LEGAL UPDATE
May 2024
LEGAL ACTS SUBJECT TO CHANGE
1. RA LAW ON AMENDMENTS TO THE LAW "ON JOINT STOCK COMPANIES"
2. RA LAW ON AMENDMENTS TO THE LAW "ON TRADE AND SERVICES"
3. RA LAW ON AMENDMENTS AND CHANGES TO THE LAW "ON DRUGS"
4. RA LAW ON AMENDMENTS AND ADDITIONS TO THE LAW "ON STATE DUTY"
5. LAW ON AMENDMENTS TO THE LAW "ON MEDICAL AID AND SERVICE OF THE
LEGAL ACTS SUBJECT TO CHANGE
Name of the legislative act
RA LAW ON AMENDMENTS TO THE LAW "ON JOINT STOCK COMPANIES"
The status of the change
The law entered into force on May 27, 2024, the tenth day following the date of official publication.
What are the changes related to?
As a result of the changes, legal conditions have been created to attract investments in Armenian companies through the Safe agreement, which defines the concept of the SAFE agreement and the main conditions for its application, taking as a basis the already formed business practice in the world and the Republic of Armenia.
Legally, a Safe agreement is an agreement under which an investor invests money in a company at an early stage of development, usually proportionally in a small amount, provided that in case of success of the company (attracting much larger investments, acquiring a larger company, etc.), the investor will receive a certain amount shares in exchange for their investments. In case the company fails (finds itself in the process of bankruptcy or liquidation, etc.), the amount of the contribution will be refunded.
Suggestions
The contract in question can become one of the important tools for attracting funds to your
commercial activities. The convenience of the SAFE contract lies in the fact that it allows you to
avoid the negative aspects of both debt (in particular, a convertible bond) and equity, assimilating the positive aspects of both. In particular, unlike a bond, a SAFE contract does not have a term and, as a rule, does not cause the need to pay interest. At the same time, unlike cases of direct sale of shares, the investor does not immediately acquire rights to participate in management and receive dividends and other rights, and in case of bankruptcy, he does not appear on equal terms with other shareholders, but receives a higher priority.
Article 38.2. The SAFE contract
1. Under the SAFE contract, one party, the investor, undertakes to invest in the Company's equity capital of the amount specified by the contract, and the Company undertakes to issue in the future and allocate to the benefit of the other party (the investor) the amount determined by the contract or determined in accordance with the procedure specified by the contract, type and class of shares.
2. In the case of signing a SAFE contract, the investor hands over to the Company funds of the amount specified in the contract, but the increase of the Company's authorized capital in the appropriate amount is made only in the case of the issuance of the Company's shares in the manner specified in the contract and allotment in favor of the investor. The SAFE contract comes into force at the time of its conclusion, but in the case of the Company's shares being issued and allocated in favor of the investor based on it, the shares are considered paid at the time of their allocation.
3. In case of meeting the conditions for the issuance of shares of the Company and allotment in favor of the investor defined by the SAFE contract, the Company is obliged to issue the shares specified in the SAFE contract and allocate them to the investor within 60 days.
4. In case of issuance of shares and placement in favor of the investor on the basis of the SAFE contract, the right of preference to acquire the shares by other shareholders of the Company or by the Company shall not be applied.
5. Relations related to attracting investments or making investments by the organizations provided for in Article 39.1, Part 1 of the Law of the Republic of Armenia "On the Central Bank of the Republic of Armenia" are regulated by the laws and normative legal acts regulating the activities of these organizations.
6. The SAFE contract also defines conditions, upon reaching which the amount equal to the amount invested by the investor based on the SAFE contract is subject to return to the investor, in which case the increase of the Company's authorized capital and allocation of additional shares are not carried out. The SAFE contract may also specify that in case of return of the invested funds, the Company is obliged to pay interest on them to the investor.
7. The SAFE contract is a security.
Name of the legislative act
RA LAW ON AMENDMENTS TO THE LAW "ON TRADE AND SERVICES"
The status of the change
This amendment entered into force three months after its publication, that is, 06.05.2024. In the case of obligations arising before the entry into force of the law, the terms defined by Article 15.12, part 1 of the Law, supplemented by Article 2 of the Law, are calculated from the date of entry into force of this Law.
