of October 20, 2007 No. ZR-195
About the security market
Accepted by National Assembly of the Republic of Armenia on October 11, 2007
1. Main objectives of this Law are protection of the rights and legitimate interests of investors, ensuring transparency, stable and effective market development of securities, ensuring reliability of system of pricing of securities, decrease in systemic risks in the security market.
2. This Law governs the relations arising in connection with implementation of activities in the security market of the Republic of Armenia and establishes:
1) procedure for public offer of securities and their public purchase and sale;
2) procedure for rendering investment services in the security market and the organization of the public securities trading;
3) procedure for storage of securities and activities of settlement systems, and also Central depositary;
4) competences and obligations of the Central bank of the Republic of Armenia (further – the Central bank) in the sphere of regulation and control of the security market;
5) responsibility for violation of requirements of this Law, the regulatory legal acts adopted on its basis and other legal acts.
3. The security market of the Republic of Armenia includes the persons issuing securities in the territory of the Republic of Armenia and performing investment into securities, controlled markets of securities and the sphere of non-regulated trade, the Central depositary, persons performing the activities which are subject to licensing according to this Law.
The security market of the Republic of Armenia is regulated by the Constitution of the Republic of Armenia, international treaties of the Republic of Armenia, the Civil code of the Republic of Armenia, the Law of the Republic of Armenia "About protection of the economic competition", the Law of the Republic of Armenia "About bases of administration and administrative production", this Law, regulatory legal acts adopted based on this Law, other laws and legal acts.
In sense of this Law:
1) the securities (irrespective of their type – documentary or paperless) established by the Civil code of the Republic of Armenia, and also other laws are considered as securities including:
and. the shares, other securities granting the rights equivalent to the rights affirmed by shares
. bonds and other debt securities, except for tools of the money market,
century the depositary receipts, documents certifying the subscription right or acquisition of the securities specified in subitems "an" and "b" of this Item
shares of investment funds or share of funds, shares and other equity securities,
the agreement on profit distribution, the document confirming participation in such agreement
e. tools of the money market,
. ceased to be valid according to the Law of the Republic of Armenia of 12.11.2016 No. ZR-189
h. any other investment agreement used for the purpose of attraction of the capital (means) which includes properties of the above-stated securities fully or partially.
In sense of this Law payment instruments are not considered as security;
2) debt securities reckon from repayment period to one year, including short-term bonds, bank certificates and other short-term debt securities as tools of the money market;
3) as derivative financial instruments (transactions) are considered:
and. the option, the future, swap, the forward and other derivative agreements connected with securities, foreign currency, interest rate, derivative financial instruments, financial indexes or financial and economic indicators, final settlement of obligations on which can be perfromed in kind or money;
. the option, the future, swap, the forward and other derivative agreements connected with goods, final settlement of obligations on which shall be perfromed by money or can be performed by money at the request of one of the parties (except as specified early agreement cancelation based on violation or other bases);
century the option, the future, swap, the forward and other derivative agreements connected with goods, final settlement of obligations on which can be perfromed in kind provided that these agreements are traded on the controlled market;
the option, the future, swap, the forward and other derivative agreements connected with goods, final settlement of obligations on which can be perfromed in kind and which are not provided by the subitem "v" of this Item, were also not concluded for commercial purposes to which the properties characterizing other derivative financial instruments, including implementation of clearing and final settlement of cross liabilities by means of settlement system or subordination of such agreements are inherent in the requirement of collateral regular security;
the derivative financial instruments connected with transfer of credit risk;
e. the financial contracts based on difference;
. the option, the future, swap, the forward and other derivative agreements connected with climatic changes, payments of the freight, the admissible amount of emissions, rates of inflation or other official economic statistics, final settlement of obligations on which shall be perfromed or at the request of the parties (except as specified early agreement cancelation based on violation or other bases), can be performed by money, and also other derivative agreements connected with the indicators or the sizes which are not provided by this Item assets, the rights, obligations, having characteristics of derivative financial instruments taking into account that they are allowed to trade in the controlled market, mutual clearing and final calculation of obligations on them is perfromed by means of settlement system, or such agreements are subordinated to the requirement of collateral regular security;
4) the derivative financial instrument allowed to trade in the controlled market is considered the standardized derivative financial instrument;
5) the security issued based on shares of the foreign issuer, other documents granting the rights, equivalent to the rights affirmed by shares, bonds or other debt securities which grants to its owner the right to perform the rights affirmed by the securities pledged in its basis is considered the depositary receipt;
and. shares, other security granting the rights, equivalent to the rights affirmed by shares
. the depositary receipt based on the security established by the subitem "an" of this Item
century any other security which grants the right to acquisition of the securities established by the subitem "an" of this Item by converting, exchange or in a different way implementation of the rights and which is issued by the issuer of the securities established by the subitem "an" of this Item or the member issuer of group of issuers.
