The concept of corporate criminal liability has developed and permeated into the legal regimes of countries around the world. After the adoption of the new Criminal Code, legal entities are already subject to criminal liability in Armenia.Here you can find some main points of criminal liability of legal entities under the new regulation:
- Without accounting for all the subtleties of application, under the new Armenian Criminal Code, legal entities are subject to criminal prosecution, if the crime is committed by a person who has the authority to affect the actions of a legal entity and who is acting on behalf of a legal entity and in its interests.
- The conviction of an individual does not exclude the criminal liability of a legal entity for the same crime.
- A legal entity is not subject to criminal liability if the shareholders have taken reasonably necessary means to prevent the crime.
- A legal entity is exempt from criminal liability:
- If it has eliminated the causes and conditions conducive to the commission of a crime (if any);
- Compensated for the damage caused and smoothed out other consequences of the alleged crime;
- Returned the property acquired as a result of the crime, including the income received.
- The new Code also provides measures that can be applied to legal entities, such as:
- A temporary suspension of the right to engage in a certain sort of activity
- Compulsory liquidation
- Restriction on business activity in Armenia.
The allocation of sufficient funds to support growth is one of the most crucial, if not the primary factors of success, for entrepreneurs and start-ups. One of the most essential forms of funding is venture capital, which enables young founders to transfer the financial risk to the venture capital firm if the business fails. In exchange, the founders give up a part of their equity so that they lose some of the possible returns on a potential exit of their venture.
- PE funds, including VC, are considered specialized funds in Armenia, meaning that at least 30% of their total assets are targeted to be invested in certain types of assets.
- PE funds may function as joint stock companies with fixed or variable capital. In the case of VC funds, a partnership legal structure is also an option.
- For investment funds the rate is 0.01% of net assets of the fund.
- The investment funds, including venture funds, are regulated by the Central Bank of Armenia.
- If the PE fund acts as a VC, according to the fund's rules or charter, not less than 50% of the fund's assets shall be invested in:
✔️Securities not allowed for sale in the regulated market and issued by organizations that are newly created; or
✔️Are in the early stage of their development, for the purpose of their growth, development; or
✔️Enabling their securities to be sold in the regulated market.
- Achievement in the Country category – Armenia as Winner law firm – Band: 1;
- Achievement in the Sub-Region category – Western Asia as Outstanding law firm – Band: 5;
- Achievement in the Continent category – Asia as Outstanding law firm – Band: 20.
THE OFFICE OF FOREIGN ASSETS CONTROL (OFAC) of the U.S. Department of the Treasury manages economic and commercial sanctions based on U.S. foreign policy and national security objectives and implements the necessary procedures. OFAC places individuals and organizations on a list called Specially Designated Nationals And Blocked Persons (SDN) for national security, foreign policy, and SDN sanctions policy purposes.
HOW CAN ONE BE DELISTED FROM THE OFAC SDN LIST?
Filing a Request for Administrative Reconsideration is typically the first step in starting the removal process with OFAC. This request is also called a Petition for Removal and it is likely the most significant filing the applicant will provide to OFAC in any case. The petition may include background facts, legal and policy arguments, and a calculated analysis of why the designated individual or company should be removed from the SDN List. After submitting this petition, OFAC may submit to the applicant a follow-up questionnaire. Whether they do this or not depends on the information they possess relevant to the information and arguments the applicant put in a petition.
EACH YEAR, THE OFAC REMOVES INDIVIDUALS AND ENTITIES FROM ITS SDN LISTS. Reasons for an OFAC delisting include the following arguments and evidence:
- There is an insufficient basis exists for the listing;
- The basis for the listing no longer exists (for example due to a corporate reorganization, the resignation of persons from positions in a blocked entity, or similar steps);
- The OFAC measures have led to a positive change in behavior.
REVIEW TURNAROUND TIME.
The processing time of a removal request to OFAC depends upon a range of factors including (i) whether OFAC needs additional information (ii) how timely and forthcoming the petitioner is in responding to OFAC’s requests and (iii) the facts and circumstances of the specific case.
Prospective applicants will have 11 different routes to qualifying for citizenship on the basis of an economic contribution in Armenia:
- A contribution of at least $150,000 to a foundation established to carry out activities in the fields of education or science;
- An investment of at least $150,000 in the shares of a commercial entity for a period of no fewer than 10 years;
- An investment of at least $150,000 in government bonds for a period of no fewer than 7 years;
- An investment of at least $150,000 in real estate “with a cadastral value approximated to the market value of the property” for a period of no fewer than 10 years.
