Getting an Armenian LLC Ready for Investors: Charter, Cap Table, IP and Governance Checklist

An Armenian LLC is ready for investment when its charter admits new participants, its State Register entries match the cap table, the company owns its IP under written assignments, and every approval the LLC Law requires is in place, from the unanimous decision of all participants for a convertible loan to an independent appraisal for any in-kind contribution above AMD 500,000 (about USD 1,384 at the house rate of AMD 361.36 per USD, CBA rate of 19 October 2026). Each of these can stop a closing or leave the investor’s stake unregistered.

What investors check first in an Armenian LLC

Due diligence on an Armenian LLC starts with three documents compared side by side: the registered charter, the State Register extract, and the founders’ own capitalisation table. Any difference between them is a closing condition. The Court of Cassation has held that a change of LLC membership takes legal effect only from state registration (case VD/0602/05/16, 22 March 2019), so an unregistered transfer leaves the buyer outside the company whatever the contract says.

Charter amendments bind third parties only once they are state-registered, or notified where the law provides for notification (LLC Law Art. 10(4)). A signed investment agreement does not substitute for the registered charter.

Two structural limits also matter early. An Armenian LLC may have no more than 49 participants, and there is no statutory minimum charter capital, although some regulated sectors set their own. A round that would take the company past 49 participants needs a different vehicle, usually a joint stock company.

Charter review: the provisions investors ask about

LLC Law Art. 10(2) lists what every charter must contain: the company name, registered office, the amount of charter capital, the size of each participant’s interest, and identifying details for each participant. Everything else, including management bodies, decision procedures, withdrawal procedure and transfer procedure, is optional and must not contradict the law. The optional clauses are where investors focus.

Third-party admission and transfers

A participant may sell to an outsider unless the charter provides otherwise (Art. 14(2)). Many founder charters prohibit outside transfers or bar capital increases through third-party contributions. Both clauses block an incoming investor. A ban on capital increases through third-party contributions also blocks any convertible loan from a lender who is not already a participant (Art. 33.1(6)).

A transfer ban carries a cost to the company. If the charter prevents a sale to an outsider and the other participants decline to buy, the company must acquire the interest at the participant’s request and pay for it under the withdrawal settlement rules (Art. 18(2), Art. 23(1)).

Pre-emption under Article 14

Existing participants hold a pre-emptive right to buy an interest offered to an outsider, in proportion to their holdings. The procedure runs in this order:

1. The seller notifies the company in writing of the price and other terms.
2. The company notifies the other participants by registered letter or personal delivery.
3. Participants have one month from notification to exercise the right, unless the charter or the participants’ agreement sets another period.
4. If they do not buy, the seller may sell to the outsider on the same terms, at a price no lower than the one offered to participants.

A participant whose right was breached, and the company where the charter gives it a pre-emptive right of its own, may ask a court to invalidate the sale within six months of learning, or of when they should have learned, of the breach (Art. 14(5)). The statutory right cannot be assigned (Art. 14(6)). The charter may shorten or lengthen the exercise period and may give the company a secondary right (Art. 14(4)). Whether a charter may remove participants’ pre-emption altogether is not settled by the text, and the enforceability of tag-along, drag-along and founder lock-up clauses against Art. 14 has no published authority we could identify.

The transfer contract itself needs only simple written form unless the Civil Code or the charter requires notarisation (Art. 15). At registration, the director confirms in writing that pre-emption was respected; a notarised transfer agreement does not need that confirmation.

Decision thresholds

Votes in an Armenian LLC are proportional to participation interests and thresholds are counted against all participants’ votes, including absent ones. The statutory floors are:

The charter may raise any two-thirds threshold. A higher threshold protects a minority investor only if its holding is large enough to block the vote. Investor-specific vetoes, weighted votes and class-style consent rights have no express basis in the LLC Law.

The exit right investors cannot remove

Every participant may leave the company at any time without the consent of the company or the other participants (LLC Law Arts. 12(e) and 21; Civil Code Art. 103), and the charter cannot limit this. On the exit application the interest passes to the company, which must pay its value within six months, calculated from the accounts for the last reporting period (Art. 23(1)). For an investor this is a liquidity risk on the company’s balance sheet. Founder lock-up language in a charter does not remove the statutory right, and whether a separate contractual undertaking not to withdraw can be enforced is untested.

Cap table and participant rights

An investor can enter an Armenian LLC in two ways, and they need different approvals. Buying an existing interest from a participant is a transfer under Arts. 14 and 15, subject to pre-emption. Subscribing new capital is a capital increase under Arts. 31 to 33, which needs a general-meeting decision and a charter amendment.

