On June 24, 2016 Hayk Hovhannisyan obtained his PhD degree in Law defending his dissertation on “Problems of challenging proceedings of arbitral awards in the Republic of Armenia”.
Hayk Hovhannisyan took part in a seminar titled ”Internet+Commerce” in Moscow, during which issues like export of goods via Internet, creation of equal conditions for Russian and foreign companies during e-commerce in Russia, goods aggregators, self-regulation in various spheres of goods sale and Internet services were discussed.
The article provides general overview about transaction types and their approval procedure. As a result, the Company has to determine the transaction types and applicable statutory requirements in regard to its conclusion.
Transactions should be carried out in compliance with the appropriate law and regulations, in particular the RA Law on “ Joint Stock Companies” (hereafter “ the Law”), the Civil Code of the Republic of Armenia etc.
Therefore, before its conclusion the Company should check whether such transaction requires the Board or GSM approval (up to a certain value if applicable) or ratification.
The conclusion procedure of transactions will vary depending on the transactions’ course and value. In general, the Company’s transactions can be divided into two groups:
- Transactions exempted from the statutory requirement on Board or GSM approval, such as transactions conducted in ordinary business course or transactions the value of which is less than 25% of the Company’s total assets;
- Transactions which require the Board or GSM approval, such as major transactions or transactions encompassing conflict of interest
TRANSACTIONS CONDUCTED IN ORDINARY COURSE OF BUSINESS
Transactions (agreements) conducted in ordinary course of business are exempt from the statutory requirement on Board or GSM approval (Article 60 of the Law). Although the Law does not define “the ordinary course of business”, judicial precedent in hand may help to conclude that “the ordinary course of business” includes usual transactions or as per customs and practices of a business and of the company. International Standard on Auditing 550 specifies some examples of transactions falling outside from the ordinary course of business. In many cases, it may be apparent that a transaction is “in the ordinary course of business of the company” or not, however in some cases, the assessment of whether a transaction is in that course or not may be highly subjective, judgmental and will vary from case-to-case basis. The Armenian Court of Cassation  stated that “ordinary activity of the company” assumes realization of company’s statutory goals and development. Also, historical practice with a pattern of frequency, and common commercial practice for businesses are considered key factors by such companies for assessing whether the transaction is undertaken in ordinary course of business or not.
Major (large) transactions (including loan, mortgage, guarantee and etc.) –The following transactions shall be deemed major:
- transaction, or series of related transactions, other than in the ordinary course of business, involving the acquisition, alienation or possibility of alienation by a company property directly or indirectly, the value of which is from 25% to 50% of the total assets of the company prior to the conclusion of decision regarding such transaction. In this case a resolution to conclude a major transaction must be adopted unanimously by the Board. If the Board does not adopt the resolution to conclude major transaction, the resolution shall be submitted to the GSM (Article 61 section 1 of the Law).
- transaction, or series of related transactions, other than in the ordinary course of business, involving the acquisition, alienation or possibility of alienation by a company property directly or indirectly, the value of which exceeds 50% of the company’s total assets prior to the conclusion of decision regarding such transaction. In this case a resolution to conclude a major transaction must be adopted by 3/4 majority vote.
CONFLICT OF INTEREST TRANSACTIONS
An affiliated person of the company shall be deemed to be interested in the company’s transaction if such person:
- is a party to such transactions, or participates in such transaction as intermediary or representative;
- is affiliated with the transactions’ party, intermediary or representative. (Article 62 of the Law)
A resolution for such transactions must be adopted by the company’s Board by a majority of the votes cast by its members who are independent and not conflict of interest person with respect to the transaction (Article 64 of the Law).
In conclusion, the approval procedure of transaction will vary based on its value and course. Therefore, it is suggested to determine the transaction type for the appropriate statutory requirements’ applicability.
Author – Anna Margaryan
Associate at “Hovhannisyan and partners”
 The market value of the property, including property rights that are the subject of a major transaction shall be determined by the Board pursuant to Article 59 of the Law and paragraph 8.10 point 5 of the Charter.
 In determining whether a transaction is a major transaction, the Board may adjust the book value of the company’s assets to reflect inflation based on recommendations of the company’s auditor.
 See case number 3-1270 (VD)
Hovhannisyan and partners is currently looking to hire Legal Associates.
Candidates should meet the following criteria:
• LL.B and/or LL.M degree(s), with an emphasis on economic competition, regulatory and commercial laws;
• Knowledge of the laws and regulations of the Republic of Armenia.
• Legal education on a foreign legislation (legal education abroad is preferable; local legal education of foreign legislation is considered);
WORK EXPERIENCE AND SKILLS
• Relevant work experience in the field is preferable;
• Proficient in drafting and reviewing legal documents;
• High professional proficiency in Armenian, English and Russian;
• Experienced in working with foreign legislation and legal documents.
• Drafting, reviewing, and analyzing local and foreign legal documents, including contracts, legal memoranda, legal opinions;
• Communicating and working with local and foreign clients;
• Communicating and working with governmental agencies.
The Associate is expected to work in a team, taking initiative when necessary.
The position entails a long-term commitment.
Compensation is competitive, based on background and experience and includes professional career growth.
To be considered for the position, please fill in the form here.
Only shortlisted candidates will be contacted.
Recently Hayk Hovhannisyan’s new article titled “Grounds of challenging Arbitral awards and their classification” was published in the Digest of materials from 2015 session of postgraduates and applicants of the faculty of Law of Yerevan State University.
Short synopsis of the article: “Grounds of challenging arbitral awards are researched, analyzed and classified as well as related international treaties and model law. Separate attention is paid to number of questions regarding discretional right and duty of the court to apply to challenging grounds, legislative regulation of challenging of arbitral awards and uniform application of arbitral terminology.”
As of April 13, 2016 “Hovhannisyan and partners” has been ranked in the Legal 500 latest edition covering Europe, Middle East and Africa.
Amongst other firms ranked by the guide in Armenian legal market “Hovhannisyan and partners” has been portrayed as ‘weighty’, providing ‘punctual advice in a timely manner with the quality of services at a master level’. Managing partner Hayk Hovhannisyan has been ranked as a Recommended lawyer in the guide and described with qualities worded by clients such as ‘responsive, open, and loyal’.
Mariam Mkrtichyan took part in discussion of a report on promoting issues on women’s rights agenda organized by the PO “Association of young lawyers in Armenia” under the auspices of the Embassy of Germany in Armenia.
Details on the report: http://iravaban.net/102864.html#full-gallery
Hayk Hovhannisyan and Gagik Grigoryan’s application on constitutionality of the Court of Appeal’s interpretation on part 2 of Article 102 of the Civil Code of the RA has been accepted by the decision of the Constitutional Court of Armenia from December 16, 2015. Legal issues raised by this application before the Constitutional Court have significant meaning for third parties without independent claim in civil procedure in terms of legal opportunity to use legal defense by filing a claim regarding compensation of damages caused by the order for security of the claim, since while interpreting part 2 of Article 102 the Court of Appeal found that this norm provides possibility for compensation of damages caused by order for security of the claim only to the defendant. This is essential for third parties without independent claim from perspective of defending their right to property as well, since third parties without independent claim can also incur damages within civil procedure, in the result of applying an order for security of the claim
On January 28 the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, the monitoring body of the Council of Europe (Moneyval) published its report on Armenia.
The report analizes the fulfillment of international and European standards by the country related with money laundering and financing of terrorism and offers a number of recomendations on improving the counter-system in Armenia.