Creation of a Regulatory Framework for S.A.F.E. (Simple Agreement for Future Equity - SAFE) contracts

The reform implied changes to the Law "On Joint Stock Companies" by defining in it the concept of the SAFE contract and the main conditions of its application, taking as a basis the business practices already formed in the world and in the Republic of Armenia. In particular, according to the proposed regulation, it is defined that 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) determined by the contract, upon reaching the conditions specified by the contract or shares of the number, type and class to be determined in accordance with the contract. The parties determine the conditions defined in the contract by mutual agreement based on the principle of freedom of contract. As a rule, such conditions include public offering of shares and/or other securities by the Company, investment of a certain volume in the authorized capital of the Company by a third party, sale of the Company's shares or a certain part of them, etc.