Criminal liability of legal entities in Armenia

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:
    1. Fine
    2. A temporary suspension of the right to engage in a certain sort of activity
    3. Compulsory liquidation
    4. Restriction on business activity in Armenia.

FAQ – Venture Capital 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.

What type of fund is venture capital?
  • 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.
What is the legal structure?
  • 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.
What is the tax system?
  • For investment funds the rate is 0.01% of net assets of the fund.
Are venture funds regulated?
  • The investment funds, including venture funds, are regulated by the Central Bank of Armenia.
What are the factors determining venture funds?
  • 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.

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