Prepare Your Armenian Company for Investor Due Diligence: A Data-Room Checklist

An investor’s lawyers will test six areas of an Armenian company: who owns it, whether its decisions were validly approved, whether it owns its IP, what its key contracts allow, whether its employment records are in order, and whether its accounts match its tax filings. For an LLC, they start by checking whether the participants recorded in the State Register match every transfer, contribution and charter amendment since formation, because under the LLC Law a participant’s status arises only on registration.

The legal points below are drawn from the official consolidated texts on arlis.am, read in October 2026.

What investor due diligence actually tests

Ownership and the cap table

For an LLC, participant status takes effect when the person is registered as a participant (LLC Law HO-252, Article 11(7)). The State Register of Legal Entities records LLC participants but does not keep shareholder registers for joint-stock companies. An investor will therefore compare the current State Register extract with your charter, formation and contribution records, and every later transfer, inheritance or capital increase. A privately kept spreadsheet of who owns what is not the statutory record.

The Court of Cassation has applied the same rule in a dispute over LLC interests: the acquirer became a participant on state registration of the change, and the date of the signed transfer agreement did not settle it. A signed but unregistered transfer is therefore an ownership gap an investor will flag.

For a JSC, the share register is generally kept by an authorised specialised registrar, with a Central Depository exception. The registrar’s extract confirms the recorded holding but is not itself a security. Reconcile nominee accounts with the underlying holders, and check share classes and votes per class against the charter.

Pledges over LLC interests are registered in the movable-property security register, so a company extract alone does not show whether a participant’s interest is encumbered. Search the pledge register as well.

Corporate approvals

Investors look for two kinds of approval: the approval of the investment itself, and the approvals behind the company’s past transactions.

For the investment, the route matters:

• New investor subscribing through a capital contribution (LLC): unanimous approval of the participants, and the charter must not prohibit contributions from third parties (LLC Law Article 33(2)).
• Additional contributions by existing participants (LLC): at least two-thirds of all participant votes under the general procedure.
• Ordinary charter amendments, including a change in capital (LLC): at least two-thirds of all votes, unless the charter sets a higher threshold.
• Valuing a non-cash contribution (LLC): unanimity.
• Investor buying an existing participant’s interest: the transfer and pre-emption rules below apply instead of the subscription rules.

For past transactions, the LLC Law treats a transaction, or a series of connected transactions, worth more than 25% of net assets at the date of the approval decision as a major transaction (Article 48). Ordinary-course transactions are excluded. General-meeting approval is the default; the charter may set a different threshold, give the board approval power within a band of 20% to 50% of net assets, or dispense with approval. A one-participant LLC whose participant also acts as executive is exempt. Interested-party transactions have their own approval rule and no general value floor.

For a JSC, a major transaction is one worth 50% or more of the book value of total assets (JSC Law HO-232, Article 60), approved by three-quarters of the voting shareholders taking part in the meeting unless the charter requires more. Smaller transactions are split between the executive body (up to 25%) and the board (25% to 50%) unless the charter provides otherwise. The statutory wording overlaps at the 25% and 50% boundaries, and no court ruling resolving it was found; for a transaction at exactly 50%, obtain general-meeting approval.

Minutes are part of the evidence. JSC general-meeting minutes must be drawn up within five days in at least two copies signed by the chair and secretary. An LLC enters general-meeting minutes in its minutes book. A director’s signature alone does not authorise an investment that needs a meeting decision.

Share transfer formalities

An LLC participant selling to an outsider must give the company written notice of the price and terms, which the company passes to the other participants. They have a pre-emption right for one month from notification unless the charter or a participants’ agreement sets another period. A later sale to the outsider must be on the notified terms and at no lower price. A participant whose pre-emption right was breached can sue to invalidate the transfer within six months of learning, or when they should have learned, of it (LLC Law Article 14(5)). The transfer agreement is in simple written form unless the Civil Code or the charter requires notarisation.

In an open JSC, shareholders may sell without the other shareholders’ consent. In a closed JSC, the other shareholders have a pre-emption right for a period the charter fixes between 30 and 60 days, followed by a company purchase stage before a sale to a third party.

