign companies can establish branches or representative offices in Armenia to conduct business on behalf of the parent company.

Business Licensing Regulations

The licensing activities of Armenia are governed by the Law on Licensing, and various sectors may require specific permits.

These sectors encompass:

  • Healthcare
  • Banking and Finance
  • Education
  • Security
  • Trade
  • Energy

Employment Regulations

The next step during this journey is the employment process. In Armenia, it is the Labor Code which governs labor relationships. The relationship between the Employee and the Employer starts with signing the Employment Contract. All the essential terms should be included in the Employment Contract, such as working hours, annual leave, wage, etc. Employment contracts are mostly concluded for indefinite periods, and an Employment contract by definite period is signed in some special cases.

Similar regulations apply for foreign citizens working in Armenia, contingent upon the acquisition of pertinent visas and permits.

Handling the taxes

The Armenian tax system is various and depends on the business operation area and activities of each company. The taxes should be calculated and paid accurately to avoid administrative fines.

In addition to the elements emphasized in this article, the process of business planning encompasses various dimensions, including several vital factors. Beyond the details already mentioned, it is essential to deliberate on additional considerations. These encompass setting up a bank account, choosing a legal address, registering trademarks, and evaluating potential adaptations to the corporate structure customized to suit the unique characteristics of each business scenario.

With KPMG Law as your trusted advisor, you can navigate through the complexities of the company registration procedure with confidence. Contact to our specialists for accurate legal consultation.