Limited Liability Company establishment/incorporation in Armenia
Limited Liability Company /LLC or sometimes incorrectly referred to as LTD/ is the most common form of company registration- as to incorporate a company and start a business in Armenia.
Limited Liability Company- No responsibility for Shareholder/s/
Limited Liability Company is a company founded by one or several persons, the charter capital of which is divided into ownership shares of amounts determined by the charter. The participants in a limited liability company are not liable for its obligations; they bear the risk of losses connected with the activity of the company within the limits of the value of the contributions made by them.
The firm name of a limited liability company must contain the name of the company and also the words “limited liability company.”
Shareholder
The number of shareholders in a limited liability company must not exceed the limit established by the Charter on limited liability companies. Otherwise the company will be subject to transformation into a joint-stock company within a year.
A limited liability company may not have as a sole participant another business company consisting of one person.
Charter
The charter of a limited liability company must contain, besides the information listed in Paragraph 2 of Article 55 of the Civil Code of RA, terms on the amount of the charter capital of the company; on the amount of ownership shares of each of the shareholders; on the composition of and procedure for the making by them of contributions; on the liability of participants for violation of the duty to making contributions; on the composition and competence of the management bodies of the company and the procedure for their making decisions, including on questions decisions on which are taken unanimously or by a qualified majority of votes; and also other information provided by the statute on limited liability companies.
The Charter Capital of a Limited Liability Company
The charter capital of a limited liability company consists of the value of the contributions of its participants. There is no minimal amount of the Charter in Armenia.
If at the end of the second or each following financial year the value of the net assets of a limited liability company is less than the charter capital, the company has the duty to report the reduction of its charter capital and to register its reduction by the established procedure. If the value of these assets of the company is less than the minimum amount of charter capital determined by a statute, the company is subject to liquidation.
A reduction of the charter capital of a limited liability company is allowed only after notification of all of its creditors. The latter have the right in this case to demand early performance or termination of the respective obligations of the company and compensation by it for losses.
Management of a Limited Liability Company
The highest body of a limited liability company is the general meeting of its shareholders.
In a limited liability company an executive body (collegial and/or one-individual) shall be created that conducts the current guidance of its activity and reports to the general meeting of its participants.
Reorganization and Liquidation of a Limited Liability Company
A limited liability company may be voluntarily reorganized or liquidated by unanimous decision of its shareholders. A limited liability company has the right to transform itself into a joint-stock company.
Shareholder replacement
A Shareholder in a limited liability company has the right to sell or otherwise assign its ownership share in the charter capital of the company or part of it to one or several participants in the given company.
Alienation by a Shareholder in the company of its ownership share (or part of it) to third persons is allowed unless otherwise provided by the charter of the company.
The participants in the company enjoy a priority right to buy of the ownership share of a participant (or part of it) in proportion to the amounts of their ownership shares, unless the charter of the company or an agreement of its participants has provided another procedure for exercising this right. In case the Shareholder in the company do not use their priority right within one month from the day of notice or within another time period provided by the charter of the company or agreement of its Shareholders, the ownership share of the Shareholder may be alienated to a third person.
Levy on the Ownership Share
Levy of execution on the ownership share of a participant in the property of a limited liability company for its personal debts shall be allowed only in case of insufficiency for this participant of other property to cover its debts. The creditors of such a participant have the right to demand from the limited liability company payment of the value of the part of the property of the company corresponding to the ownership share of the debtor in the charter capital or the separation of this part of the property for the purpose of levying execution on it. The part of the property of the company subject to separation or its value shall be determined according to a balance sheet complied at the time of presentation of claims by creditors.
Exit of a shareholder
A participant in a limited liability company has the right at any time to exit from the company regardless of the consent of its other participants.Settlements Upon Exit of a shareholder from a Limited Liability Company
A participant who has exited from a limited liability company shall be paid the value of the part of the property corresponding to its ownership share in the charter capital unless otherwise provided by the charter of the company.
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