Equity securities are only nominal;
7) any security which is not considered equity according to Item 6 of this Article is considered not equity security;
8) the any kind of the message containing the offer on security sale or security purchase sent to the persons is considered the offer of securities;
9) public offer of securities the offer of securities to 100 and more persons who are not skilled investors or uncertain number of persons is considered;
10) the same class of security includes all securities of this issuer which have in fact identical characteristics and for which owners the identical rights and privileges are allocated in fact;
11) the document accepted by authorized body of management of the issuer based on which the issuer provides permanent release of not equity securities of one type and (or) class during certain time is considered the program of the offer. Release is considered permanent if at least two issues of securities of one type and (or) class within twelve months are made. In sense of this Law also the securities, the rights certified which have in fact identical characteristics belong to one type, however differ under the terms of first priority of repayment or receipt of other payments, the size of the amount paid on them and repayment periods;
12) the document containing established by this Law and regulatory legal acts of the information about the issuer and his securities adopted on its basis based on which the public offer and (or) the admission of securities to the biddings in the controlled market is performed is considered the prospectus;
13) person who issues is considered the issuer (issued) security or makes offer about security issue on its own behalf;
14) the issuer whose issued security of any class is admitted to trading in the controlled market operating in the territory of the Republic of Armenia is considered the accountable issuer;
15) the nonresident issuer is considered the foreign issuer. The residence is applied in the value established by the Law of the Republic of Armenia "About currency control and currency exchange control";
16) issue of securities – complex of the actions of person directed to formation of set of securities of one class. Issue of securities based on the same decision of the issuer, but during different periods of time (on series) is considered one release;
17) the transaction on purchase and sale, on exchange of this security or any other paid transaction is considered security sale;
18) placement the first security sale to the investor is considered. The issuer or person having the right to render stipulated in Item 6 parts 1 of article 25 of this Law investment services (underwriter) can perform placement. Sale by the issuer of the securities acquired or redeemed by him placement is not considered;
19) public placement securities placement by means of their public offer is considered;
20) person who for the purpose of placement acquires securities at the issuer is considered the underwriter, and (or) for the purpose of placement offers, sells securities of the issuer or participates in the agreement or the agreement on implementation of similar case, with exceptions which can be established by regulatory legal acts of the Central bank. According to this Item the underwriter also person who directly or indirectly controls the issuer is considered, it is controlled by the issuer, or together with it is under general control;
21) person who belongs security or who provides acquisition of security is considered the investor;
22) the person which is using services of person rendering investment services, or who addressed person rendering investment services for the purpose of use of such service is considered the client;
23) as skilled investors are considered:
and. investment companies, branches of foreign investment companies, banks, credit institutions, insurance companies, the investment, pension funds and managing directors of investment funds, and also those legal entities registered in foreign state who, according to the legislation of this state, have the right to perform activities of any person determined by this subitem
. Republic of Armenia, municipalities, Central bank of the Republic of Armenia, foreign states, local government bodies of foreign states, Central Banks of foreign states,
century international financial institutions, including International Monetary Fund, European Central Bank, European Investment Bank,
person who according to the law or regulatory legal acts of the Central bank will be considered as the skilled investor based on knowledge and experience of this person in the financial sphere, its capability to hire specialists with such knowledge and experience, sizes of its net assets or size of the assets which are under its management and other similar criteria,
the legal entity, all participants (shareholders, unitholders) of which are the faces specified in subitems "a" – "" of this Item.
