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Financial Security Types in the Republic of Armenia

Securities are documents of set form, having obligatory requisites and confirming property rights, the exercise or transfer of which is possible only upon their presentation. When transferring securities all rights confirmed by it pass. The Civil Code of the Republic of Armenia distinguishes securities into a bearer security, a named security, and an ordered security. For the transfer to another person of the rights evidenced by bearer securities, handing the securities to this person is sufficient. The rights evidenced by named securities may be transferred by the procedure established for assignment of claims (session). Rights under order securities may be transferred to another person by making upon this security a transfer notation (an endorsement).  Below is the list of financial security types in the Republic of Armenia.


A bond is a security, confirming the right of its holder to receive the stated value of the bond or other property equivalents at the time period provided in it as well as a percent. The bond may be both bearers and named in the Republic of Armenia. Most frequently bonds are issued when the issuer wishes to concentrate a certain amount of the assets. In this case, he borrows money from certain persons in exchange for the obligation to pay the cost of the bond and percent from it in future, accumulating monetary assets in this way.


A cheque is a security containing an unconditionally written instruction of the cheque drawer to the bank to pay the sum indicated in it. The cheques are issued on the special blank of set form and contain requisites (name of a drawer (a person writing the cheque), bank account, his signature, name of the beneficiary (in case of the named cheque) and the sum of payment). Banks issue сheque books to their clients. A cheque book shall contain the bank account of its holder. 

Bill of exchange

A bill of exchange is a security confirming the unconditional obligations of exchange maker (a simple bill of exchange) or other names indicated in the bill of exchange (a transfer bill of exchange) to pay a certain sum to the holder of the bill of exchange upon the expiration of the period, indicated in it. Despite the low prevalence in the Republic of Armenia, the bill of exchange is quite useful. For example, when formalizing debt liabilities, the debtor, who at the same time is the exchange maker, issues the bill of exchange to the creditor in order to guarantee his debt liability. The holder of the bill of exchange may turn to the bank and transfer the sum of money to his account after the expiration of the period.


Naturally, stocks are also referred to securities in the Republic of Armenia. The stock is a security, which confirms the right of a stockholder to receive a part of the profit of the company in the form of dividends, take part in the management of the affairs of the company and receive the property remaining after the liquidation of the one.

The stocks are very important in civil turnover. Especially after the Republic of Armenia declared independence and established a free market economy. Nowadays stock issue shall be carried out in the order specially established upon the law, and stocks must be registered in stockholder register of the legal entity, which is maintained by the Central Depository of Armenia. The charter capitals of Open joint-stock companies (OJSC) and Close joint-stock companies (CJSC) shall be divided into stocks. In the Republic of Armenia, the difference between the stocks of OJSC and the stocks of CJSC implies that stocks of OJSC are on the open market and placed in the initial public offering (IPO).

The right to purchase the stocks of OJSC is given to an unlimited range of persons and in case of their alienation by one of the stockholders to the third person, other stockholders of the OJSC don’t enjoy the pre-emption right.

In case of CJSC the legislation of the RA establishes that after the founders of CJSC take a decision on the stock issue, stocks is to be placed in the initial offering for a limited range of persons, determined by the founders of the company. In this way, CJSC stock subscription is limited and if one of the stockholders wishes to sell them to the third person, other stockholders of the CJSC have the right of pre-emption. The procedure and timeframe for exercising the right of pre-emption are defined by the Company Charter and this timeframe shall not be less than 30 and more than 60 days after the stocks are offered for sale. Company Charter may also establish the prohibition for sale of the stocks to the third persons. The number of participants of CJSC cannot exceed 49 persons, otherwise, the company must be reorganized into an OJSC. 

The corporate legislation of the Republic of Armenia distinguishes ordinary and preferred stocks. All holders of ordinary stocks are fully legitimate stockholders because each of them has the right of vote on the General Shareholder Meeting, what allows them to take part in board elections, audit committee elections, determine the direction of activities of the joint-stock company and affirm annual report of the company. One stock provides one vote. That’s why the number of votes of each stockholder shall be determined by the number of his ordinary stocks.

First of all, dividends shall be distributed among the preferred stockholders. After it, dividends will be distributed among the ordinary stockholders. But preference stocks don’t provide stockholders with the right of vote on Stockholder General Meeting. Preference stockholders have the advantage of compensation for their damages when carrying out the procedure of bankruptcy.

Other types of securities

Securities also include the bill of landing, bank record, double warehouse certificate, simple warehouse certificate and social mission securities.

The bill of landing is a document for disposition of goods, confirming the right of its holder to dispose of the goods mentioned in the bill of landing and receive them after the transportation. The bill of landing may be bearer, order, or named.

The bank record (the bank book or bank certificate) is a security, confirming the sum of a contribution and the right of the contributor to receive the sum of the contribution and percent after the expiration of the certain term at the bank which issued bank record or in any branch of the bank. It may also be named or bearer.

The double warehouse certificate is an order security which confirms acceptance of the goods warehouse for storage. It consists of a warehouse certificate and a pledge certificate (warrant) which are separate securities. The goods shall be released to the holder of the warehouse certificate, who doesn’t have the pledge certificate but who has paid the sum of the debt under it not otherwise, than in exchange for the warehouse certificate and under condition of presenting the receipt for payment of the whole sum of the debt under the pledge certificate. The holder of the warehouse certificate and the pledge certificate has the right to receive the goods in parts.

The simple warehouse certificate may be presented as a bearer document and consists of the single document.

Social mission security is a new type of securities for the legal system of the Republic of Armenia. This type of securities has been established as a result of the pension reform in Armenia. Social mission securities shall be issued by the Accumulative Pension Fund. They are named securities and confirm the right of their holder only to receive the payments of the accumulative pension.