LAW
OF THE REPUBLIC OF ARMENIA
Adopted by the National Assembly
on 17 December 1997
ON PRIVITISATION (TRANSFER TO PRIVATE OWNERSHIP) OF STATE PROPERTY
CHAPTER 1.
GENERAL PROVISIONS
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Article 1. |
Scope of the Law |
This Law shall regulate the relations pertaining to privatisation, i.e. transfer to private ownership (hereinafter referred to as “privatisation”) of the state property, including unfinished construction objects.
This Law shall not extend to the relations arising from alienation of state property to other States and international organisations that are related with the fulfilment of representation functions in the Republic of Armenia, as well as with the relations pertaining to alienation of state housing fund.
Relations pertaining to privatisation of the community-owned property, including unfinished construction objects, except for the case provided for by sub-point (h) of point 2 of Article 3 of this Law, shall not be regulated by this Law.
Privatisation of land shall be carried out as prescribed by the Land Code of the Republic of Armenia.
(Article 1 amended by HO-252 of 13 October 1998, amended and supplemented by HՕ-423-N of 8 October 2002)
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Article 2. |
Concepts used in the Law |
The concepts used in this Law shall have the following meaning:
State property: property owned by the State by the right of ownership, including shares of the companies, as well as separate elements of property owned by the State.
Unfinished construction object:
(a) an object with a design approved in a prescribed manner and with an allocated land area, where the construction and assembly works yet are not launched;
(b) an object where construction and assembly works were or are being carried out, and which is not operated or conserved in a prescribed manner;
(c) an object conserved in a prescribed manner.
A company with state participation: a company, where 50 and more per cent of shares thereof falls under the ownership of the State or community.
“Small” object: legal persons specialised in the fields of public food, household service of the population and trade or separated sub-divisions thereof. “Small” privatisation shall be considered as the privatisation of “small” objects, where the total area occupied thereby at the time of valuation does not exceed 200 square meters; “Small” privatisation shall be carried out “through direct sales of “small” objects to the members of labour collective of “small” objects, as prescribed by this Law.
The following persons shall be considered as members of labour collective of a company (enterprise) or “small” object at the time of adopting a decision as prescribed by this Law on privatisation of state property:
(a) employees of the given company (enterprise) or “small” object;
(b) persons possessing at least one year of employment service in the given company (enterprise) or “small” object during the last three years;
(c) persons having retired from the given company (enterprise) or “small” object during the last ten years and those with employment service therein for at least two consecutive years;
(d) persons with disabilities, possessing at least one year of continuous employment service in the given company (enterprise) or “small” object during the last ten years;
(e) persons possessing at least eight years of employment service, in total, in the given company (enterprise) or “small” object;
(f) the employees of superior bodies, dismissed as a result of privatisation of companies (enterprises) or “small” objects being restructured or liquidated, who possess at least one year of continuous employment service in the given body or possess at least two years of employment service during the last three years;
(g) (Sub-point repealed by HO-423-N of 8 October 2002)
(h) persons receiving pension in respect of losing the breadwinner having been employed in the given company (enterprise) or “small” object”;
(i) persons having been conscripted to military service form the given company (enterprise) or “small” object” in accordance with the Law of the Republic of Armenia “On conscription” and those undergoing military service, those possessing at least one year of employment service in the company (enterprise) or “small” object”, as well as persons elected in elective state bodies, local self-government bodies;
The citizens may, upon their discretion, obtain a status of a member of labour collective only in one company (enterprise) or “small” object.
(Part repealed by HO-423-N of 8 October 2002)
(Article 2 amended by HՕ-423-N of 8 October 2002, HO-355-N of 2 October 2024)
(Law HO-355-N of 2 October 2024 contains a transitional provision)
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Article 3. |
The concept of privatisation and the objects thereof |
1. Privatisation shall be deemed to be the transfer, to entities of privatisation, of ownership of state property or other property rights reserved to the State.
The decision on privatisation of state property (except for movable property assigned to state establishments) shall be adopted by the Government of the Republic of Armenia as prescribed by this Law.
Privatisation of movable property assigned to state establishments shall be carried out as prescribed by the Government of the Republic of Armenia.
2. The objects of privatisations shall be as follows:
(a) The shares of state joint stock companies, shares owned by the State in non-state companies and companies with state participation;
(b) property transferred to the State after liquidation of the company with state participation;
(c) state property, including immovable property, provided under the right to use;
(d) non-residential areas in residential buildings, that are not deemed as areas of common use and fall under state ownership;
(e) unfinished construction objects;
(f) other property rights reserved to the State;
(g) (Sub-point repealed by HO-423-N of 8 October 2002)
(h) non-residential areas in residential buildings, falling under community ownership, including those not deemed as areas of common use and transferred by the State to the community under discretionary right of ownership, if they are:
- provided to a legal or physical person for lease;
- provided to “small” objects for lease or for permanent use.
3. This Law shall not cover:
(a) alienation of property transferred, against debt, to the State under the right of ownership as a result of confiscation, declaring as ownerless, by inheritance or gifting, as well as the sales of collateral by the State;
(b) alienation of state property owned by legal persons recognised as insolvent upon court decision and undergoing liquidation;
(c) property being alienated from state reserve;
(d) forfeiture imposed, upon civil judgment of the court, on the collateral deemed as state property or the sales of collateral by the pledge, as prescribed by law;
(e) (Sub-point repealed by HO-423-N of 8 October 2002);
(f) (Sub-point repealed by HO-423-N of 8 October 2002);
(g) (Sub-point repealed by HO-423-N of 8 October 2002);
h) alienation of property assigned to bodies of legislative, executive, judiciary power, budgetary establishments and that owned by the Central Bank of the Republic of Armenia.
(Article 3 edited and supplemented by HO-252 of 13 October 1998, edited, supplemented and amended by HO-423-N of 8 October 2002)
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Article 4. |
Programme for state property privatisation |
The goals, preferences and the restrictions of the current stage of privatisation shall be defined by the programmes for state property privatisation of the Republic of Armenia (hereinafter referred to as “the Programme”).