Keep the filed registration package and the resulting register entry for every past transfer, along with any pre-emption notices and waivers.

Beneficial ownership

The company must declare changes in its beneficial owners immediately and no later than 40 days after it becomes aware of them, and confirm or update the declaration every year by 20 February, as at 31 December of the preceding year (Registration Law HO-169, Article 60.3). A beneficial owner must notify the company within 20 days of acquiring that status or of a relevant change. An investor will check that the declarations on file match the ownership chain; beneficial-ownership disclosure and legal title are separate records, and one does not prove the other.

Intellectual property

Economic rights in a work an employee creates in carrying out their job duties or an employer’s assignment belong to the employer unless their contract provides otherwise (Copyright Law HO-142-N, Article 33). The rule covers qualifying service works only, so keep the employment contract, the job-function annex and the project assignments that show the work was within the job.

Contractors are different. An agency or freelancer keeps the rights unless a written agreement transfers them. A paid invoice, an NDA or a one-line “deliverables belong to us” clause is weak evidence of title, and where the agency used its own staff or subcontractors, the investor will want the upstream chain too.

Check whether each document is an assignment or a licence. Under a copyright licence that names no territory, use is limited to Armenia, and a licence with no stated term defaults to five years. Moral rights, including the right to be named as author, cannot be transferred at all, so a foreign template clause “assigning” them has no effect.

Inventions follow the Patent Law (HO-108-N, Article 19). The employer is entitled to patent an invention made within an employee’s duties or assignment unless agreed otherwise. The employee must notify the employer in writing within one month of creating it; if the employer neither files nor notifies a decision to keep it as know-how within three months of that notice, the right to file passes to the employee. Investors will ask for the invention notices and the filing or know-how decisions, not only employment contracts. Our software IP ownership audit guide covers the code-specific steps.

Employment records

A paper employment contract must be signed in two copies, one handed to the employee within three days (Labor Code HO-124-N, Article 85(1)). The Labor Code also permits the state digital system and qualifying exchanges by post or electronic signature, so an investor should not insist on two wet-ink originals for every employee.

Use of the digital employment-contract system is optional before 1 July 2027 and generally mandatory from that date, with exceptions that include people working outside Armenia. Contracts concluded before 1 July 2027 that are still running, and hiring orders adopted before 1 July 2025, must be entered in the system by 30 June 2028 unless they are already there. Article 90 on employment record books has been repealed, but that does not permit destroying historic personnel records.

Investors also check time records, which the employer must keep accurately on a daily and weekly basis as the basis for payroll, and reconcile them to payroll and to the employees registered with the tax authority. See our employment compliance page for audit support.

A change in the people who own the company is not a ground for dismissal where there is no reduction in headcount or positions (Labor Code Article 126), and a collective agreement continues in force despite a change of participants or shareholders. A redundancy after the deal still needs its own lawful basis.

Key contracts

A share sale leaves the company as the same contracting party, so most contracts carry on unchanged. Express change-of-control clauses, however, can give a counterparty a right to terminate or require its consent or notice. Under the Civil Code, assigning a claim generally needs no debtor consent unless the law or the contract requires it, while transferring a debt generally needs the creditor’s consent; these matter in an asset sale. For each material contract, record the trigger, whether it requires consent or only notice, the deadline, the consequence and whether a waiver has been obtained.

Financial statements and tax

No statute prescribes an investor data room, and not every Armenian company must be audited because of its legal form. Under the Accounting Law, large and medium entities and public-interest entities have a mandatory audit; small entities have no general audit duty from their size alone. An entity is large if it exceeds two of: AMD 10 billion in assets (about USD 27.67 million at the house rate of AMD 361.36 per USD, CBA rate of 19 October 2026), AMD 20 billion in revenue (about USD 55.35 million) and 250 employees. Entities outside the small and micro exemptions generally publish annual statements with the audit opinion by 30 June of the following year.

