[ armenia - taxation]
Land tax | Withholding of Tax
Establishing a Business
An enterprise, or an entrepreneur may do business only after receiving a state registration certificate. A legal entity shall be considered created from the time of its state registration.
The law on the State Register of Enterprises provides for two types of registration: initial, when a state registration card is first filed with the State Register, and current, when additions and amendments are made to the registration card.
Registration is carried out by a local division of the State Register, and may take up to 5 days for enterprises and entrepreneurs.
Types of Business Entities
- Joint-Stock Company (open and closed)
- Limited liability company
- Business partnership (general or limited)
Joint Stock Company (JSC)
This form is similar to a corporation in Europe and USA. A JSC is a legal entity whose charter capital is divided into a defined number of shares. The founders determine the quantity and value of the shares.
The liability of the founders is limited to the nominal value of the shares in their possession.
The Joint Stock Company law defines two types of JSCs - open, when the stocks are sold to the public, and closed, when the stocks are owned only by the founders.
The minimum capital requirement for an open JSC is 1,000 times the minimum monthly wage (as of November 2002, for the purpose of this law the minimum wage is deemed to be 1000 AMD). For closed JSCs, this is reduced to 100 times the minimum monthly wage. In certain industries, e.g. banking, higher minimum investment requirements may apply.
The founders of a JSC are obliged before registration of the company to fully pay up the charter capital. Upon the founding of a JSC all its shares must be distributed among the founders.
Limited Liability Company (LLC)
This form of organization is basically the same as a closed stock company with the only difference being that there are no shares. The LLC is a legal entity founded by one or several persons. The liability of its founders is limited to the initial investment. The founders of a LLC are obligated before registration of the company to fully pay up the charter capital. The profits are divided among founders according to the investment share ratio unless another ratio is stipulated in the charter. The LLC and founders are taxed separately.
This is an association of two or more people or organizations who run a profit-making business as owners. Business partnerships may be created in the form of a general or limited partnership.
A general partnership is a form of legal entity that represents an association of two or more individuals (general partners) who act as owners of the partnership. The partners jointly bear liability with all their property for the obligations of the partnership.
A limited partnership is a form of legal entity that represents an association of two or more individuals who act as owners or contributor participants of the partnership. It is different from a general partnership with respect to the liability obligations of its partners. A limited partnership has two types of partners – general and limited. General partners are liable for the obligations of the partnership with all their property. Limited partners do not participate in the conduct of the daily operations of the company, and are only liable to the extent of their contributions to the charter capital or working capital of the company.
An individual may be a general partner in only one partnership.
A business company is considered to be a daughter enterprise if another (or principal) business company or partnership, by virtue of dominant participation in the subsidiary’s charter capital or in accordance with a contract concluded between them, has the power of determining decisions taken by such a company. A subsidiary is not liable for the debts of the parent company.
A business company is a dependent company if another (the dominant or participant) partnership or company has more than 20% of the charter capital of a LLC or more than 20% of the voting shares of a JSC.
Representative Offices and Branches
Foreign companies may operate in Armenia without establishing a new entity, i.e. by registering in Armenia a representative office or a branch of a foreign legal entity. Representative offices and branches are not legal entities, and they act on the basis of statutes approved by their foreign legal entity.