The Government of the Republic of Armenia shall submit the Draft Programme at the session of the National Assembly of the Republic of Armenia, which precedes the implementation of the Programme. Prior to launching the implementation of the Programme, the National Assembly of the Republic of Armenia shall consider and approve the Programme, as well as the report — in the form laws — on performance of the Programme preceding the current programme. If after the expiry of the implementation period of the Programme no new programme is adopted, the previous programme shall remain in effect.
The Programme shall contain the following:
(a) the principles of selection of state property to be privatised;
(b) the branches and fields of economy (in certain cases also the companies and the unfinished construction objects) where no privatisation is foreseen in the following year;
(c) restrictions on competences of the ministries and state and local self-government bodies with regard to companies in the process of privatisation;
(d) the scale of deferred payments;
(e) the list of state joint stock companies, non-state companies and companies with state participation and unfinished construction objects, that are planned by the programme for privatisation, by indicating the ones being privatised in the form of free subscription for shares;
(e) decision on issuing or not issuing privatisation certificates for the given programme;
(f) validity period of privatisation certificate issued within the framework of the previous programmes;
(g) in case of issuing privatisation certificates for the given programme — the volume of the issuance thereof, information on the persons entitled to obtain them, the procedure for issuing, distributing and circulating them, the nominal value thereof and the amount of the fee for obtaining privatisation certificates;
2. Companies (enterprises) and “small” objects, included in the lists of previous programmes though not privatised, shall form a part of the new programme from the moment of entry into force of the latter.
(Article 4 amended by HՕ-423-N of 8 October 2002)
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Article 5. |
Entities of privatisation |
1. The entities of privatisation shall be legal and natural persons and in the cases prescribed by this Law — the members of the labour collective of the company or “small” object undergoing privatisation, and the communities.
2. Foreign persons shall be entitled to participate in privatisation on an equal footing with physical and legal persons of the Republic of Armenia.
3. State companies and companies with state participation may participate in privatisation of individual elements of state property if it is envisaged by the decision of the Government of the Republic of Armenia on privatisation of this property.
4. The former owners of the companies nationalised, confiscated or transferred to state ownership in any other form, the heirs or successors thereof, shall participate in privatisation of these enterprises on general grounds.
(Article 5 supplemented by HՕ-423-N of 8 October 2002)
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Article 6. |
Means of payment used for privatisation |
The currency of the Republic of Armenia, freely convertible foreign currency, privatisation certificates may be used as means of payment for privatisation of the state property.
The replacement of debts with shares, the convertible bonds, other property may also be used as means of payment if privatisation is carried out in the forms provided for by sub-points (c), (d) (except for the cases of privatisation by the members of labour collective and the lessee), (e) (except for the case of open distribution of shares), (f) and (g) of Article 14 of this Law, and is carried out for the purpose of privatisation — authorised upon the decision of the Government of the Republic of Armenia — of state property by use of the mentioned means.
Where privatisation is carried out in the form referred to in sub-point (e) of point one of Article 14 of this Law, the payments made by the participants of privatisation to the authorized capital of the company undergoing privatisation shall also be deemed as means used for the purpose of privatisation. Privatisation certificates may not be used as means of payment in the cases provided for by Article17, Article 18 (except for the cases where the state property is privatised to the members of labour collective or the lessee), Articles 19 and 21.
(Article 6 amended by HՕ-423-N of 8 October 2002)
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Article 7. |
Privatisation certificates |
Privatisation certificate shall be deemed to be the security issued by the Government of the Republic of Armenia. In the cases prescribed by this Law, the State shall be obliged to accept them as means of payment against alienation of the object to be privatised.
Privatisation certificates shall have nominal value which is denominated in the currency of the Republic of Armenia. Privatisation certificates, except for the cases provided for by Article 6 of this Law, shall be legitimate means of payment for acquisition of property, equity or share to be privatised and shall be mandatorily accepted in the whole territory of the Republic of Armenia only with the nominal value and within the validity period thereof.
Only citizens of the Republic of Armenia shall have the right to receive privatisation certificates. The repressed citizen of the Republic of Armenia shall have the right to receive one additional certificate. The rights of minors in the field of privatisation shall be exercised by the parents or legal representatives thereof.
The procedure, conditions for receiving privatisation certificates, the volume of issuance and the validity period thereof shall be prescribed by the Programme.
The fact of receiving privatisation certificates shall be certified by making relevant indication in the personal identification document of the citizen of the Republic of Armenia.
Privatisation certificates shall be distributed to the citizens of the Republic of Armenia without paying for the nominal value thereof. The amount of the fee for receiving privatisation certificates shall be established by the Programme based on the need for compensation of the costs of printing, distribution, circulation and exchange thereof.
Privatisation certificates shall be subject to free purchase and sales in any form not prohibited by the legislation of the Republic of Armenia, by the prices freely formed by the owners thereof or mediation organisations.
The number of privatisation certificates disposed by one person shall not be restricted.
The State shall not purchase back the privatisation certificates. The State, i.e. state organisations and companies (enterprises) may not participate in the purchase and sales of privatisation certificates.
In the course of any payment for privatisation, the value of the part being paid by privatisation certificates shall not be restricted.
Privatisation certificates having served as a means of payment for privatisation shall be taken out of circulation and repaid as prescribed by the Government of the Republic of Armenia.
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Article 8. |
Partial gratuitous privatisation of the property owned by state enterprises |
20 per cent of the balance value of the property owned by a state enterprise shall be gratuitously privatised to the employees of the state enterprise who possess at least one year of continuous employment service in the given enterprise at the time of adopting the decision thereon and have expressed willingness to participate in partial gratuitous privatisation.