Persons specified in subitems "g" and "d" of this Item are considered as skilled investors after registration in the Central bank according to the procedure established by regulatory legal acts of the Central bank;
24) any physical person or legal entity is considered face;
25) person addressed to whom the personalized securities belonging to other persons without transfer of property are registered is considered the nominee holder;
26) persons rendering investment services, the operator of the controlled market, the operator of settlement system of securities and other persons provided by the law are considered as professional participants of the security market;
27) the investment company, branch of foreign investment company, the managing director of investment fund, branch of foreign managing investment fund, bank are considered as person rendering investment services;
28) the legal entity having the license for rendering investment services in the procedure established by this Law is considered investment company;
29) the legal entity registered in foreign state having the right to render investment services based on the license granted by authorized body of this foreign state is considered foreign investment company;
30) management of packet of securities management of the managing director transferred to it to ownership of the securities belonging to the client, money provided for investment into securities, the securities and money received owing to trust management on behalf of the managing director for benefit of the client or for benefit of specified to them the third parties (beneficiaries) as directed received from the client is considered;
31) the controlled market the system of organizational, legal and technical means, directly or indirectly available to society, regularly organizing, providing, providing the meeting place or means for offers to purchase and security sale, and also derivative financial instruments, or performing regular functions on the organization of the securities trading, and also derivative financial instruments is considered. The controlled market includes stock exchange and other controlled markets;
32) person (persons) organizing (organizing) activities of the controlled market is considered the operator of the controlled market;
33) process of admission to stock exchange trading of the securities meeting the certain requirements and criteria established by this Law, regulatory legal acts of the Central bank and stock exchange rules is considered listing of securities;
34) the direct or indirect participation in the authorized capital of the legal entity granting the right of 10 and more percent of votes is considered considerable participation.
Considerable participation is considered direct if the participant performs it on its own behalf.
Considerable participation is considered indirect if:
and. the participant controls the legal entity irrespective of the fact of its participation in the authorized capital or its size,
. the participant controls the legal entity having direct considerable participation in the authorized capital of the legal entity;
35) monitoring or control the possibility of direct or indirect predetermination of the decision of governing bodies of this legal entity, significant effect on adoption (application) by them of decisions or predetermination of the directions, fields of activity of this legal entity owing to the prevailing participation in its authorized capital according to the agreement signed with it, the goodwill, the authority or otherwise is considered. The fact of availability of such opportunity can be reasonable according to the criteria established by regulatory legal acts of the Central bank;
and. one of them with the right of direct or indirect vote owns twenty and more percent of the equity securities of another (others) granting voting power,
. more than a half of board members, the director or other official of one of them having such competences at the same time are the board member, the director or the official of another (others) having such competences,
century one of them controls other person, or they are under general control, or one of them has the actual or fixed by the agreement opportunity to have significant effect on solutions of another according to the criteria established by regulatory legal acts of the Central bank
they are members of the same family or in this case were effective in coordination proceeding from common economic interests;
37) the father, mother, the spouse (spouse), parents, the grandmother, the grandfather, the sister, the brother, children of the spouse (spouse), the spouse of the sister, the spouse of the brother and their children are considered as members of the same family;
38) the fact or the data are considered essential if the importance in case of decision about purchase or security sale is attached to them and (or) they can have significant effect on the security price;
39) misstatement or omission of essential fact provision of the untrue data on this fact or non-inclusion in any provision (statement) of essential fact which inclusion is required by the law or other legal act adopted according to it and which availability is necessary for its not transformation in disorienting at the time of inclusion of this provision (statement) is considered;
40) the authorized state body controlling the security market of foreign state is considered authorized body of foreign state;
41) the allocated division of foreign investment company created in the territory of the Republic of Armenia is considered branch of foreign investment company;
42) the security issued by the nonresident is considered foreign security. The residence is applied in the value established by the Law of the Republic of Armenia "About currency control and currency exchange control";
43) group the controlling legal entity together with the legal entities controlled by it is considered.
