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In Armenia, corporate governance has evolved into a structured legal framework that blends specific corporate regulation with civil-law principles. Rather than acting as a purely theoretical framework, corporate governance directly shapes how companies are managed, how decisions are made, and how accountability is enforced.
At its basis, corporate governance in Armenia is not treated as an independent field distinct from civil law. Rather, governance rules derive from general contractual and organizational principles governing legal entities, complemented by corporate statutes regulating internal management structures. This integrated framework ensures that corporate relations remain fully enforceable within the broader civil-law system.
Legal framework
The primary legal basis for corporate governance is established by Chapter 5 of the Civil Code of the Republic of Armenia, which outlines the characteristics of legal entities, their governing bodies, and the distribution of rights and obligations among participants. The Code incorporates core values that serve as safeguards against arbitrary or detrimental corporate behaviour, such as good faith, reasonableness, and the prohibition of abuse of rights.
Specialized governance rules are further detailed in the Law of the Republic of Armenia on Joint-Stock Companies and the Law of the Republic of Armenia on Limited Liability Companies. These statutes regulate voting mechanisms, managerial authority, fiduciary duties, capital structure, and procedures for decision-making.
Together, these laws form a cohesive governance framework that balances flexibility in corporate organization with enforceable legal discipline.
Governance Bodies and Decision-Making Structure
Corporate entities operate through a hierarchy of governing bodies designed to separate ownership control from operational management.
The general meeting of shareholders (GMS) is the supreme decision-making authority, responsible for foundational matters such as charter amendments, appointment of executives, approval of annual results, and corporate restructuring. The meeting should be held annually, and if necessary, extraordinary meetings may be held more often.
Procedural reforms have expanded flexibility by recognizing remote participation and electronic voting, provided that transparency and verification standards are met. These changes are intended to facilitate efficient governance while preserving the integrity of shareholder decision-making.
The Board of Directors is the central governing body of a company that is responsible for overseeing management and protecting the interests of shareholders and other stakeholders. Its role combines strategic leadership, supervision, and accountability.
A company with more than 50 shareholders should have a BoD unless it is a regulated comp-any, such as a financial institution, for which having a BoD is a must.
The board of directors is also bound by fiduciary obligations, most notably the duty of care and the duty of loyalty. Directors are expected to fulfil these responsibilities by acting with diligence, making wise choices, avoiding conflicts of interest, and putting the company’s interests ahead of their own. Fiduciary standards strengthen confidence in corporate governance frameworks and provide a moral and legal basis for board conduct.
The Executive
The executive body is the managerial organ of a company responsible for conducting its day-to-day operations and implementing the decisions of GMD and BoD. Its primary responsibility is operational management, which includes planning business operations, assigning resources, managing staff, and making sure internal business procedures run smoothly.
In Armenia, this function is performed either by a single Chief Executive Officer (CEO) or a managment board.
Protection of Participant Right
Effective governance depends on enforceable participant rights. According to Armenian law, LLC members and shareholders have proportional voting rights, access to corporate information and legal remedies against unlawful decisions. Courts increasingly rely on general civil-law principles, including good faith and reasonableness, and, where appropriate, proportionality when evaluating corporate disputes, reflecting a judicial commitment to substantive fairness alongside formal compliance. A more predictable dispute-resolution environment and increased investor confidence have resulted from recent developments that have strengthened protections against decisions that unfairly disadvantage minority participants and clarified the processes for contesting invalid corporate acts.
Fiduciary Duties and Liability Standards
Fiduciary duties are imposed on controlling participants and corporate officers. Armenian legislation addresses conflicts of interest, misuse of corporate opportunities, and negligent management. Liability clauses have been strengthened to guarantee that governance lapses have significant repercussions, such as loss reimbursement and the reversal of damaging transactions.
By embedding these standards within the civil-law system, Armenian law ensures that corporate authority is exercised responsibly and remains subject to judicial oversight.
Digitalization of Corporate Procedures
Modern governance increasingly relies on digital infrastructure. Electronic documentation, digital communication with participants, and remote governance procedures are recognized by Armenian law as long as authenticity and accountability measures are taken. These changes facilitate accessibility and efficiency in business operations while lessening administrative burdens.
Digitalization also enhances transparency by creating verifiable audit trails and improving record management.
Practical Challenges and Ongoing Development
Despite legislative progress, effective corporate governance ultimately depends on consistent enforcement and corporate culture. Challenges remain in ensuring uniform compliance with managerial duties, improving governance literacy among participants, and strengthening internal controls. Nevertheless, Armenia’s recent reforms demonstrate a clear policy direction: governance rules are increasingly aligned with modern commercial expectations while remaining grounded in civil-law principles.
Conclusion
In Armenia Corporate governance represents a dynamic interaction between statutory regulation, civil-law doctrine, and evolving business practice. Legislative developments over the past several years have clarified managerial accountability, enhanced the protection of participants/shareholders/stockholders, modernized procedural rules, and strengthened transparency requirements. Governance bodies operate within a structured legal hierarchy that promotes balanced authority, enforceable obligations, and fair participation.
As Armenian corporate law continues to develop, its governance framework supports legal certainty, investor confidence, and sustainable corporate growth, which are considered essential components of a modern economic system.