The following persons either shall participate in partial gratuitous privatisation of the property owned by a state enterprise:
(a) persons having been called-up to fixed-term military service from the given enterprise who possess at least one year of continuous employment service in the given enterprise at the time of adopting the decision on partial gratuitous privatisation of the property owned by the enterprise;
(b) persons and volunteer fighters having left to military service from the enterprise after 1 January 1988, who have recognised as persons with disabilities due to the injuries or diseases;
(c) the heirs of a military servant, volunteer fighters having left for military service from the given enterprise and having fallen after 1 January 1988, as prescribed by the legislation.
(d) persons having left employment due to injury inflicted at work or occupational disease and, for this reason, having been recognised as persons with disability or receiving compensation from the given enterprise for the damage caused;
(e) persons having been transferred to the given enterprise as prescribed by legislation, who possess at least one year of continuous employment service at the time of adopting the decision on partial gratuitous privatisation of the property owned by the enterprise;
(f) staff employees of trade unions, being employed at state enterprise.
The following persons either may participate in partial gratuitous privatisation upon the decision of the General Meeting (meeting or conference of proxies) of shareholders of the joint stock company or participants of partial gratuitous privatisation:
(a) persons having lost the breadwinner — having been employed in the given enterprise — due to occupational injury and receiving compensation or pension from this enterprise;
(b) pensioners having retired from the given enterprise and possessing at least ten years of continuous employment service in the given enterprise before retiring.
The citizens may exercise the right to participate in partial gratuitous privatisation of the property owned by state enterprise in the case provided for by only one of the sub-points indicated and only in one enterprise. “Small” objects, as well as enterprises indicated in the list approved by the National Assembly of the Republic of Armenia upon submission of the Government of the Republic of Armenia may not be included in the list of enterprises subject to partial gratuitous privatisation.
The state enterprise shall confirm its willingness to undergo partial gratuitous privatisation upon the decision of the General Meeting (meeting or conference of proxies) of the labour collective thereof in the manner and within time limits prescribed by the Government of the Republic of Armenia.
Partial gratuitous privatisation shall be carried out prior to launching the implementation of the first programme for privatisation and denationalisation of state enterprises and unfinished construction objects of the Republic of Armenia unless a different time limit is established by law for certain enterprises.
(Article 8 amended by HO-355-N of 2 October 2024)
(Law HO-355-N of 2 October 2024 contains a transitional provision)
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Article 9. |
Investment privatisation of the state equity of joint stock companies formed in the result of partial gratuitous privatisation |
(Article 9 repealed on 1 July 1998 according to part 2 of Article 35 of this Law)
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Article 10. |
Right of the members of labour collectives of companies (enterprises) and objects of “small” privatisation to participate in privatisation |
1. Persons deemed as members of labour collective of the company (enterprise) undergoing privatisation or “small” object of privatisation shall have equal rights to acquire the property owned by this company (enterprise) or by “small” object of privatisation.
2. In case of free subscription for state shares, the members of labour collective shall, upon the decision of the General Meeting (meeting or conference of proxies) of the labour collective, be allocated certain part of the state equity but not more than 20 per cent, moreover — only in the case where more than 50 per cent of the members of the labour collective expressed willingness and subscribed for up to 20 per cent of the state equity of the company (enterprise).
3. In case of “small” privatisation, the labour collectives of these objects shall have preferential right for privatisation of these objects in the form of direct sales. This preference shall not apply to objects of “small” privatisation sold through auction or competition.
In case of “small” privatisation, the labour collectives having acquired these objects may benefit the scale of deferred payments.
The objects of “small” privatisation included in the composition of companies shall be privatised in the composition of these companies, if the labour collectives of these “small” objects submitted no application for privatisation prior to the entry into force of this Law.
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Article 11. |
Relations between the company and the labour collective thereof after privatisation |
Where more than 50 per cent of shares of the company is privatised, the Government of the Republic of Armenia may restrict, for a period of up to six months, the right of new owners (owner) of the privatised company or the authorised bodies thereof to change the minimum number of employees, except for the cases provided for by law. The new owner may, upon the consent of the members of labour collective, alter the restriction imposed on the minimum number of employees. In this case the dismissal from the work shall take place earlier than the established time limit and the owner shall be obliged to compensate the damage incurred by the employee having given his or her consent, by paying remuneration for the period not worked, according to the average salary of the given employee for the last one year.
The new owners of the privatised object or the authorised bodies thereof shall, within six months, conclude a collective or employment contracts with the labour collective. The employment contracts concluded earlier shall be effective until the conclusion of new contracts.
CHAPTER 2.
THE COMPETENCES OF THE STATE BODIES IN PRIVATISATION PROCESS
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Article 12. |
The competence of the Government of the Republic of Armenia in privatisation process |
The Government of the Republic of Armenia shall:
(a) adopt draft laws on privatisation programmes, on making amendments thereto, as prescribed by Article 4 of this Law, and submit them to the National Assembly of the Republic of Armenia;
(b) submit to the National Assembly of the Republic of Armenia annual reports on the progress of implementation of the programme for state property privatisation;
The report on implementation of the programme for state property privatisation shall contain the following:
- the level of fulfilment of goals specified in the Programme for the reporting period;
- description of actions implemented by the Government of the Republic of Armenia, information on privatisation of state property for the reporting period, including quantitative indicators regarding privatisation transactions as of the forms of privatisation and enterprises, means debited to the State Budget as a result of privatisation, as well as investments actually made as a result of privatisation and investment obligations.
The reporting period of the Programme shall include the calendar year. The report on implementation of the Programme of current year shall be submitted to the National Assembly of the Republic of Armenia by 1 May of the following year.
(c) apply restrictions on the companies undergoing privatisation;
(d) adopt decisions on privatisation of state property.
The decision of the Government of the Republic of Armenia on privatisation of state property must contain the form and time limits of privatisation, the means and time limits of payment, the content of preparation works, the preferences granted to the participants of privatisation, information on land parcels recommended for privatisation in the composition of the property to be privatised (the price, conditions on the provision for use, restrictions, etc.), etc.
