Redomiciliation of legal entities in the Republic of Armenia
At the end of 2016, the RA National Assembly amended the Civil Code and some other laws. Due to these changes in corporate law, the NA introduced the Instrument for redomiciliating entities. This story was borrowed because of its successful use in the legal systems of countries such as Austria, Belgium, Ireland, and Latvia. This instrument offers great opportunities for potential investors, by allowing to painlessly replace the “citizenship” of the company.
What is a redomiciliation? Its definition is enshrined in Article 59.1 of the Civil Code of RA – it is a legal entity moving from one jurisdiction to the jurisdiction of another country, thereby changing the personal law of the legal person. Redomiciliation primarily affects commercial organizations. Change of the jurisdiction can be applied to all non-profit organizations with the exception of political parties, religious and community organizations, state and municipal non-profit organizations and condominiums.
The law also stipulates that redomiciliation cannot be implemented by an organization that has selected one of the organizational-legal forms not provided for in the RA Civil Code, or has chosen the legal form of the transition which is impossible under the law of the RA. This means that not every organization can be placed under the jurisdiction of the Republic of Armenia and the company that wants to change the country of residence, should carefully review the opportunities available to it in the RA legislation.
In addition, the law states that the provisions of redomiciliation do not apply to organizations licensed by the Central Bank of the Republic of Armenia and under its supervision.
Note on two types of redomiciliation in the Republic of Armenia:
- Redomiciliation of a foreign legal entity in the Republic of Armenia, IE: the entry of foreign companies under the jurisdiction of the Republic of Armenia and its registration in the registering body.
- Redomiciliation of a legal entity registered in the State Register of Legal Entities of the Republic of Armenia, IE: transfer of Armenian companies to a foreign jurisdiction.
In this article, we will look at the legal regulation of jurisdiction change (redomiciliation) of a foreign organization to the jurisdiction of the Republic of Armenia.
Redomiciliation is only possible when it is not expressly prohibited by the charter of the organization. The initial stage of redomiciliation is carried out in accordance with the personal law of the company. Suppose that the supreme governing body of the Cyprian company decides to change the country of domicile to the Republic of Armenia. In this case, the process starts within the jurisdiction of the Republic of Cyprus and in accordance with its legislation. As a result of this process, the body performing registration of legal persons in the Republic of Cyprus decides to redomicile the company, which is the
basis for the submission of documents to the State Register of Legal Entities in the Ministry of Justice of the Republic of Armenia.
Registration in the Republic of Armenia will only be possible if there is a foreign company statute, as well as, the termination of registration as a legal entity, or registration information on redomiciliation in the register of legal entities of a foreign state.
The main advantage of this instrument is that following the completion of the change of domicile in the country the newly registered Armenian companies or organizations retain all rights and responsibilities, with a few exceptions provided for by law.
Redomiciliation in the Republic of Armenia starts with the filing of the prior application together with all the necessary information and documents to the registering authority. At the same time, the statement is necessary to choose the legal form of organization. If the application does not reveal the circumstances precluding redomiciliation, then the State Register responsible for the implementation of the pre-registration of a legal entity must be provided with the corresponding extract from the register of legal entities.
During, or after the pre-registration, the authorized body issues the legal entity wishing to redomicile a preliminary document of succession concerning redomiciliation in the RA. Following this, the legal entity is obliged to present to the register a document confirming the termination of legal registration of persons in the register of legal entities of a foreign state. This document must be certified in compliance with the requirements of the international legalization of documents by way of consular legalization, or an Apostille stamp, and translated into the Armenian language certified by a notary.
Upon completion of the actions referred to in the preceding paragraph, the register carries out the final registration of the foreign legal entity in the Republic of Armenia and provides a document of continuity, which is a recognition of redomiciliation of the organization in the Republic of Armenia.
An important caveat: as a general rule the organizations that were pre-registered in the Republic of Armenia and are occupied by one, or more types of licensed activity, are entitled to apply to the Licensing Authority for a license from the date of provisional registration.
Previously, the company that worked abroad had to liquidate, sell assets and create a new legal entity in the Republic of Armenia in order to fall under the jurisdiction of the Republic of Armenia. Nowadays the procedure is simplified considerably, which greatly reduces the waste of time and material resources.