What are the changes related to?
With this amendment:
- general requirements for trading network and supplier relations are defined,
- a list of information to be published on the official website of the trading network was fixed,
- the criteria and conditions for choosing a supplier's product were provided for,
- the essential terms of the contract concluded with the trading network were clarified,
- the conditions for displaying products in the trading network, including the conditions and
procedures for advertising products, carrying out promotions, setting privileges or other
activities aimed at promoting products, are provided for.
It is expected that as a result of the adoption of the law, the necessary, predictable and definite legislative framework will be created for relations between the trading networks and suppliers, as well as for the market for agricultural products, which will contribute to the implementation of fair trade, including improving the competitive environment and improving consumer protection.
Suggestions:
To ensure that the activities of an economic entity comply with the changes under discussion, it is necessary to:
1) The following information is necessarily posted on the official website of the trading network:
- minimum requirements and principles for choosing a potential supplier's product,
- the list of products to be sold by the trading network,
- the conditions of displaying the product in the trading network,
- grounds for termination of supply relations.
2) In connection with the display of products, we should note that from now on, issues related to the display of products can be regulated exclusively by a written contract, which must define:
- detailed description of the product demonstration, specifications and conditions for the
implementation of product promotion measures,
- the price of the contract, which includes, among other things, all fees related to the terms of the display or pricing procedure,
- payment terms, deadlines or the procedure for determining them.
3) As a result of the supplement, the relationship between trading networks and suppliers shall be regulated by a written contract concluded between the latter, which shall contain the
following essential terms:
- the price of the contract, which includes, among others, all the fees or the procedure for
setting the price by the trading network,
- the payment procedure, deadlines, or the procedure for determining them,
- the procedure and grounds for making changes to the non-disclosure contract, as well as
unilateral termination and termination of the contract,
- If the possibility of return of products not sold within the expiration date is provided, the
procedure for their return.
CHAPTER 4.4
FAIR TRADE RULES BETWEEN THE TRADING NETWORKS AND SUPPLIERS
Article 15.8. General requirements for the relationship between the trading network and suppliers
1. It is forbidden to set and apply discriminatory conditions by the trading network in the process of establishing, current and termination of relations with suppliers, unless there is a reasoned decision of the Competition Protection Commission for a reasonable and objective basis of difference, also due to economic conditions (factors) or the status of a separate group.
Article 15.9. The official website of the trading network
1. The trading network has an official website.
2. The trading network publishes on the official website:
1) minimum requirements and principles for product selection of a potential supplier,
2) the list of goods to be sold by the trading network,
3) terms of product demonstration in the trading network,
4) grounds for termination of the supply relationship.
Article 15.10. Minimum requirements and principles of supplier's product selection, entry of new suppliers into the trading network
1. Trade networks define minimum requirements and principles for product selection of potential suppliers. Minimum requirements and principles may be defined by product type, provided that the supplier can understand the relevance of the given requirement or principle to a specific product type.
2. The selection of the supplier's product is carried out at the initiative of the trading network or as a result of the study of the written commercial proposal of the potential supplier, taking into account the minimum requirements and principles for the supplier's product published by the trading network.
3. The trading network considers the written commercial proposal after receiving it, no later than within 15 working days. In the event that additional actions are necessary for the selection of the supplier's product (examination, etc.), the period can be extended up to 15 working days, if no other period is necessary for the implementation of the specified action, about which the trading network informs the prospective business offer in writing.
4. The trading network informs the proposer in writing about the negative decision on the selection of the product of the potential supplier, justifying the non-compliance with the minimum requirements and principles published by the trading network.
5. It is prohibited for the trading network to impose additional services unrelated to the supply contract on the potential supplier or to refuse to conclude a supply contract on the basis of their refusal.