Where buildings, constructions and other objects of property, recognised as historical and cultural property as prescribed by law or other legal acts, are included in the composition of the property to be privatised, the decision of the Government of the Republic of Armenia must contain restrictions on the use thereof, in particular those relating to the maintenance, external and internal transformation thereof;
(e) approve the procedure for valuation of state property to be privatised and the procedure for applying the valuation methods;
(f) approve the regulations on the forms of privatisation prescribed by this Law;
(g) issue privatisation certificates, ensure their distribution, as well as their acceptance as means of payment for privatisation, the exchange and repay thereof;
(h) approve the price for one square meter area of “small” objects, minimum and maximum value of correction coefficient for the calculation thereof.
(Article 12 supplemented by HՕ-423-N of 8 October 2002)
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Article 12.1. |
State administration body carrying out privatisation |
1. The State Property Management Committee (hereinafter referred to as “the Committee”) shall be the state administration body carrying out privatisation.
(Article 12.1 supplemented by HՕ-303-N of 23 March 2018)
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Article 13. |
The powers of the Committee |
(Title edited by HՕ-303-N of 23 March 2018)
1. The Committee shall:
(a) develop draft laws on privatisation programmes, on making amendments thereto, and submit them to relevant Minister;
(b) implement the preparation works for privatisation approved by the Government;
(c) conclude privatisation transactions in the name of the Government, supervise the fulfilment of contractual obligations, and in case of failure to fulfil them — take measures provided for by legislation of the Republic of Armenia and privatisation programme;
(d) accept applications for “small” privatisation and process them in a prescribed manner;
(e) if provided for by the decision of the Government, appoint a manager, involve experts for the purpose of carrying out the preparation works in the company;
(f) approve the correction coefficients for calculation of the value of area of “small” objects based on the price per one square meter approved by the Government and the minimum and maximum value of coefficients;
(g) in case of privatisation of companies with free subscription for shares or auction, calculate the initial price of state property to be privatised;
(h) supervise and analyse the privatisation process, by receiving information from state administration bodies and judicial authorities to that regard;
(i) discuss recommendations, applications, complaints on privatisation;
(j) carry out the privatisation, in a prescribed manner, of the developed land parcels falling under state ownership, in the course of privatisation of state property;
(k) involve experts for the purpose of carrying out the preparation works for privatisation, as well as involve scientific and research organisations and other organisations, as well as certain specialists in privatisation activities, including those for the purpose of expert examination;
(l) coordinate the activities on estimation of the value of state property to be privatised and alienated (valuation and re-valuation);
(m) exercise supervision over the fulfilment of obligations envisaged for the other party according to the contract signed thereby;
(n) organise the publication of information (including prospectuses) on state property to be privatised;
(o) carry out analysis of the processes of privatisation, disposition, as well as record-registration of state property and summarise recommendations thereon.
(Article 13 amended by HO-423-N of 8 October 2002, edited by HՕ-303-N of 23 March 2018)
CHAPTER 3.
THE PROCEDURE FOR PRIVATISATION OF STATE PROPERTY
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Article 14. |
The forms of privatisation of state property |
1. The privatisation of state property shall be carried out in the following main forms:
(a) free subscription for shares;
(b) auction;
(c) competition;
(d) direct sales;
(e) open or closed distribution of new shares;
(f) issuance of bonds with the right to convert the shares;
(g) sales of shares in specialised markets;
(h) transfer of the right of the State to use over the property owned by natural and legal persons and communities, in the cases provided for by this Law.
2. The decision on the form of privatisation of state property shall be adopted by the Government of the Republic of Armenia as prescribed by this Law.
Upon the decision of the Government of the Republic of Armenia both one of the forms of privatisation and the combination thereof may be applied.
The form of privatisation may be selected based on the following:
branch peculiarities;
the position held in foreign and domestic markets;
financial state of the enterprise;
appropriateness of privatisation of state property as an operating company;
the need for making the necessary investments.
(Article 14 amended and supplemented by HՕ-423-N of 8 October 2002)
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Article 15. |
Privatisation of state property through free subscription for shares |
1. Privatisation of state property through free subscription for shares shall be deemed to be full or partial sales of state equity in the given company through open auction of the number of shares.
Privatisation of state property through free subscription for shares shall be carried out through closed subscription for the members of the labour collective and through open subscription for other persons, moreover, the members of the collective may participate in open subscription on general grounds. In case of privatisation of state property through free subscription for shares, the initial price of the company to be privatised shall be defined by the decision of the Government of the Republic of Armenia, which shall include the initial number of shares and the nominal value of shares, which must be multiple of 100 drams but not more than twenty thousand drams. The time limits for publication of the prospectus, the obligations of the company at the time of valuation of the property, including arrears for taxes, duties and other mandatory fees, fines and penalties shall be also defined by the decision of the Government of the Republic of Armenia.
In case of privatisation of state property through free subscription for shares, the Government of the Republic of Armenia may define the minimum threshold for holding the subscription.
2. Privatisation of state property through free subscription for shares shall be carried out by the Committee from the tenth day following the publication of prospectus.
The Committee shall carry out the closed and open subscriptions in parallel. The subscription shall be carried out within thirty five days, where the closed subscription for the members of the labour collective shall be carried out within one month.
3. Where the number of persons willing to participate in closed subscription within the time limit prescribed for closed subscription does not exceed 50 per cent of the members of labour collective, the closed subscription shall not be carried out and the shares allocated to the collective for closed subscription shall be subject to sales through open subscription.
4. If the privatisation is deemed as having taken place, the number of shares allocated to the members of the labour collective shall be determined based on the proportion thereof, which shall be calculated by dividing the number of shares acquired through closed subscription by the number of shares defined by the decision of the Government of the Republic of Armenia.