A three-year lookback plus the current year is a practical starting point. Prepare:

• signed annual statements, notes and current-year management accounts;
• audit opinions, management letters and your responses, plus evidence of publication;
• trial balances, ledgers, receivables and payables ageing, and fixed-asset schedules;
• debt, shareholder-loan, guarantee and security schedules, related-party balances and distributions;
• filed tax returns, amendments and e-filing receipts, SRC account reconciliations and payment evidence;
• tax inspection acts, assessments, objections and appeals, and transfer-pricing records for controlled transactions;
• a reconciliation explaining the gap between accounting profit and taxable profit.

Audit working papers are protected by audit confidentiality and are not automatically available to an investor. A certificate of absence of tax liabilities shows no current arrears. It is no evidence that past transactions were correctly taxed. Profit distributions must come from profit actually generated and be made by general-meeting decision, no more often than quarterly for an LLC; the Court of Cassation has rejected advances against expected profit. Our Armenian tax services page covers tax review support.

Step 1: review each area and find the gaps

Work through the six areas above with one owner per area. For each document, record whether it exists, whether it is signed and complete, whether it matches the public record, and who can fix it. Common defects in Armenian companies include:

• a transfer signed but never registered, or registered without evidence that pre-emption was offered;
• a capital increase admitted by a two-thirds vote where unanimity was required;
• transactions above the major-transaction threshold with no approval or charter exception on file;
• software built by contractors with no written transfer of rights, or by founders before the company existed;
• employees working without a written contract, or contracts missing their function annex;
• beneficial-ownership declarations not updated after an earlier change of ownership;
• management accounts that do not reconcile to the filed tax returns.

Founder-created material deserves its own line. Code, designs or a brand developed before incorporation belong to the founder unless they were transferred to the company, and later employment does not cure the earlier gap.

Step 2: build a prioritised repair plan

Sort every gap into three groups: fix before the data room opens, fix as a condition of signing or closing, and disclose. Ownership and approval defects belong in the first group, because an investor cannot price a company whose title is uncertain. Typical first-group repairs are registering outstanding transfers, obtaining ratifying participant decisions, signing IP assignments with current and former contractors, and updating beneficial-ownership declarations.

For each item, the plan should name the missing document or defect, the person responsible, the cure and the evidence it will produce, and the target date. Repairs that depend on people outside the company, such as a departed contractor’s signature or a lender’s lien release, take longest and should start first.

Step 3: organise the data room

Mirror the investor’s checklist so their lawyers find each item where they expect it. A workable structure:

Keep a numbered index that maps every document to its folder, and log who accessed what. Data rooms contain personal data, so the Personal Data Protection Law applies to what you upload: disclose for a lawful purpose and in proportion to it, redact or aggregate employee data where an investor does not need names, and check the rules on cross-border transfer if the investor’s advisers sit abroad.

Approvals outside the company

Some deals need clearance from a regulator before they can close, and investors will ask early.

Competition. Acquisitions of equity, including crossing a 20% threshold, and of assets or control can be notifiable concentrations under the Law on Economic Competition. Under Competition Protection Commission Decision 553-N of 15 August 2025, filing thresholds turn on combined participant assets above AMD 4 billion (about USD 11.07 million at the house rate of AMD 361.36 per USD, CBA rate of 19 October 2026) or one participant’s assets above AMD 3 billion (about USD 8.30 million), or the same figures for revenue. Because the acquirer’s own size counts, a small target can still trigger a filing. Put any filing into the timetable and the closing conditions.

Regulated sectors. Some sectors require prior approval of a change in significant holdings; for banks, the Central Bank of Armenia must give prior permission. Check each licence for ownership and control restrictions, and do not assume the bank rules apply to every sector.

Foreign-owned companies. A foreign acquirer filing an LLC transfer must provide certified, Armenian-translated legal-status or identity documents. A foreign-owned subsidiary preparing for a group transaction should also confirm that its own local records show the current directors and signatories. If you are on the buyer side instead, see our business acquisition due diligence checklist, the Armenia M&A legal guide and our guide to buying a ready-made Armenian LLC. For corporate filings, see business registration in Armenia.

Frequently asked questions

Last updated: 23 October 2026