- An investment of at least US$150,000 in any government-approved investment fund for a period of no fewer than 10 years.
- The establishment of a company in a high-tech or IT business with a capitalization of at least $1 million, “provided that the center of vital interests of the founder is located in the Republic of Armenia”;
- The establishment of a branch in Armenia for a foreign information technology company with a capitalization equal to $100 million or more that has at least 500 employees in Armenia;
- The establishment of a venture capital fund with assets amounting to at least $80 million in Armenia;
- An investment of $100,000 or more in a high-tech or venture capital fund;
- Have at least 20 years of work experience in “high and (or) information technology companies listed on the New York, Frankfurt or London stock exchanges”; or
- Having engaged in long-term activity, at least five years, in the international structures of the postal sector, as well as making financial, material, and technical investments in the field amounting to at least $250,000.
The new Gun Law will introduce developed gun control measures to regulate the manufacture, sale, transfer, possession, modification, or use of firearms. The new measures will set in place more stringent measures for first-time gun buyers, at the same time enabling long-time lawful gun owners with broader opportunities.
What is new?
- The law sets a minimum age requirement to 21 from the current 18 for individuals who want to buy a rifle.
- Handguns and automatic firearms will continue to be banned for civilians.
- Civilians will still be able to buy only semi-automatic rifles or shotguns.
- First-time buyers will be required to successfully pass a training and safety exam before receiving a license/certificate on acquiring a firearm for a 10-year term.
- Within 10 years, according to the certificate, a citizen can purchase a new gun, but with each new purchase, he/she will have to undergo a new medical examination.
- The previous law allowed civilians to own 3 rifles and 5 shotguns, but these limits will be changed to 10 unspecified units, meaning the buyer is free to own a total of 10 firearms of their choice.
- Civilians are allowed to open-carry shotguns and rifles only in designated areas, such as hunting locations.
The reasons investors want to remove founders can vary greatly, from loss of aspiration by management to buying the company for the technology knowing that they can bring in their own team. There also may be unscrupulous investors who remove founders to gain cheap equity. So, protecting yourself as a founder is essential when deciding to take a venture capital investment. Here are some preventive measures from the founder's perspective.
Retain control of at least Series B. Your investors may block a lucrative sale. The founders who had control of the board on average received more during any sale or takeover․ Having seats on the board and non-affiliated with VC independent directors is vital for strategic protection.
Drag right. As time goes on and as further investment rounds close, you may find your shareholding in the company diluted which can have an effect on your ability to influence decisions at the shareholder level. However, if you are likely to remain as the majority shareholder for a period post-investment, you should ensure that a "drag right" is included in the articles. If an offer is made to buy the company by a third-party purchaser, a drag right will allow the majority shareholder to compel the remaining shareholders to sell their shares to the purchaser, on the same terms as would have been offered to him.
Leaver provisions. In a funding scenario, the principal purpose of leaving provisions is to put the equity of the founders at risk if they leave the company, or if the company doesn't perform as forecast during the pitch to investors. Because investors have established their valuation and invested based on the founders' commitment to the business, it's deemed fair that the founders lose some of their equity if they bail early. Were you to exit the company for any reason, and provided you've been diligent enough, you will not be required to give up your own shares. Certainly not straight away in any event. It's entirely possible that investors will expect you to stay active in the company for a pre-agreed timescale, allowing a certain portion of the shares to vest each year.
Restrictive covenants. Likely, post-investment, you will be required to have a service agreement in place with the company, if you haven't already got one. Included in your service agreement will be a number of restrictive covenants which will apply to you both during your employment and for a certain period of time after you cease to be employed. These restrictive covenants typically restrict you from working with or being involved in another business which competes with the startup and from poaching clients or employees. While it is entirely usual for an investor to require these terms to be included, as a founder, you will obviously want to ensure that they are limited in terms of time, location, and business sector, so that you are able to work in another business if you leave or are forced to leave earlier than you have anticipated.
Note, that Armenian law does not offer a wide variety of adaptable safeguards for the founder's rights by default. The relevant special agreements should be signed to cover those gaps.
We are pleased to announce that Redbridge recognized by IFLR1000 as "Notable Firm" in Financial and Corporate Practice for Armenia according to 2022 results. The IFLR1000 – The Guide to the World's Leading Financial Law Firms – has been a leading independent global guide to the world's financial and corporate law firms since 1990, covering 120 jurisdictions around the world.