Moreover, if:
(a) shares more than those defined by the decision of the Government of the Republic of Armenia were acquired through subscription, the number of shares allocated to the members of labour collective through closed subscription shall be added so that it corresponds to the calculated proportion. In this case, additional shares shall be allocated gratuitously;
(b) shares less than those defined by the decision of the Government of the Republic of Armenia were acquired through subscription, the number of shares allocated to the members of labour collective through closed subscription shall be reduced so that it corresponds to the calculated proportion. In this case, the payments made for the number of reduced shares shall be returned to the members of the labour collective, as prescribed by the Government of the Republic of Armenia, by means of the payment they were acquired.
5. If partial gratuitous privatisation took place according to Article 8 of this Law or investment privatisation of state equity took place according to Article 9 of this Law in the company to be privatised, the number of shares to be allocated to the persons having participated in partial gratuitous privatisation or investment privatisation of state equity, shall be calculated so that to maintain the ratio of the shares available prior to privatisation through free subscription for shares of the company against state equity.
6. The Committee shall be responsible for the data published in prospectus on privatisation through free subscription for shares.
7. (Point repealed by HO-423-N of 8 October 2002)
(Article 15 supplemented and amended by HO-423-N of 8 October 2002, amended by HՕ-303-N of 23 March 2018)
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Article 16. |
Privatisation of state property through auction |
1. In case of privatisation of state property through auction, the right of ownership of this property shall be granted to the participant of the auction who offered the highest price during the auction.
The sales of state property through auction shall be carried out in the case where the buyer is not required to comply with any condition.
The existence of only a single bid may not serve as a reason for terminating the auction without announcing the winner.
2. In case of privatisation of state property through auction, the Government of the Republic of Armenia shall define the types of auction: classic, Dutch dir., full or lot, the initial price of the property to be privatised and the time limits for holding the auction.
The obligations of the company to be privatised through auction at the time of adopting the decision, including arrears for taxes, duties and other mandatory fees, fines and penalties shall be also defined by the decision of the Government of the Republic of Armenia.
3. Privatisation of state property through auction shall be carried out by the Committee within the time limits established by the decision of the Government of the Republic of Armenia.
4. In case of privatisation of state property through auction, no other price restrictions apart from the initial price shall be applied.
5. (Point repealed by HO-423-N of 8 October 2002)
(Article 16 amended by HO-423-N of 8 October 2002, HO-303-N of 23 March 2018)
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Article 17. |
Privatisation of state property through competition |
(Title amended by HՕ-423-N of 8 October 2002)
The state property shall be deemed as privatised through competition, if the state property is privatised to a participant having submitted a bid meeting the priorly defined conditions to a maximum extent.
Upon the decision of the Government of the Republic of Armenia, the competition may be held through pre-qualification of participants.
Upon the decision of the Government of the Republic of Armenia, in order to determine the winner the following conditions may be set:
(a) the price;
(b) the size of investments;
(c) social safeguards;
(d) service delivery tariffs, where the state equity of a company performing activities licensed by law or other legal act, is privatised;
(e) the combination of conditions referred to in points (a) and (d) of this Article or part thereof, with pre-defined proportion;
(f) other conditions.
In case of privatisation of state property through competition, upon the decision of the Government of the Republic of Armenia a Competition Commission may be established, and the composition and competencies thereof may be defined.
The Competition Commission, and where the latter fails to be established — the Committee shall be entitled to run direct negotiations with competition bidders aimed at clarifying the competition bids, where it is provided for by the decision of the Government of the Republic of Armenia on privatisation of the state property through competition.
The competition shall be publicly announced at least one month prior to commencement of the competition, unless otherwise provided for by the decision of the Government of the Republic of Armenia.
The winner of the competition shall be the person whose bids meet the proposed requirements to a maximum extent.
With a view of successfully holding the completion, the Competition Commission, and where the latter fails to be established — the Committee shall be entitled to involve specialised organisations for preparation for and organisation of the competition.
The existence of only a single bid may not serve as a reason for terminating the competition without announcing the winner.
Where the competition does not take place within the established time limit due to the lack of bids or is terminated without determining the winner, the competition shall be declared as having not taken place.
(Article 17 amended and supplemented by HO-423-N of 8 October 2002, amended by HՕ-303-N of 23 March 2018)
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Article 18. |
Privatisation of state property through direct sales |
1. The state property shall be privatised through direct sales:
to the labour collective of the given organisation;
to the lessee of the given state property;
to the owner (owners) of non-state equity of the given company;
to the potential buyer of the given property, if it is priorly known.
2. The decision of the Government of the Republic of Armenia on privatisation of state property through direct sales must particularly contain the name of the buyer, the price for the state property to be privatised, the means used for payment, time limits for payment and the peculiarities of payment.
The bid submitted to the Committee by the collective may serve as a ground for privatisation — through direct sales — of state property included in the privatisation programme to the labour collective of the given company. The form of the bid, the procedure and time limits for submitting, considering and rejecting the bid shall be prescribed by the Government of the Republic of Armenia.
3. The General Meeting (meeting or conference of proxies) of the labour collective shall, following the adoption of the decision of the Government of the Republic of Armenia on privatisation of state property to the labour collective of the given company through direct sales, i.e. within time limits specified by this decision, carry out, as prescribed by this Law, the distribution of state property to be privatised, between the persons deemed as members of the labour collective, as well as shall select an initiative group vested with the right to represent the collective in the process of purchasing state equity.
The General Meeting (meeting or conference of proxies) of the labour collective may, by 3/4 majority of votes, establish for the members of the initiative group the size of their participation in the future company, as well as shall include persons not deemed as members of labour collective of the given company in the composition of the initiative group, the number whereof must not be more than three persons. Legal persons and enterprises without the status of a legal person may not be a member of the initiative group, unless otherwise provided for by the decision of the Government of the Republic of Armenia.
4. The lessees of state property shall have the preferential right for privatisation of this property, if:
this property does not form a part of the property owned by the companies included in privatisation programmes;
is not a leased area in administrative and public buildings and premises.
