IMI (ARMENIA): HOW TO ESTABLISH AN OFFICE IN

UNCLAS SECTION 01 OF 05 YEREVAN 000189 SIPDIS COMMERCE FOR 3150/PBRADLEY/BSMITH COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE EMBASSIES - PLEASE PASS FCS DEPT FOR EUR/CACEN, EB/CBA ANKARA ALSO FOR CFC/ SNYDER/BALLINGER PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO E.O. 12958: N/A TAGS: KTDB BBSR BEXP BTIO AM SUBJECT: IMI (ARMENIA): HOW TO ESTABLISH AN OFFICE IN ARMENIA -------------- SUMMARY -------------- ¶1. This cable explains the process of opening a business in Armenia. It describes the varieties of corporate structures under Armenian law, the process of establishing and registering companies with foreign participation, and the practical aspects of renting office space, hiring personnel, and obtaining government licenses. It also provides key contacts and useful web resources. End Summary. -------------- LEGAL FORMS OF BUSINESSES -------------- ¶2. Foreign investors may choose from a range of legal entities through which to do business in Armenia. Foreign investors can establish a legal company under Armenian law, open a branch or representative office of a company established under foreign law, or acquire shares in an existing business. ¶3. The Civil Code of the Republic of Armenia, provides for the following types of legal entities: -- Sole proprietorship -- Limited Liability Company -- Joint-stock company -- General partnership -- Limited partnership -- Commercial cooperative ¶4. Most small and medium-sized businesses in Armenia are sole proprietorships, limited liability companies or closed joint-stock companies. The majority of foreign investors register limited liability companies and joint-stock companies. ¶5. According to the Armenian legislation, an enterprise or entrepreneur may not conduct business without a registration certificate from the State Registry. For this, the following documents must be provided: -- Application for the registration; -- The minutes of the meeting founding the company; -- In case one of the founders is also legal entity, a formal decision by that company to participate in the subsidiary company; -- In case one of the founders is foreign legal entity, the documents proving its judicial status, as well as its founding documents; -- Two copies of the company's charter; and -- Receipt for payment of state duties. ¶6. Enterprise registration also requires registration with the Intellectual Property Agency, the tax authorities, and the Social Security Fund. ¶7. Registration Procedures: Step 1. Pay (at any commercial bank) state duties for: a) Registering a legal entity; Fee: AMD 12,000 (approximately USD 24) b) Registering the company name. Fee: AMD 5,000 (approximately USD 10) Step 2. Register company name at the Intellectual Property Agency by submitting an application to State Registry. This should take about 2 days. Step 3. Translate and notarize the founders' documents. Prepare and sign the incorporation documents. Step 4. Open a temporary bank account. The bank will give you a verification document that you should include in your registration packet. Depending upon the type of the company, the following amounts should be deposited as the charter capital: -- Limited Liability Company - AMD 50,000 (approximately USD 100) -- Closed Joint-Stock Company - AMD 100,000 (approximately USD 200) -- Open Joint-Stock Company - AMD 1,000,000 (approximately USD 1,000). Step 5. Submit the registration application to the regional branch of the State Registry. Registration can take up to five days, after which you can collect the registration certificate from the State Registry. Step 6. Register at Armenia's Tax Service to get a tax identification number (TIN). You will need to submit a copy of your company charter and identification documents. Registration normally takes 1-2 business days. There is no fee. Step 7. Register with Armenia's Social Security Fund. You must do this within 30 days of registering with the State Registry or you could face penalties. Be sure to take a copy of your registration certificate, your company charter, and your Tax Identification Number. There is no fee and you can usually get the social security registration certificate on the spot. Step 8. Obtain permission from the local police departments to apply for a company seal. Take your completed application form, Certificate of State Registration, Charter, Tax Identification Number, and bank receipt for payment of State Duty for requesting a seal. Permission