Article 15.11. Essential terms of the contract to be concluded with the trading network
1. The supply contract is concluded in writing.
2. The contract shall contain at least:
1) the price of the contract, which includes, among other things, all fees or pricing procedures made by the trading network,
2) the order, terms of payment or the procedure for determining them,
3) the procedure and grounds for amending the contract, as well as for unilaterally terminating and terminating the contract,
4) if the possibility of return of products not delivered within the expiration date is provided, the
procedure for their return.
3. The trading network can publish the content of the contract with the suppliers on the official website.
Article 15.12. Terms and procedure of payment for goods supplied to the trading network
1. The trading network makes the payment to the supplier no later than:
1) for foodstuff, within 30 days,
2) for non-food items within 60 days.
2. The calculation of the time limits provided for in paragraph 1 of this article begins from the moment of acceptance of the delivered goods in accordance with the procedure established by law and the contract.
3. By written agreement of the parties, shorter payment terms may be established than provided for in paragraph 1 of this Article.
Article 15.13. Terms of product demonstration in the trading network
1. The trading network sets conditions for product demonstration, including conditions for product promotion, promotions, benefits or other measures aimed at promoting the product, including display options and fees charged for them:
2. The relationship related to the product demonstration is regulated by a written contract, which may also be part of a supply contract.
3. The contract regulating the relationship related to the product demonstration at least contains:
1) product display description, features and conditions for product promotion activities,
2) the contract price, which includes, among other things, any fees incurred by the trading network related to the terms of the display or pricing procedure;
3) the order, terms of payment or the procedure for determining them.
Name of the legislative act
RA LAW ON AMENDMENTS AND CHANGES TO THE LAW "ON DRUGS"
The status of the change
This Law entered into force on the day following its official publication, that is, on 08.05.2024.
What are the changes related to?
The adoption of the RA Law "On Amendments to the Law on Drugs" aims to more clearly and comprehensively regulate the sphere of circulation of medicines, ensuring the introduction of unified rules of the EAEU.
The draft law was developed by the Department of Drug Policy and Medical Technologies of the
Ministry of Health of the Republic of Armenia and CJSC "Expert Center for Medicines and
Medical Technologies named after Academician Emil Gabrielyan" of the Ministry of Health of the Republic of Armenia.
The amendments made to the Law "On Drugs" aim to improve the tools of state control over the circulation of medicines. The two aforementioned acts provide for additional restrictions to comprehensively control the advertising, import, and export of drugs, pharmaceuticals, investigational pharmaceutical products, and herbal raw materials.
Article 7. Implementation of examinations and professional observations in the field of state regulation of drug circulation
2. For examinations in the field of state regulation of drug circulation, a state fee shall be charged in the manner and amount determined by the Law of the Republic of Armenia "On State Duty", except for the cases provided for by law.
3. The expert organization established by the decision of the Government of the Republic of Armenia carries out the examinations and professional observations in the field of state regulation of drug circulation.
Article 16. State registration of drugs
3. In the Republic of Armenia, drugs are registered according to general and simplified procedures, as well as according to the rules of the EAEU. The simplified procedure is applied to medicines registered by the competent authority of the member country of the international professional organizations established by the decision of the Government of the Republic of Armenia or subjected to examination or pre-qualified by the World Health Organization (hereinafter referred to as pre-qualified). The drug to be registered under the simplified procedure must be registered (tested) or pre-qualified by the reference authority, except for the holder of the drug's trade name or registration certificate. Regardless of the procedure, the packaging and labeling of the drug registered in the Republic of Armenia must comply with the requirements established by the legislation of the Republic of Armenia.
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16. The applicant has the right to refuse the examination at any stage. Based on the withdrawal letter, the examination is terminated and the registration process is completed. And within 60 calendar days after the first notification of the examination results, or within 120 calendar days after the second notification, the requested additional or unsatisfactory documents or data or samples or standards or specific reagents or other materials necessary for laboratory examination are not submitted or in the amount and manner prescribed by law. If the state duty is not paid, the examination is stopped, and registration, re-registration, extension of the certificate period, post- registration change are rejected. In the cases defined by this part, the state fee paid for the examination is not subject to return.