5. The bid submitted to the Committee shall serve as a ground for considering the issue of privatisation of state property to lessees. The form and the procedure for submitting the bid shall be prescribed by the Government of the Republic of Armenia.
6. The Committee shall consider the bid within two months. The written response on the official acceptance or rejection of the bid shall be forwarded to persons having submitted the bid.
The rejection of the bid shall be possible if:
(a) the person having submitted it may not act as a person obtaining the rights of ownership as a result of privatisation;
(b) restrictions on privatisation of the given property are provided for by law or other legal acts;
(c) the use of non-leased property owned by the lessor may become impossible as a result of privatisation.
The rejection of the bid for purchasing the leased property may be appealed against through judicial procedure.
7. Where the grounds prescribed by point 6 of this Article are missing, the Government of the Republic of Armenia shall, upon the submission of the Committee and within a period of two months, adopt a decision on privatisation of the leased property to the lessee through direct sales.
8. Privatisation of state property through direct sales shall be carried out by the Committee within the time limits prescribed by the decision of the Government of the Republic of Armenia.
9. (Point repealed by HO-423-N of 8 October 2002)
(Article 18 amended, supplemented and edited by HO-423-N of 8 October 2002, amended by HՕ-303-N of 23 March 2018)
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Article 19. |
Privatisation of state property by issuance of new shares and convertible bonds |
1. Privatisation of state property by issuance of new shares shall be carried out with the purpose of increasing the statutory fund of state joint stock companies and joint stock companies with state participation by the decision of the Government of the Republic of Armenia, which must particularly contain the subscription time limits, the volume of increase in the statutory fund, types of shares to be issued, nominal values, restrictions for participation.
Based on the mentioned decision and within the time limits prescribed thereby, state joint stock companies and joint stock companies with state participation shall adopt decisions on increasing the statutory fund as prescribed by law.
In case of distribution of the shares through free subscription, no restrictions for participation shall be imposed.
In case of distribution of shares through closed subscription, the members of labour collective, non-state shareholders of the given company, and in case of distribution through competition — only pre-qualified persons, may act as participants.
2. Privatisation of state property by issuance of convertible bonds of shares shall be carried out for the purpose of issuing bonds enabling to convert the shares of state joint stock companies and joint stock companies with state participation, upon the decision of the Government of the Republic of Armenia, which must particularly contain the distribution time limits and the volume, types of convertible bonds to be issued, nominal values and restrictions on participation.
Based on the mentioned decision and within the time limits prescribed thereby, state joint stock companies and joint stock companies with state participation shall adopt decisions on converting and distributing the convertible bonds as prescribed by law.
3. (Point repealed by HO-423-N of 8 October 2002)
(Article 19 amended by HՕ-423-N of 8 October 2002)
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Article 19.1. |
Privatisation of state property in specialised markets |
Privatisation of state property in specialised markets shall be carried out upon the decision of the Government of the Republic of Armenia in the form of sales of shares through the stock exchanges of the Republic of Armenia and (or) other countries according to the rules of exchange trade.
(Article 19.1 supplemented by HՕ-423-N of 8 October 2002)
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Article 20. |
Privatisation of state property in the form of transfer of the right to use the property |
1. In case of privatisation, by state companies and companies with state participation, of state equity as prescribed by this Law, the right to use the property owned thereby shall remain in effect after privatisation as well, unless otherwise provided for by the decision of the Government of the Republic of Armenia on privatisation.
2. The right of state companies and companies with state participation to extract natural resources, to use renewable natural resources or to provide services deemed as natural monopoly (water supply, sewage, energy supply, etc.) shall be privatised in full and without changes to the terms of use, along with privatisation of state equity of these companies, unless otherwise provided for by the decision of the Government of the Republic of Armenia.
3. Changes to the right to extract natural resources, to use renewable natural resources or to provide services deemed as natural monopoly, in particular, changes to the time limits, the amount of fee, the procedure for payment, compensation of costs and exclusive right to use which are provided for by contracts on the use of subsoil, provision of services deemed as natural monopoly and (or) those provided for by certificates (licences), may also be specified by the decision of the Government of the Republic of Armenia.
4. Where according to point 3 of this Article, the rights to extract natural resources, to use renewable natural resources or to provide services deemed as natural monopoly are transferred in part or fail to be transferred, the non-transferred rights may be privatised to other persons, including, to companies with state participation, in the forms of privatisation prescribed by this Law. Privatisation of property rights carried out according to this point needs not be included in privatisation programme.
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Article 21. |
Privatisation of property, deemed as state equity, of liquidated companies |
(Title edited by HՕ-423-N of 8 October 2002)
The property, deemed as state equity, of liquidated companies may be privatised in the forms prescribed by this Law, as separate elements of property, as well as through creating a new company based on this property or a part thereof.
(Article 21 edited, amended by HՕ-423-N of 8 October 2002)
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Article 22. |
Providing separate elements of the property owned by liquidated companies (enterprises) for lease |
The property owned by liquidated state companies may be provided for short-term or long-term lease.
The lessor of separate elements of state property shall be the Committee.
Where the state property is provided for lease through competition, the main condition for the competition shall be the lease payment and the lease period.
The lease payments for the lease of state property (without the costs made for provision of the property for lease) shall be transferred to the State Budget.
(Article 22 amended by HՕ-303-N of 23 March 2018)
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Article 23. |
Privatisation of unfinished construction objects |
1. The unfinished construction objects included in the composition of the property owned by state companies or companies with state participation to be privatised, except for unfinished residential buildings wherein the apartments are allocated in a prescribed manner, shall be privatised along with this property, if they were not split off after the preparation works.
2. Unfinished residential buildings wherein the apartments are allocated in a prescribed manner, shall be allocated to relevant communities under the right of ownership.