1. If other is not provided by this Law and other legal acts regulating the security market, then provisions of this Law and legal acts adopted on its basis extend to the standardized derivative financial instruments and their market, and also in the cases which are directly provided by this Law or in the cases provided by the regulatory legal acts of the Central bank adopted on the basis of the law – also to other financial instruments and their market.
2. Central Bank has the right to regulate the regulatory legal acts derivative financial instruments and their markets if lack of the specified adjustments can lead to violation of financial stability or violation of interests of investors or growth of risk-taking of derivative financial instruments or violation of natural functioning of the financial markets.
3. Central Bank can establish the regulatory legal act the standard agreements of derivative financial instruments or financial transactions which are widely applied in the international markets. In case of the conclusion of the standard agreements provided by this Item or in the course of their action the parties can apply the right of the state which is usually applied to these standard agreements to conditions of these agreements. The regulation of foreign law applied according to this Item is not applied if consequences of its application obviously contradict mandatory rules of the Republic of Armenia or bases of law and order (public order) of the Republic of Armenia.
4. Central Bank creates the unified register of derivative financial transactions (the register of trade). The procedure and terms of registration of derivative financial transactions, procedure and conditions of maintaining the register, representation, processing, storage, provision of data are established by the regulatory legal act of the Central bank. The procedure, terms and amounts of provision of data from the trade register to tax authority are established by the joint legal act of the Central bank and tax authority.
Provisions of this Section do not extend on:
2) the securities issued or guaranteed by any state included in the list of foreign states established by the Central bank, its Central Bank or body of local authority;
3) not equity securities issued by the international organizations included in the list established by the Central bank;
4) the securities issued by religious, educational, charitable and other non-profit organizations in the religious, educational or charitable purposes;
5) not equity securities issued by banks on permanent basis if they:
and. are inconvertible or not turned,
. do not certify the rights of acquisition of securities or subscription to securities of other type, and also are not connected with derivative financial instruments,
certify deposition of money in bank century and
their compensation is guaranteed according to the procedure, established by the Law of the Republic of Armenia "About guaranteeing compensation of bank deposits of physical persons";
6) not equity securities issued by banks on permanent basis if total nominal value of the offered securities within 12 months does not exceed the size established by regulatory legal acts of the Central bank, and they:
and. are inconvertible or not turned and
. do not certify the rights of acquisition of securities or subscription to securities of other type, and also are not connected with derivative financial instruments;
7) on derivative financial instruments except for the derivative financial instruments established by the Central bank;
8) tools of the money market;
9) on the securities issued by open-end investment funds.
1. The public offer of securities without publication of the prospectus meeting the requirements of this Law is forbidden. The prospectus shall be constituted and published according to the procedure, established by this Law and regulatory legal acts of the Central bank.
2. The provisions of this Section relating to the underwriter extend to the issuer if the last does not perform public offer through the underwriter.
1. The requirement of publication of the prospectus does not extend to public offers of securities when:
1) the offer becomes to exclusively skilled investors;
2) the offer becomes to investors, the total cost of the securities acquired by each of which according to conditions of the offer on selling price exceeds the size established by regulatory legal acts of the Central bank - in case of each separate offer;
4) the total cost of the offered securities at the price of release or sale within 12 months does not exceed the size established by regulatory legal acts of the Central bank.