Capital increase routes

No increase is possible until the existing charter capital is fully paid (Art. 31(1)). Founders must pay their own contributions within one year of registration (Art. 30), so an unpaid founder contribution is the first thing to clear before a round. After that:

• From company property (Art. 32): two-thirds of all votes. Nominal values rise; percentages do not change.
• Additional contributions by all participants (Art. 33(1)): two-thirds of all votes. The decision sets the total and a uniform ratio. Contributions are due within one year of the decision or a shorter period; the general meeting approves the results and the charter amendments within one month after the contribution deadline, and the documents go to the State Register within one month after that approval.
• On one participant’s application, or admitting a third party (Art. 33(2)): unanimous decision. The third-party route is unavailable if the charter prohibits it. Whether the Art. 33(1) one-month filing deadline also applies to this route is not established by the text.
• Conversion of a convertible loan (Art. 33.1): its own procedure, set out below.

In-kind contributions and the AMD 500,000 appraisal trigger

Contributions may be money, securities, other property or rights capable of monetary valuation (Art. 29(1)). The general meeting must approve the valuation of any non-cash contribution unanimously. An independent appraiser is also required where the nominal value of the interest paid for in kind, or the nominal increase, exceeds 500 times the AMD 1,000 statutory calculation base, which is AMD 500,000 (about USD 1,384 at the house rate) (Art. 29(2); Minimum Monthly Wage Law Art. 3). The trigger is the nominal value of the interest paid for in kind, and a nominal value of exactly AMD 500,000 does not trigger it.

The general rule bars releasing a participant from the contribution obligation, including by set-off against a claim on the company. Since 12 June 2025 that bar does not apply to a qualifying convertible-loan conversion (Art. 30(2); Civil Code Art. 98(3)). It still applies to an ordinary loan, so a founder’s shareholder loan cannot simply be set off against a new capital subscription.

Registering the change

Participant changes and charter amendments are registered by the State Register Agency of Legal Entities at the Ministry of Justice. The state duty is AMD 20,000 for a participant change and AMD 10,000 for a charter amendment (about USD 55 and USD 28 at the same house rate), separate items under State Duty Law Art. 16, which the Hartak government portal lists together as AMD 30,000 (about USD 83). Registration takes two working days once every document is supplied.

For a transfer of an existing interest, Hartak lists an application with the new participant’s details, the legal basis for the transfer, the director’s written pre-emption confirmation, proof of duty payment, and authenticated Armenian translations of documents for a foreign individual or company buyer. Updated beneficial-owner information must be declared no later than 40 days after the change becomes known. Hartak describes the service as in person; the State Register separately advertises an online participant-transfer service for Armenian-citizen individuals, and which channel a foreign investor’s filing can use is not confirmed. The complete Registry checklist for an admission under Art. 33(2) or a loan conversion has not been published.

IP ownership and assignments into the company

Investors want the code, brand and inventions owned by the LLC itself. Under Armenian copyright law, works created by an employee within their job duties generally vest in the employer, while works created by contractors, founders acting before incorporation, or a related foreign company stay with their author until a written assignment transfers them. A written assignment in present-tense wording (“hereby assigns”) is the standard fix; notarisation is not mandatory. Employee inventions follow separate rules in the Patent Law.

Founders who contribute IP to the company as capital are making an in-kind contribution, so the unanimity and AMD 500,000 appraisal rules above apply. The interaction between IP assignments and employment contracts is covered in our guide to employee equity plans in Armenia.

Governance: general meeting, director, board and revision commission

The general meeting of participants is the supreme body. Its exclusive powers, which include charter amendments, capital changes, forming and removing the executive body, reorganisation and liquidation (Art. 36), cannot be handed to a board or director except where the law allows. The executive body (the director) runs day-to-day business, is elected by the general meeting, and need not be a participant. For a founder who will run the company from abroad, see our guide to appointing an Armenian LLC manager under Article 44.

• Board: optional at any number of participants. The charter may create one and define its powers (Art. 35(2)). An investor who wants a board seat needs the charter amended to create the board first.
• Revision commission: mandatory above 20 participants. At 20 or fewer, the charter may provide that none is formed (Art. 35(6)); without that clause, a small company is not automatically exempt. Board and executive-body members cannot sit on it (Art. 35(7)), and the charter may let an independent auditor perform its functions.

An optional board does not acquire the general meeting’s statutory powers. A clause giving the board unrestricted power to appoint and remove the director needs a specific legal basis, which the law does not clearly supply.

Convertible loans under Civil Code Art. 886.2 and LLC Law Art. 33.1

Since 12 June 2025 an Armenian LLC or JSC may borrow under a convertible loan: the agreement may require the company to issue participation interests or shares in place of repaying all or part of the principal or interest (Civil Code Art. 886.2, inserted by Law HO-114-N). The LLC procedure sits in Art. 33.1 of the LLC Law, inserted by Law HO-115-N. Both laws apply only to agreements concluded after 12 June 2025. Our earlier article on Armenia’s convertible-loan reform covers the Civil Code side; this section covers what the LLC must do.

