Here are some differences between open joint-stock and closed joint-stock companies in the Republic of Armenia which will help investors to choose the right form for their business;

Feature OJSC CJSC
Number of shareholders Number of shareholders is not limited A closed joint-stock company shall have no more than 49 shareholders. If the number of shareholders has increased to more than 49, the Company shall be reorganized within one year or reduce the number of shareholders accordingly. Otherwise, it is subject to judicial liquidation.
Preemptive rights in case of sale of shares of other shareholders No such right is provided for the shareholders of the Open joint-stock company A shareholder of a closed joint-stock company is entitled to the preemptive right to purchase shares sold by other shareholders of that Company.
Preemptive right to new shares placed by the Company

The shareholders of the company shall have the preemptive right to purchase new shares in proportion to their shares in the equity capital during the period specified in the charter.

The meeting of the open joint-stock company is entitled to decide not to apply (suspend) the preemptive right of the holders of the voting shares, as well as to set the validity period of that decision if the voting shares are distributed through an open subscription, and payment for the distributed shares is made in cash.

 The shareholders of the company have the preemptive right to purchase new shares in proportion to their shares in the equity capital during the period specified in the charter.
Subscription of shares The open joint-stock company is entitled to have an open subscription of its placed shares and their free sale under the conditions specified in the law and other legal acts. The open joint-stock company may also have a closed subscription of its placed shares. A closed joint-stock company is not entitled to conduct an open subscription of its placed shares or otherwise offer an unlimited number of persons to acquire them.
Increase of equity capital The open joint-stock company may make a decision on the distribution of additional shares only within the limits of the number of shares announced in the charter and only if the previously distributed shares are fully paid. There is no such limitation set for a closed joint-stock company.
Shares granted to employees The open joint-stock company is entitled to acquire the employee's shares subject to alienation at the market price, but not less than the nominal value of the given shares, if the possibility of managing the shares or derivative financial instruments distributed (provided) among the employees was limited under the charter or the employee share ownership plan. In case of forced alienation of the employee's shares in the cases provided by law, the closed joint-stock company has the preemptive right to acquire the employee's shares to be alienated at the market price of the given shares, but not less than the nominal value.
Distribution of Company shares and share-convertible securities

The open joint-stock company is entitled to distribute shares and securities convertible into shares through open or closed subscription.

The forms of distribution of shares and securities convertible into shares carried out by the open joint-stock company (open or closed subscription) are specified following the decision of the meeting.

 The closed joint-stock company is not entitled to place shares and securities convertible into shares through open subscription or otherwise offer to purchase them to an unlimited number of persons.
Convening of the general meeting The open joint-stock company shall notify its shareholders about the convening of the meeting at least 21 days before the day of convening the meeting. The deadlines for notifying the shareholders about the convening of the meeting are defined by the charter.
Requirements set for board members

In an open joint-stock company, at least one-third of the board members must be independent.

In open joint-stock companies, the positions of the chairman of the board and director (general director) cannot be combined.

 There is no such limitation set for a closed joint-stock company.
Request to form an audit committee by the board of directors In open joint-stock companies an audit committee by the board is formed. There is no such request set for a closed joint-stock company.
Request to form a Control Committee In an open joint-stock company a control committee is elected. A control committee may be elected in a closed joint-stock company.
Request to mandatory disclosure of information

An open joint-stock company shall publish information prescribed by law on the official website of the public notices of the Republic of Armenia at http://www.azdarar.am.

The open joint-stock company shall provide the information on the parties, conditions, nature, and scope of the transaction within three days after making the decision to conduct transaction in interest on the basis that the amount to be paid in the transaction or the market value of the property that is the subject of the transaction is equal to at least 10 percent of the value of the Company's assets, as well as provide the conclusion of the independent evaluator to all the Company's shareholders or publish it on the official website of the public notices of the Republic of Armenia at http://www.azdarar.am if the Company does not have its own official website.

In case of public placement of bonds and other securities issued by the company, the latter shall publish information in accordance with the Law of the Republic of Armenia "On the Securities Market", as well as in the scope and order set by the Central Bank of the Republic of Armenia.

 In case of public placement of bonds and other securities issued by the closed joint-stock company, the latter shall publish information in accordance with the Law of the Republic of Armenia "On the Securities Market", as well as in the scope and order set by the Central Bank of the Republic of Armenia.
Application of provisions regarding transactions of interest Application of the provisions on transactions in interest is mandatory for an open joint-stock company. The charter of a closed joint-stock company (the number of holders of voting shares does not exceed 10) may provide provisions on the partial or complete non-application of requirements related to transactions in interest.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.