The main type of entrepreneurial activity is the activity carried out through the formation of a legal entity. The concept of a legal entity is defined by Article 50 of the Civil Code of the Republic of Armenia, according to which, "A legal entity is considered to be an organization that has separated property as its own and is responsible for its obligations with that property, can acquire and exercise property and personal non-property rights in its own name, bear obligations, and appear in court as a plaintiff or defendant:
A legal entity must have an independent balance sheet.
A legal entity has founders and participants. In this regard, according to Article 50 of the Civil Code, "In connection with the participation in the formation of the property of a legal entity, its founders/participants have or do not have mandatory rights regarding that legal entity:
Among the legal entities whose founders/participants have mandatory rights are economic partnerships or companies:
Among the legal entities whose founders/participants do not have mandatory rights are public associations, foundations, and unions of legal entities.
The types of legal entities are also defined by the Civil Code. The list defined by Article 51 of the Code is exhaustive, and any legal entity to be created must correspond to one of the types provided for by the article:
According to Article 51 of the Code, "Legal entities can be organizations pursuing profit-making goals (commercial) or organizations not pursuing profit-making goals (non-commercial):
Legal entities that are commercial organizations can be established in the form of economic partnerships and companies:
Legal entities that are considered non-commercial organizations can be established in the form of public associations, foundations, unions of legal entities, as well as other forms provided by law:
The article distinguishes cooperatives, stating that depending on the nature of their activities, they can be commercial or non-commercial organizations:
According to the second paragraph of point 4 of the discussed article, "Non-commercial organizations can engage in entrepreneurial activities only if it serves the implementation of the goals for which they were created and corresponds to those goals. Non-commercial organizations have the right to create economic companies or be participants in them for the purpose of engaging in entrepreneurial activities:
This part of the article is controversial in that it defines the right to engage in entrepreneurial activities aimed at achieving its goals, which also implies the possibility of engaging in such activities without creating an economic company:
The second sentence defines the right to create economic companies or participate in them, rather than an obligation:
It does not follow from the article that an organization is obliged to create an economic company to engage in economic activities, but practice has gone in the direction that a non-commercial organization can only engage in economic activities through the creation of an economic company. It is precisely as a result of such an interpretation that it is stated in the law on "Public Organizations" that an NGO has the right to create commercial organizations or participate in them. From which it follows that an NGO cannot engage in commercial activities without creating such an organization. The same applies to trade unions. Although changes to the Tax Code are already being prepared.
The status of foundations is different. According to the law on "Foundations," a foundation also has the right to personally engage in commercial activities for the purpose of fulfilling its statutory objectives:
Representative Offices and Enterprises, Merging and Splitting of Legal Entities, Liquidation of a Legal Entity, Economic Companies and Partnerships, Limited Liability Company, Joint Stock Company, Subsidiary and Dependent Companies, Liquidation - Bankruptcy - Liquidation of Companies (Firms)