Signing the term sheet into a loan

1. Check the charter does not prohibit capital increases through third-party contributions if the lender is not already a participant (Art. 33.1(6)).
2. Check the existing charter capital is fully paid (Art. 31(1)).
3. Write convertibility into the agreement when it is concluded. Civil Code Art. 886.2(2) fixes the conversion possibility at signing.
4. Obtain the unanimous decision of all participants of the company to enter into the agreement, including where it is a major transaction (Art. 33.1(1)). Any later amendment needs the same unanimity.
5. If a participant or director is on the lender side, the interested-party rules in Art. 47(2) also require unanimity of the participants with no interest in the deal. The law does not say how the two unanimity rules combine where every participant is interested; document compliance with both.

Conversion: application, decisions and the 60-day deadline

Conversion is triggered by the lender’s application to the company’s executive body within the contractual period. Where conversion depends on conditions, the application must show they occurred; the agreement may provide that the application is deemed received when the conditions occur (Art. 33.1(3)). The general meeting must then adopt the conversion decisions within 60 days of receipt or deemed receipt (Art. 33.1(4)):

• for a lender who is already a participant: increase the charter capital and the nominal value of the lender’s interest, and approve the results and charter amendments;
• for an outside lender: also admit the lender as a participant and grant the new interest.

The lender’s contribution is deemed fully paid when those decisions are adopted (Art. 33.1(5)); no second payment is made. Initial approval does not make conversion automatic: the decisions still have to be taken. Art. 33.1 sets no voting threshold for the conversion-stage decisions, and how it relates to the unanimity rule in Art. 33(2) and the general two-thirds rules for capital and charter changes is being confirmed. Approval at conversion should therefore be planned with every participant’s vote in view.

For a foreign-currency loan, the contribution is fixed in AMD at the Central Bank of Armenia average market rate on the day the conversion application is received or deemed received, and the agreement must provide that the loan is replaced by an AMD loan on that date (Civil Code Art. 886.2(6)). After the decisions, the charter amendment and the new participant still have to be registered: the lender becomes a participant on registration (Art. 11(7)). The 60-day period applies to the corporate decisions; no deadline for the Registry filing after a conversion has been confirmed.

Cap-table arithmetic on conversion

The conversion terms (valuation cap, discount, conversion price) are contractual. What changes in the register is nominal capital. Take an LLC with AMD 1,000,000 of charter capital held 60/40 by two founders. If the conversion decisions add AMD 250,000 of nominal value for the lender, charter capital becomes AMD 1,250,000; the lender holds 20%, and the founders fall to 48% and 32%. The amount of loan converted into that nominal value is whatever the agreement sets.

Existing loans and imported SAFEs

An ordinary loan cannot be assumed convertible by adding a conversion clause later, because Art. 886.2(2) requires convertibility at conclusion, and loans concluded before 12 June 2025 sit outside the regime. Whether replacing such a loan by novation with a new convertible loan satisfies Art. 886.2(2) has no published answer.

A US-style SAFE has an express statutory home only in a joint stock company: JSC Law Art. 38.2 regulates SAFE agreements, and concluding one needs the unanimous approval of all voting shareholders. The LLC Law has no equivalent. An imported SAFE signed by an LLC does not by itself produce equity conversion. It can be redrafted as an Art. 886.2 convertible loan that meets the Art. 33.1 approvals, or the company can convert to a JSC before the round.

Direct investment, foreign holdings and residence

Foreign investors can hold an Armenian LLC interest directly or through a foreign holding company; the approvals above are the same either way, and a foreign corporate participant adds authenticated, translated constitutional documents to every filing. From 1 November 2026, investment-based residence for a foreign participant turns on the applicant’s own investment of at least AMD 2,000,000 (about USD 5,535 at the house rate) in charter capital, or shares or securities of that value (Foreigners Law Art. 29.4(3)). The company’s total capital does not satisfy the test on its own, the implementing act has not been located, and whether a converted loan counts as that investment is unconfirmed. For the R&D employee tax incentive that often accompanies an investor round, see Armenia’s 10% R&D income tax rate.

One-page charter checklist

Items 3, 7 and 11 are the ones most likely to need a charter amendment and a registered general-meeting decision before closing; budget at least the two-working-day registration period plus the time to collect every participant’s vote. Company formation steps are on our business registration page, and buyer-side checks on our guide to buying a ready-made Armenian LLC.

Frequently asked questions

Last updated: 23 October 2026