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18. The period of drug registration is five years, which is calculated from the date of entry into force of the order of the Authorized Body on drug registration. As a result of the registration, a registration certificate is issued, and the registered medicine is included in the register. The authorized body approves the form of the registration certificate, the form of the register and the procedure of management. Along with the registration certificate, the applicant is provided with the electronic versions of the drug's primary, outer package, label, Armenian instructions for medical use (general characteristics of the drug) and Armenian instructions for use (insert-leaflet) and quality indicators
(specifications) or quality normative documents, which are also the basis of Armenia. For drug identification, quality control or official information at all stages of drug circulation in the Republic. The primary and outer packages of the registered drug with their marking, label and leaflet are considered as registration. The authorized body ensures the publication and posting of the register, the register and the Armenian instructions for medical use (general characteristics of the drug) on the official website of the authorized body.
19. After the registration period ends, the drug can be re-registered for a period of five years in accordance with the procedure established by the Government of the Republic of Armenia, re-evaluating the safety, effectiveness and quality of the product. After the expiration of the re- registration period, with the consent of the holder of the registration certificate, the registration certificate may be extended every five years, based on the results of post-registration safety professional observations by the Authorized Body. Re-registration of the drug, extension of the term of the registration certificate is carried out by the Authorized Body on the basis of a positive expert opinion. The maximum duration of the drug re-registration process is 120 calendar days, including the examination period of 110 calendar days. The maximum duration of the process of extending the term of the drug registration certificate is 30 calendar days, in which the examination period is calculated 20 calendar days. The application for re-registration and the application for extension of the term of the certificate of registration shall be submitted before the expiry of the term of the certificate of registration, but not earlier than 210 calendar days and not later than the day of the expiry of the term of the certificate of registration. After the certificate expires, a new registration application is submitted.
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35. The registration documents of drugs registered in the Republic of Armenia, which have not been registered by EAEU procedures, must comply with EAEU rules, except for the cases defined by those rules. In order to keep valid the indefinite registration certificate issued in accordance with the EAEU rules, the right holder of the registration certificate pays an annual state fee in the manner and amount determined by the Law of the Republic of Armenia "On State Duty". If the annual state fee is not paid within the specified time, the registration of the drug is suspended, about which the Authorized Body publishes information on its official website and makes a note in the register. To restore the registration, the right holder of the certificate submits an application, attaching the document confirming the payment.
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Article 17. Reporting Side Effects and Counterfeit Products
2. The right holder of the drug registration certificate is obliged to have a pharmacovigilance system in accordance with the "Proper pharmacovigilance activities" defined by the Authorized Body, to record the cases of side effects, to evaluate the risk-benefit ratio of the drug and to report them according to the procedure defined by the Authorized Body. The right holder of the registration certificate means the qualified person who is responsible for pharmacovigilance, and in the case of the qualified person acting outside the territory of the Republic of Armenia, also the person responsible for pharmacovigilance in the Republic of Armenia. The requirements for qualified and responsible persons are defined by the Authorized Body. The rules of "Proper pharmacovigilance activities" adopted by the authorized body are posted on the official website of the authorized body.
Article 25. Retail sale of drugs
8. The sale of prescription drugs without a prescription or with prescriptions written on forms that do not meet the requirements established by the legislation of the Republic of Armenia is prohibited.
9. It is prohibited to issue prescriptions on forms that do not meet the requirements established by the legislation of the Republic of Armenia.
Article 28. Advertisement of drugs
2. The permission to advertise the drug is given by the Competent Authority on the basis of expert opinion. The Government of the Republic of Armenia defines the procedure for advertising permission, examination of advertising material and the list of necessary documents. In case of
advertising of drugs through electronic or printed means of mass information, the number, day, month, year, validity period of the drug's state registration certificate in the Republic of Armenia, authorization number and day, month, year of the Authorized Body must be indicated. External advertising of medicines is prohibited in the Republic of Armenia. The permission to advertise veterinary vaccines, serums and diagnostic means is granted by the state authorized body in the field of agriculture, in accordance with the procedure established by the Government of the Republic of Armenia.