should take one day. Fee: AMD 6,000 (approximately USD 12) plus banking fee. Step 9. Order your company seal at "Seal" JSC. Duration: 1-30 days depending on design and price. Fee: order completion within several hours AMD 21,500 (approximately USD 43); two-day service costs AMD 15,500 (approximately USD 31). -------------- LICENSING -------------- ¶8. Many businesses require state licenses. The Law on Licensing outlines two types of licensing procedures -- simple and compound. The Ministry of Finance and Economy provides simple license within 3 days of receiving application. If you need a compound license you must submit a request to the agency that oversees your activity. If your license is not rejected after 30 days, you can begin your business activity. -------------- LEGAL SERVICES -------------- ¶9. To simplify the process of registration and avoid complications, you may want to use the services of a local legal consulting firm. A list of consulting and law firms operating in Armenia is available on BISNIS website: www.bisnis.doc.gov/country/armenia.cfm -------------- USEFUL WEB RESOURCES -------------- ¶10. Foreign investors may obtain the information on different aspects of establishing a business in Armenia accessing the following local web resources available in English: Social Security Registration www.mss.am Investor Entry www.armeniaforeignministry Licensing www.aviation.am www.rcnm.am www.mfe.gov.am Licensing and Real Estate issues www.cadastre.am Privatization of land www.privatization.am Tax-related issues www.taxservice.am Customs www.customs.am Certification www.sarm.am -------------- OFFICE SPACE RENTAL -------------- ¶11. Office space is widely available in Yerevan. Businesses may choose from among the following types of rentals: -- Two or three storey renovated private houses, centrally located with air conditioning and several telephone lines. The monthly rental price for this kind of office space is between USD 10 to 15 per square meter. -- Office space available in former or current state institutions, buildings of the Academy of Sciences, or commercial space in ordinary apartment buildings rent for USD 5 to 12 per square meter. -- Specialized business centers and hotels lease modern office space with air conditioning, multiple telephone lines and Internet access, security systems, backup electric generators, parking lots, reception and secretarial support. The largest providers are the AUA SIPDIS Business Center, SIL Group, Grant Thornton Amyot, Hotel Marriott Armenia, Hotel Yerevan, and Ani Plaza. Such office spaces costs between USD 15-20 per square meter monthly. -------------- CONTACTS -------------- Real Estate Agencies AL Tandem Tel: (374-1) 589-936 E-mail: altandem@mail.com Website: www.altandem.am Madatyan and Sons Tel: (374-1) 544-666 Website: www.mrealty.nt.am Bars Tel: (374-1) 561-411 Fax: (374-1) 523-082 E-mail: info@bars.am Website: www.bars.am -------------- HIRING PERSONNEL -------------- ¶12. Companies may find local qualified staff via: -- Recruiting agencies operating in Yerevan. Their services include personnel search and consulting services on the labor market. -- Advertisements in local media; and -- Website of the local NGO Career Center: www.careercenter.am (post job announcements for free). Average salaries for qualified specialists, net USD/month: IT sector: Director, CEO, Head of branch 1,500 - 4,000 Programmer 300 - 900 System administrator 300 - 800 Accountant, HR specialists 400 - 1,200 Other sectors: Regional representative 800 - 1,500 Sales manager 600 - 800 Office manager 200 - 400 Secretary 100 - 150 SIPDIS -------------- CONTACTS -------------- Tanger Recruiting Agency 33 Moskovyan Street Suite 26 Yerevan-02 Tel: (374-1) 531-892 E-mail: tanger@netsys.am Website: www.tanger.am Accept 4 Byron Street Suite 5 Yerevan-09 Tel: (374-1) 584-945 E-mail: accept@port.am Career Center NGO 56 Komitas Avenue Yerevan-51 Tel: (374-1) 234-739 Fax: (374-1) 241-149 E-mail: mailbox@careercenter.am Website: www.careercenter.am -------------- OTHER USEFUL CONTACTS -------------- Ministry of Justice of Armenia 8 Khorhrdarani Street Yerevan-10 Tel: (374-1) 582-157 E-mail: justice@justice.am Website: www.justice.am State Registry Agency under the Ministry of Justice 15 Grigor Lusavorutch Street Yerevan-10 Tel: (374-1) 524-516 Small & Medium Entrepreneurship Development National Center (SME DNC) 5 Mher Mkrtchyan Street, Yerevan-10 Tel: (374-1) 541-648 Fax: (374-1) 541-642 E-mail: info@smednc.am Evans