3. Unfinished construction objects not included in the composition of state companies or companies with state participation to be privatised, or those split off from the composition of these companies after the preparation works, shall be privatised upon the decision of the Government of the Republic of Armenia in any form prescribed by this Law.
4. The decision of the Government of the Republic of Armenia on privatisation of unfinished construction objects may provide for conditions for completing the construction with an approved design within certain time limits, changing the design or carrying out the construction with a new design, as well as other conditions, including also the condition for construction, exploitation and return of this object to the State under the right of ownership after certain time period.
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Article 24. |
Preparing state property for privatisation |
1. Preparing state property for privatisation shall be deemed to be a set of necessary actions preceding the privatisation.
The content, time limits and the bodies implementing the actions for preparing state property for privatisation shall be prescribed by the decision of the Government of the Republic of Armenia on privatisation of state property.
2. The preparation works may include the following:
(a) reorganisation of state enterprises to state joint stock companies;
(b) in case of privatisation of state equity of joint stock companies:
de-merger, split-off , as well as merger, consolidation of the company with other state companies;
conducting audit of financial and economic activities of the company;
restructuring the debt of the company;
developing an action plan of the company;
preparing for issuance of new bonds;
implementing actions aimed at getting familiarised, by the persons having expressed their willingness to participate in privatisation, with financial and economic activities of the company;
publishing information on the activities of the company;
assessing the assets and liabilities of the company;
evaluating the value of the shares.
For the purpose of organising preparation works, specialised organisations and experts may be invited where the decision of the Government of the Republic of Armenia so provides for.
Persons carrying out preparation works shall be accountable to the state authorised body.
3. The organisation having prepared the information, including declarations (prospectuses), data on the property to be privatised, which were published in the course of preparation works, shall bear the responsibility for them.
(Article 24 amended and supplemented by HՕ-423-N of 8 October 2002)
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Article 24.1. |
Privatisation of state property |
1. Decision on privatisation of state property shall be adopted by the Government of the Republic of Armenia.
2. If the privatisation of state property fails to take place, the Government of the Republic of Armenia shall, within 60 days, adopt a new decision on privatisation or liquidation of the property as prescribed by this Law.
3. In case of failure to privatise state property in the forms prescribed by sub-points (a), (b) and (d) of point 1 of Article 14 of this Law, the entities of privatisation may, prior to the adoption by the Government of the Republic of Armenia of a new decision on privatisation of the given property, apply to the Committee for acquiring this property under the conditions prescribed by the latest decision of the Government of the Republic of Armenia on privatisation of the given property.
4. In case of failure to privatise state property in the form prescribed by sub-point (c) of point 1 of Article 14 of this Law, the entities of privatisation may, prior to adoption by the Government of the Republic of Armenia of a new decision on privatisation of the given property, apply to the Committee for acquiring this property under the conditions prescribed by the latest decision of the Government of the Republic of Armenia on privatisation of the given property, if all conditions referred to in this decision are expressed in numerical values.
5. The Committee shall, within a period of one month following the receipt of the application filed by the entity of privatisation, privatise the state property in the form of direct sales to the entity of privatisation, as prescribed by the Government of the Republic of Armenia.
(Article 24.1 supplemented by HO-423-N of 8 October 2002, amended by
HO-75-N of 23 May 2006, HO-303-N of 23 March 2018)
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Article 25. |
The price of state property to be privatised and the procedure for payment |
1. The price of state property to be privatised shall be formed as a result of privatisation.
The methods of price calculation shall be as follows:
(a) balance method;
(b) methods for determining the current value of cash-flows;
(c) market value method of similar enterprises or property;
(d) times- revenue (profit) methods;
(e) other methods accepted in international practice.
The initial price of state property to be privatised shall be determined through one of the methods motioned above or a combination thereof.
The Government of the Republic of Armenia may define the minimum (initial) price.
The valuation methods for state property to be privatised shall selected as prescribed by the Government of the Republic of Armenia.
2. The prices of “small” objects shall be calculated based on the value of the property thereof and the area occupied thereby, as prescribed by the Government of the Republic of Armenia.
3. In order to determine the initial price of state property, the Government of the Republic of Armenia may invite experts or specialised organisations.
(Article 25 amended by HՕ-423-N of 8 October 2002)
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Article 26. |
The procedure for “small” privatisation |
1. The Committee shall, upon relevant decision of the Government of the Republic of Armenia, offer, in writing, the objects of “small” privatisation to be privatised to the labour collectives thereof.
2. The labour collective must, within 20 days following the receipt of the written offer, submit a written consent on buying the object at the indicated price, as well as the decision of the General Meeting on establishing a limited liability company to that regard, as well as make an advance payment in the amount of 5 per cent of the value of the object.
3. The distribution of equity between the members of the labour collective shall be carried out (according to the definition of point (a) of part 6 of Article 2 of this Law) upon the decision of the members of the collective by simple majority of votes, based on the calculation of equal rights of the members of the collective to acquire equity. Where a member of the collective refuses the equity envisaged for him or her, his or her equity shall be equally distributed among the remaining members of the collective. “Small” object may be privatised to the members of the labour collective if more than 50 per cent of those included in the staff list have expressed willingness to become an owner and have made relevant investment.
4. In case of failure to comply with the conditions prescribed by points 2 and 3 of this Article, the labour collective shall be deprived of the preferential right.
(Article 26 amended and edited by HO-423-N of 8 October 2002, amended by HՕ-303-N of 23 March 2018)
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Article 27. |
Information on privatisation |
Information on free subscription for shares of state property, auction and “small” privatisation shall be published in press and other mass media, at least ten days prior to privatisation thereof. The procedure for publishing information on privatisation carried out in other forms of privatisation provided for by this Law, shall be prescribed by relevant decision of the Government of the Republic of Armenia on privatisation.
Information on the results of privatisation transactions shall be published within one month following the date of completion of these transactions, as prescribed by the Government of the Republic of Armenia.
CHAPTER 4.
