Introduction of SAFE Agreements Into the Laws of the Republic of Armenia

The Republic of Armenia has a new law in effect since May 30, 2024, governing Simple Agreement for Future Equity (SAFE), establishing a fresh avenue for startup funding. This law allows investors to invest capital into a company's equity in exchange for future shares.

Key points of the SAFE agreement (art. 38.2 of Law “On Joint Stock Companies”):

• An investor agrees to invest a certain amount of money in a company that undertakes to issue shares when certain conditions are met.
• The funds are transferred by the investor, and the shares are issued upon fulfilment of the conditions.
• The shares must be issued by the company within 60 days of fulfilment of the conditions.
• Shareholders' preemptive rights are waived.
• The investment relationships are governed by the laws of the Central Bank.
• SAFE agreements may include terms related to fund reimbursement and interest payments.
• These agreements are classified as securities.