YEREVAN, January 19. /ARKA/. By a vote of 115 to 4 abstentions Armenia's National Assembly has approved today in the second and final reading a set of amendments to the Civil Code and a package of related draft laws proposed by the opposition Bright Armenia party's parliamentary faction.

Bright Armenia MP Arkady Khachatryan said that the main purpose of these changes is to improve the existing system of guarantees, which are especially important for persons who are not individual entrepreneurs and who act as a back-up for someone signing a credit contract.

"The main goal is to increase the legal protection of individual guarantors," he said.

Speaking about the problems arising from the current legal regulations, Khachatryan said  banks and credit organizations require personal guarantees of an individual when concluding a credit contract with a borrower, but the contracts do not specify the maximum amount of guarantor's liability.

Moreover, the contracts often contain a clause according to which the guarantor is obliged to agree in advance to liabilities that may arise in the future.

"As a result, an individual who acts as a back-up for a borrower who was given one million dram loan  may in the end be obliged to liabilities 4, 5, 10 times higher because of accrued fines and penalties," he said.

Another significant problem, according to Khachatryan is that the guarantors are jointly liable with the main borrower and, therefore, claims are presented to them as well and their property becomes subject to confiscation.

He said the proposed changes determine that when guarantee contract is concluded with individuals, the maximum monetary amount of their liability should be limited.

Khachatryan stated that from now on, under the guarantee agreements to be concluded with individuals, they must bear subsidiary, that is, additional, responsibility.

"This means that claims against a guarantor can be presented only after the claim is made to the main borrower, and, secondly, the confiscation can be extended to guarantor's property only after the confiscation of the borrower's property," he explained. -0-