2. The requirement of publication of the prospectus does not extend to public offer of the following securities:
1) shares which are issued for exchange for shares of the issuer of the same class if it does not lead to increase in the authorized capital;
2) securities which are offered by the issuer by exchange in connection with acquisition of equity securities of other company and there is document, available to the interested investors, which, according to the Central bank, contains information, equivalent information required by the prospectus;
3) securities which are offered by the issuer to shareholders of the joining company in connection with joining of the issuer to other company and there is document, available to the interested investors, which, according to the Central bank, contains information, equivalent information required by the prospectus;
4) the shares of the same class paid as dividends for the account of shares if there is document containing information on quantity and type, and also on the purpose and conditions of the offer of securities, available to the interested investors;
5) securities which are offered by the issuer or other person belonging to group of the issuer, acting or to the former heads or employees of this issuer if any security of this issuer is admitted to trading in the controlled market operating in the Republic of Armenia, and there is document containing information on quantity and type, and also on the purpose and terms of the offer offered securities, available to the interested investors;
6) securities which are allowed to public offer (sale) and (or) trade in any state included in the list of foreign states established by regulatory legal acts of the Central bank, according to the procedure, established by the legislation of this state on securities or are allowed to trade in any controlled market included in the list of the controlled markets operating outside the Republic of Armenia established by regulatory legal acts of the Central bank, according to the procedure, established by rules of this controlled market. Central Bank the regulatory legal acts can establish additional requirements to the securities specified in this Item.
3. For the purpose of investor protection the Central bank has the right to establish the regulatory legal acts requirements and procedure for sale in the territory of the Republic of Armenia of securities, stipulated in Item 6 parts 2 of this Article. Central Bank has the right the decision to stop or forbid sale stipulated in Item 6 parts 2 of this Article of securities in the Republic of Armenia according to the procedure, established by this Law and regulatory legal acts adopted according to it if sale of these securities in the Republic of Armenia, in reasonable opinion of the Central bank, threatens interests of investors.
4. Based on the document established by Items 2 and 3 of part 2 of this Article, the public offer of the securities established by these Items can be made only in prior consent of the Central bank. For receipt of prior consent of the Central bank the issuer or the underwriter submits in the Central bank the application which form and the list of the documents enclosed to which are established by regulatory legal acts of the Central bank. Central Bank passes the decision on giving prior consent or on refusal in its giving within 20 working days from the moment of receipt of all necessary documents. Central Bank refuses giving prior consent if the submitted documents do not conform to the requirements established by this Law and regulatory legal acts of the Central bank or in them the essential fact is missed or distorted.
5. Requirements imposed to form and content of the documents provided by items 4 and 5 parts 2 of this Article are established by regulatory legal acts of the Central bank.
6. In sense of Items 2-5 of part 2 of this Article the document is considered to the available interested investors if he is properly brought to all interested investors or is published on the official website of the issuer or underwriter and is available in printed form to all interested persons in the location of the issuer and underwriter. In sense of Items 2-5 of part 2 of this Article interested person is person to whom the offer of these securities is addressed.
7. The issuer in case of the offers provided by part of 1 this Article shall notify in the procedure established by regulatory legal acts of the Central bank the Central bank within 15 days after completion of securities placement. Central Bank has the right to demand from the issuer and the underwriter the additional information necessary for reasons for application of such exception.
1. Release, sale or the offer to security sale to bearer or the invitation with the offer of purchase of such security which is subject to the admission to public offer or the biddings in the controlled market is forbidden.
2. The securities having the documentary form which shall be publicly offered society or are allowed to trade in the controlled market, are transferred to paperless form (dematerialization) or immobilized by the Central depositary according to the procedure and the cases established by regulatory legal acts of the Central bank and rules of the Central depositary prior to process of public placement of securities or to the request for the admission of securities to trade in the controlled market.
1. The prospectus shall contain the complete information about the issuer and about the offered securities which the investor of reasonable assessment of assets and liabilities of the issuer and any person guaranteeing the obligations provided by securities shall have sufficient for forming (further – the guarantor), of their financial position, the income and expenses, the prospects of activities, the related risks, and also the rights affirmed by these securities.
