Foreign and local companies expanding their activities in Armenia often face a key structural decision: should they operate through a branch, a representation, or a subsidiary?
Understanding the legal difference between representations, branches and subsidiaries is essential to choose the form fitting for your legal entity and purposes.
What Is a Representation in Armenia?
Under Armenian law, a representation or a representative office is a separated subdivision of a legal entity located outside the company’s registered office, established solely to represent and protect the interests of the parent company.
Key characteristics of a Representative office of a foreign company:
- It is not a legal entity
- Cannot conduct independent commercial activity
- Acts only on behalf of the parent company
- Operates under the parent company’s Charter and other statutes
- Can act in a foreign country
- Should be registered in the Agency for State Register of Legal Entities
What Is a Branch in Armenia?
A branch is also a separated subdivision located outside the company’s registered office, but with broader operational authority. A branch office may perform all or part of the functions of the parent company solely, including commercial activities.
Key characteristics of a Branch office of foreign company:
- It is not a legal entity
- It may conduct business operations
- The parent company bears full legal responsibility for its actions
- Operates under the parent company’s Charter and other statutes
- Can act in a foreign country
- Should be registered in the Agency for State Register of Legal Entities
What is a Subsidiary in Armenia?
A subsidiary company is a company that is controlled by another company (the parent company) because the parent owns a dominant share of its capital or has a contract that allows it to control the company’s decisions. It is not liable for the debts of the principal partnership or company․
- Participants (shareholders) of a subsidiary company shall have the right to require from the principal partnership or company to compensate for the damages caused to the subsidiary company by its fault.
Legal Status and Liability
Both representations and branches
- Are not separate legal persons
- Act in the name of the parent company
- Do not have independent liability
Any obligations, debts, or violations incurred by a branch or representation are legally attributed directly to the parent company.
Subsidiary
- Is a separate legal entity
- The parent company has the right to predetermine the subsidiary’s decisions because of:
- Dominant participation in capital, or
- A contract.
Registration and Establishment Process in Armenia
In Armenia, the creation of branches and representations requires:
- Corporate decision
- For LLCs: by the General meeting of Participants
- For JSCs: by the Board of Directors (Supervisory Board)
- Approval of internal statutes
- Defining scope of activities
- Governance structure
- Authority of the head
- State registration in the Agency for State Register of Legal Entities
- Registration with the authority responsible for legal entity registration in Armenia
- State fee for the registration of separate subdivisions of commercial organizations is AMD 12 000
The creation of subsidiary companies in Armenia:
- Subsidiary companies register the same way as for LLC’s and JSC – click here to see the article on LLC and JSC in Armenia. (place hyperlink here after publishing corp 02 article)
- There is no state duty required for the registration of a subsidiary of a foreign company.
This guide explains how representations and branches work under Armenian law, what activities they may conduct, and what businesses should consider before registration.
Frequently Asked Questions (FAQs)
Can a Branch or Representation Hire Employees?
Yes.
- Both may hire employees in Armenia
- Employment contracts are signed on behalf of the parent company
- Payroll taxes and labor law compliance apply in full
Can They Open Bank Accounts?
Yes.
- Branches representations and subsidiaries can open bank accounts in Armenia
- Banks typically require:
- Registration documents
- Statutes of the subdivision
- Power of attorney for the head
Our lawyers at Retrieve Legal & Tax can assess your business model and set up the right presence while managing compliance and reporting.