The companies’ actions in Georgia are usually regulated by the Civil Code of Georgia (1997), the Law On Entrepreneurs (1994) and the Law On Assistance and Guarantees for Foreign Investments" (1996). Our team of consultants in company formation in Georgia
can present the legal framework under which local businesses must operate.
Businessmen who want to open a company in Georgia
will find the most important regulations in the Law on Enterprises, which regulates the manner in which one can register a business here and the manner in which any legal entity may develop its business activity, as well as the obligations commercial entities have in the relation with the local institutions. The notaries, legal and accounting professions or activities related to the medicine, architecture, art and science are not considered entrepreneurial activities and are not regulated by this law.
What are the main company types in Georgia?
There are some several forms of business recognized by the law in Georgia
, as follows: sole proprietorships, joint stock companies, limited liability companies
or cooperatives. All these forms are considered legal entities, but it must be noted that the sole proprietorship (or the sole trader) is not considered a separate business form, as there isn’t any distinction between the owner and the business itself.
Also, the partnership activities are regulated by the Law on Entrepreneurs. There are two forms of partnerships: general or limited. The only forms of business that may have more than 50 partners are the stock companies and the cooperatives. You can receive in-depth information on how to register these company types from our team of consultants in company formation in Georgia
Where must companies in Georgia be registered?
Once the investors have started the procedure for company registration in Georgia
, it will also be necessary to register the company with the Public Registry
, a requirement applicable to all company types
. For all the actions performed before the registration, the founders are directly responsible. A company may begin any commercial activities only after registration.
One of the most important regulations is that, if refunding is necessary in the limited liabilities companies opened in Georgia
, stock companies and cooperatives, the founders must record the changes with the Public Registry
. This fact is possible only by reducing the authorized capital
Another rule stipulated by the law is that half of the company’s capital must be deposited when the founders are signing the company’s charter. If a member is not paying his or her share in the specific period of time, he or she must receive a notification where is specified the time limit when the debt can be paid.
If this time limit is not respected, the member may be excluded from the company. The remaining partners must cover the missing part, after the member is excluded. If the capital contribution is made in kind, it must be changed into the appropriate cash value.
When registering a Georgian company
, investors must also make sure that the trading name of the legal entity
is unique at a national level. In case of a partnership, the name must contain at least one name of a general partner, this being a basic requirement.
What are the legal obligations when registering a Georgian business form?
According to the Law on Entrepreneurs, Article 5, any person who wants to register a legal entity is legally required to provide a set of information on the future company and the registration authority should receive compulsory data, such as: the company name, the business form under which the company is registered, as well as its address.
With regards to the persons who will have the quality of shareholders of the company, personal information has to be presented, such as their name and their residential address. Investors must prepare information on the management body of the company and the internal structure of the company, with the responsibilities of each party.
In the case of legal entities registered as limited liability companies or companies which are formed based on shares, the investors have to prepare details on the shareholding structure of the company as well. Our team of consultants in company registration in Georgia
can offer an in-depth presentation on other documents that should be submitted upon the incorporation of a legal entity.
If the investor wants to start a business through a sole trader, it is necessary to know that there are fewer documents to be completed and fewer information the local institutions will request from the businessman. For instance, one should present information with regards to the person’s identity and the place of business, an application form and an e-mail address.
It is also important to know that this entity can be registered by foreigners as well, but additional steps will have to be completed in this sense and you can request the help of our team of specialists
, who can assist you in the process of opening a company in Georgia
as an individual entrepreneur. Our team is ready to provide full legal advice on any aspect that is regulated by the Company Act
, so do not hesitate to address to our specialists
The management of a Georgian company
The obligation to carry management tasks within a company is the responsibility of the company’s director – this is applicable when the legal entity is represented by entities registered as limited liability companies, joint stock companies or cooperatives. The company’s chart may stipulate that the company may be ruled by two directors instead of one or by a board of directors.
The managers of the company are responsible for keeping the company’s books and the recording of these books at the end of every financial year. A financial year cannot exceed the period of twelve months. There are several documents that must be kept by the managers for more than ten years.
Such documents can refer to the accounting documents
, the business mails, organizational documents, accounting books, balance sheets or inventory sheets. Within the first three months of every financial year, the managers must fill the balance sheet and the annual account of the previous economic year and also the activity report.
Liquidation of a company in Georgia
The legislation on commercial companies in Georgia
also prescribes the manner in which the liquidation of the company can be carried out. There are a set of reasons for which a local business can be liquidated and you must know that our team of specialists in company formation in Georgia
can help you in this process.
A Georgian company can be liquidated due to the following reasons: the end of the company’s availability, a court decision based on a request from a creditor, if the laws are broken by the company or if a decision is taken during a general meeting by the company’s members.
Also, a company may be liquidated very easy if it didn’t issue any shares or didn’t perform any commercial activity. If the company did raise any shares and performed commercial activities, a liquidator is appointed to make all the necessary arrangements in order to liquidate the company established in Georgia.
What is the current situation of the business environment in Georgia?
Foreign investors who are wishing to open a company in Georgia
must know that this country provides an extremely attractive business environment, given that in the last decade the local government created numerous policies to increase the local economy and expand its relations with third parties. According to the data presented by the National Statistics Office of Georgia
, the local business market is characterized by the following:
- • starting with 2014, the local economy increased, and this was observed in the number of persons employed – in 2014, there were 592,100 employees, while in 2019, the number of employees increased at 756,900 persons;
- • the average monthly salary of a worker also increased from GEL 800.5 in 2014 to GEL 1161.7 in 2019;
- • the value of the purchases of goods or services for resale in the business sector also increased at a steady rate since 2011, when it had a value of GEL 18.6 billion, to GEL 41.2 billion in 2019;
- • the production value also expanded – in 2013, it stood at a value of GEL 23.6 billion and in 2019, it increased at 47.5 billion;
- • the turnover reported by the business sector expanded rapidly in the last years, as for instance, in 2010, it was of only GEL 24.4 billion, and in 2018, it increased at GEL 86.6 billion (and in 2019, it reached GEL 109 billion).