2. The prospectus can be constituted in the form of one single document or separate documents. The prospectus constituted from one single or separate documents, shall include the title page of the prospectus (further – the title page) meeting the requirements established by part 3 of this Article. The prospectus constituted from separate documents consists of the registration document containing the information about the issuer, the description of securities containing data on the offered securities, and the title page.
In case of creation of the prospectus in the form of separate documents each separate document is subject to registration by the Central bank.
3. The title page shall contain short essential information on the issuer, about the related risks, its financial position and the prospects of its activities, the guarantor (in the presence) and the offered securities, stated by nontechnical language and in the style corresponding to the original of the prospectus. The title page shall contain the warning regulations on the fact that the title page is considered as the introductory short description of the prospectus and that the decision of the issuer on investment into the offered securities is based on the complete prospectus.
Person responsible for creation of the title page bears the civil responsibility for the incomplete or misleading information containing in the title page (including in the part relating to the translation) if it is incomplete and misleading by its consideration together with other parts of the avenue. This provision shall be included in the title page.
4. Requirements to form and content of the prospectus are established by regulatory legal acts of the Central bank. Central Bank can establish various requirements to prospectus form and content depending on type of the offered securities.
5. Central Bank in case of publication of the certain information included in the avenue can establish exceptions based on the written application of the issuer if:
1) disclosure of such data contradicts public concerns and can lead to disclosure of the state secret;
2) disclosure of such data can do essential harm to legitimate interests of the issuer provided that the non-inclusion to the avenue of such data cannot mislead investors in case of creation of assessment of the present and future financial position of the issuer, underwriter, guarantor (in the presence) or the rights affirmed by the offered securities.
6. In the cases established by part 5 of this Article, the issuer shall represent to the Central bank the corresponding data together with written reasons for need of their not disclosure.
7. Central Bank within 10 working days after receipt of the statement provided by this part makes the decision on recognition or on refusal in recognition of data confidential. Central Bank refuses confidentiality of data if it, having sufficient reasons, believes that they are essential and their non-inclusion to the avenue can threaten interests of investors or mislead the investors in question of essential circumstances connected with assessment of the present and future financial position of the issuer, underwriter, guarantor (in the presence) or the offered securities. The issuer shall provide to the Central bank amendment to the avenue within 3 working days from the date of refusal in confidentiality of information.
8. Central Bank has the right to establish the regulatory legal acts the list and the description of data which confidentiality is satisfied with the Central bank anyway.
9. The procedure for representation of confidential information and documents is established by regulatory legal acts of the Central bank. Central Bank shall the internal regulations and by means of acceptance of other measures to exclude publication of such data and documents.
10. If final price and amount of the offer of the offered securities cannot be included in the avenue, then the prospectus shall contain at least maximum price of security and method or conditions of determination of final price and amount of the offer of securities.
11. In the case established by part 10 of this Article, final price information and amount of the offered securities shall be presented in the Central bank in the amendment form to the avenue and is published in the stipulated in Clause 16 these Laws procedure prior to placement process.
1. The issuer or the underwriter has the right to publish instead of the prospectus the program prospectus in case of public offer of the not equity securities issued based on the program of the offer and also provided by the law of the securities provided with assets or secured mortgage bonds (further – secure securities).
2. Programmny Prospekt can be constituted only in the form of one single document.
3. In case of the program prospectus the requirement provided by part 11 of article 8 of this Law is applied in case of each offer provided by this prospectus.
4. The provisions of this Law relating to the prospectus extend also to the program avenue if this Law and regulatory legal acts of the Central bank does not provide other.
1. The prospectus cannot be published if it is not registered in the Central bank according to the procedure established by this Law and regulatory legal acts of the Central bank.
2. For registration of the prospectus the issuer or the underwriter submits the registration application of the prospectus which form is established by the Central bank in the Central bank. Together with the statement are represented:
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