DISPOSING FUNDS ACQUIRED FROM PRIVATISATION
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Article 28. |
Disposing funds acquired from privatisation |
(Title edited by HO-280 of 28 December 1998)
1. The funds acquired from privatisation, except for the cases provided for by this Law, by points 2, 3 and 4 of this Article, shall be transferred to the State Budget of the Republic of Armenia and in the cases provided for by points 1 and 2 of Article 19 of this Law — to the account of relevant company, by priorly reimbursing the expenses incurred in the course of privatisation, not provided for by the State Budget.
2. Where non-residential areas in residential buildings falling under community ownership, including those not deemed as areas of common use having been transferred by the State to the community under discretionary right of ownership, were privatised after 1 January 1999, the funds acquired from privatisation shall be transferred to relevant community budget.
3. Where “small” objects occupying, under the right to lease or right to permanent use, non-residential areas in residential buildings falling under community ownership, including those not deemed as areas of common use having been transferred by the State to the community under discretionary right of ownership, were privatised after 1 January 1999, the funds acquired from privatisation being paid for privatisation of occupied area, shall be transferred to relevant community budget.
4. Funds acquired from privatisation and alienation of state participation in the authorised capital of legal persons, immovable property falling under state ownership, including unfinished construction objects shall be used as prescribed by the Law of the Republic of Armenia “On Budgetary System of the Republic of Armenia”.
(Article 28 edited HO-280 of 28 December 1998, amended and supplemented by HO-6 of 12 October 1999, amended by HO-423-N of 8 October 2002, supplemented by HO-128-N of 13 December 2004, amended by HՕ-136-N of
13 June 2006, HO-280-N of 12 September 2023)
CHAPTER 5.
PRIVATISATION TRANSACTIONS
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Article 29. |
Privatisation contract |
As a result of privatisation, the right of ownership shall be transferred by a documented transaction of privatisation of the state property concluded, as prescribed by the Government of the Republic of Armenia, between the Committee and the buyer, after receiving state registration, in the cases provided for by legislation.
The right of ownership over shares and convertible bonds shall be deemed as transferred after registering in the registry, in a prescribed manner, the shares or the certificates thereof.
The right of ownership of the buyer over immovable property to be privatised shall arise after the state registration of the transaction (contract) for privatisation.
(Article 29 edited and supplemented by HO-423-N of 8 October 2002, amended by HՕ-303-N of 23 March 2018)
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Article 30. |
Responsibilities of the seller |
The state authorised body shall be obliged to provide the buyer with information and documents on the property to be privatised, the responsibilities and financial and economic activities, to provide — after concluding the privatisation transaction — the buyer with the package of shares to be privatised, as well as perform other obligations provided for by privatisation contract.
The responsibilities of the seller, referred to in this Article, shall be terminated between it and the seller upon registration of the privatisation contract or of the shares as prescribed by the legislation of the Republic of Armenia.
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Article 31. |
State guarantees granted to the participants of privatisation |
The Republic of Armenia shall provide for guarantees for the rights of the participants of privatisation. The officials being guilty for violation of these rights shall bear responsibility as prescribed by law and other legal acts.
Information related to the participants of privatisation disclosed to the Committee in the course of and due to privatisation, shall not be subject to publication without the consent thereof, except for the cases provided for by law.
(Article 31 amended by HՕ-303-N of 23 March 2018)
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Article 32. |
Declaring privatisation transactions as invalid |
Privatisation transactions shall be declared as invalid through judicial procedure, if the privatised property is not subject to privatisation according to this Law or the person having obtained state property due to privatisation is not entitled to participate in privatisation according to this Law. In the latter case, the transaction may be declared as invalid only as to the part relating to this person.
In case of failure to make the payment for privatisation, including the regular payment, as well as to fulfil other conditions of privatisation transaction, the Committee shall file a claim to the court on levying execution on the property owned by the buyer under the right of ownership or on applying other sanctions provided for by privatisation contract.
(Article 32 supplemented by HO-423-N of 8 October 2002, amended by HՕ-303-N of 23 March 2018)
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Article 33. |
Paying taxes, duties and other mandatory fees prescribed by the State |
In case of detecting — in the course of privatisation of more than half of state property or property with state participation — violations of the legislation covering tax and other mandatory fees prescribed by the State, no tax liabilities shall arise if the given violation was detected after the entry into force of the decision of the Government of the Republic of Armenia on privatisation and is related to the time period preceding the time of transfer, referred to in this Law, of the right of ownership as a result of privatisation.
CHAPTER 6.
LIABILITY FOR VIOLATING THE LEGISLATION
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Article 34. |
Liability for violating the legislation on privatisation |
Violation of the legislation on privatisation of state property shall entail liability as prescribed by the legislation of the Republic of Armenia.
CHAPTER 7.
TRANSITIONAL PROVISIONS
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Article 35. |
Transitional provisions |
1. Upon the entry into force of this Law, the Law of the Republic of Armenia “On Privatisation and denationalisation of state enterprises and unfinished construction objects” with all supplements and amendments shall be repealed.
2. Article 9 of the Law shall be effective till 1 July 1998 and investment privatisation having taken place shall be documented based on the results of 1997 economic activities of the company.
For the companies the actual privatisation of state equity whereof takes place prior to 1 January 1998, the above-mentioned Article shall be effective until then.
Article 32 of the Law shall extend to the relations having arisen from the contracts concluded before the entry into force of this Law, except for the cases where there is a civil judgement of the court on declaring the privatisation contract as invalid or that on levying execution, having entered into legal force.
3. The Law shall not extend to privatisation of state equity of the companies (enterprises) where the decision of the Government of the Republic of Armenia on the privatisation thereof was adopted before the entry into force of this Law.
(Article 35 supplemented by HՕ-423-N of 8 October 2002)
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President |
L. Ter-Petrosyan |
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Yerevan 13 January 1998 HO-188 |
Published on a joint site 09.07.2025.
