State Policy for the Development of Corporate Governance Culture

The Government of the Republic of Armenia considers the promotion of the implementation of modern corporate governance systems in companies as a key prerequisite for the sustainable development of the private sector, enhancement of investment confidence, and stimulation of long-term economic growth.

Through improving the corporate governance system, the Government aims to contribute to increasing transparency in the business environment, boosting investor confidence, reducing risks in the private sector, strengthening business ethics, and protecting the interests of stakeholders.

What is the Corporate Governance Code?

The Code is a legal act approved by the order of the Minister of Economy, which contains principles and guidelines aimed at enhancing the efficiency of corporate management, protecting shareholders’ rights, increasing transparency, and accountability (Civil Code of RA, Article 76.1).

The Code was adopted by the Minister of Economy’s order dated 30.07.2024 and is based on the OECD/G20 Principles of Corporate Governance.

Joining the Code is voluntary, except in cases where otherwise stipulated by law. According to the listing rules of the Armenian Stock Exchange, adherence to the Code is mandatory for listed companies.

How is the Code Applied?

The application of the Code is based on the “Comply or Explain” principle. This means that an organization:

Either complies with the principles of the Code,
Or provides a well-founded explanation for non-compliance and the alternative solutions applied.
Organizations that join the Code are required to prepare and publish on their official website an annual report as prescribed by the Code, including the corporate governance report and the annual corporate governance declaration, for each reporting year by June 30 of the year following the reporting year.

What Should Organizations Do?

✅ Step 1. Adopt a decision to join the Code by the general meeting of the organization or another authorized body (in the case of voluntary adherence).

✅ Step 2. Assess the level of corporate governance maturity based on the Corporate Governance Progression Matrix.

✅ Step 3. Identify the characteristic stage of their corporate governance system and formally state the organization’s official position regarding it.

✅ Step 4. Select and complete the format of the annual declaration corresponding to the identified stage.

✅ Step 5. Publish the annual report prescribed by the Code, including the corporate governance report and the annual corporate governance declaration, on the organization’s official website by June 30 of the year following the reporting year.

✅ Step 6. After publishing the declaration, send its link via email: anhovhannisyan@mineconomy.am

The Corporate Governance Progression Matrix and the declaration formats are not mandatory, and companies may complete the declarations in a free format, disclosing their compliance with all the principles established by the Code.

Nevertheless, to assist companies in the gradual implementation of the principles and their essence, and to avoid unnecessary burden and formal compliance within their corporate governance system, the Corporate Governance Progression Matrix and the phased declaration formats have been developed, simplifying the reporting process as much as possible.

Useful Documents and Materials

📘 Corporate Governance Code

📘 Corporate Governance Progression Matrix (Guideline)

📘 Annual Declaration Format — Phase I

📘 Annual Declaration Format — Phase II

📘 Annual Declaration Format — Phase III

📘 “Comply or Explain” Principle Guideline

▶️ Video explaining the “Comply or Explain” principle