Central Bank Regulates Shareholdings in Armenian Banks

In a move to ensure financial stability and transparency in the Armenian banking sector, the Central Bank has introduced new regulations governing shareholdings in banks.

Shareholding Regulations

According to Article 18 of the Law on Banks, any individual or related parties seeking to acquire a significant participation in a bank’s statutory fund must obtain preliminary consent from the Central Bank. This applies to transactions that result in a deterioration of a significant participant’s stake by:

The Central Bank has outlined specific requirements for documentation and submission procedures, which will be determined by the regulator.

In cases where there are grounds for suspecting that a transaction may compromise the financial stability of a bank or undermine its reputation, the Central Bank may waive the application within ten days.

However, this regulation does not apply to share acquisitions from significant participants acting as issuers through stock exchanges, provided the acquisition does not exceed 20% of the statutory fund. For transactions exceeding this threshold, preliminary consent from the Central Bank is required.

Bank Charter Regulations

Article 20 of the Law on Banks outlines the requirements for bank charters, which are considered founding documents. The charter must include information such as:

Full and short name
Location
Organizational-legal type
Statutory fund size
Managing body structure
Decision-making procedures

The charter may also limit the maximum share of participation by a single founder or participant in the statutory fund, as well as define the rules for oversight and control by the founding entity.

Managing Bodies of Banks

According to Article 21, banks must have three main managing bodies:

General meeting of participants
Board
Executive director

The charter and Armenian Law on Joint Stock Companies regulate the formation and procedures of these bodies. Regardless of organizational-legal type, all banks must have:

Chief accountant
Department of internal audit

Conclusion

The Central Bank has emphasized its commitment to ensuring the stability and transparency of Armenia’s banking sector through these regulations. These measures aim to promote financial stability and protect the interests of bank participants and depositors.