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Central Bank Approvals Required for Bank Shareholdings

The Central Bank has introduced new regulations to enhance its control over the acquisition of shareholdings in Armenia’s banking sector. According to Article 18, any person or affiliated persons seeking to acquire a qualifying holding (i.e., more than 10% of the authorized capital stock) in a bank must obtain prior approval from the Central Bank.

New Rules Aim to Prevent Risks and Protect Interests

The new rules, which came into effect on October 23, 2001, aim to prevent potential risks to financial stability and protect the interests of depositors. Under Article 18, the Central Bank will review all applications for qualifying holdings and may reject them if it determines that the transaction could harm the bank’s financial position or reputation.

Restrictions on Shareholdings with Offshore Connections

The Central Bank has introduced new restrictions on shareholdings in banks with offshore connections. According to Article 5, natural persons and legal entities established in offshore zones, as well as their affiliated persons, are subject to stricter regulations when acquiring shares in Armenian banks.

Article 181 of the law requires prior consent from the Central Bank for the acquisition of other shareholdings (i.e., not qualifying holdings) in a bank’s authorized capital stock. This provision applies to transactions that result in a reduction of the shareholding of a qualifying participant in the bank.

Limitations on Shareholdings

The law also imposes limitations on the acquisition of more than 50% shareholding in a bank’s authorized capital stock. Under Article 19, any person or affiliated persons seeking to acquire a majority stake in a bank must obtain prior approval from the Central Bank.

Charter and Constitutional Documents

Article 20 of the law outlines the requirements for the charter of a bank, which serves as its constitutional document. The charter must define key details about the bank, including:

  • Full and short trade name
  • Registered office
  • Organizational structure

These new regulations are designed to strengthen the regulatory framework for Armenia’s banking sector and ensure greater transparency and accountability in the acquisition of shareholdings in banks.