Company Registration in Georgia - Business Starting & Setup

The legal system of Georgia is based on civil law and stands apart along with legal systems of other CIS countries (Eurasian group).

The global transformation of the Georgian legal system started in 1990s. In 1995, a new democratic Constitution was adopted, and by 2000 the majority of basic codes had been updated, which laid the foundation of the modern legal system of Georgia.

The main sources of law are legislative and regulatory acts: the Constitution, laws of the Parliament, decrees of the President, bylaws of ministries, agencies, and local authorities.

A special place in the system of sources of law is occupied by decisions of the Constitutional Court, which may cancel any provision of a law or bylaw.

Customs are of secondary importance and apply if they do not contradict generally accepted provisions of law, standards of morality or public order (clause 4 of article 2 of the Civil Code of Georgia).

One of the pillars of stability of Georgia is the Economic Freedom Act. In 2023, the country ranked 21st among all European countries in terms of economic freedom.

In accordance with article 2 of the Law on Entrepreneurs several types of legal entities may be incorporated in Georgia, each of which has its own features and advantages. The main of them are listed below.

Registering as a sole proprietorship will be interesting to novice businessmen because of the favorable tax regime: in certain conditions a Georgian sole proprietorship is allowed to obtain the status of a small business, which pays a 1% income tax.

According to article 2 of the Law of Georgia on Entrepreneurs, a sole proprietorship is not a legal entity and shall only exercise their rights and fulfil their obligations in business relationships as an individual.

A sole proprietorship is considered formed upon its entrance in the Register of Entrepreneurs and Non-entrepreneur (Non-commercial) Legal Entities.

The following documents are required to register a sole proprietorship:

• passport with a stamp proving legal crossing of Georgia’s border;
• cell phone with a local SIM card;
• email address (preferably not the .ru domain, but, for example, gmail.com);
• registered address in Georgia; money to pay state duties.

Joint liability company (JLC) is a legal entity where a few founders (partners) jointly conduct business activity under a single name (company name).

Unlike a limited liability company (LLC) and joint stock company (JSC), its founders are liable to creditors of the JLC as joint and several debtors to the extent of all their property.

All partners have the right to manage the joint liability company.

Limited partnership (LP) is a legal entity where a few persons conduct business activity under a single company name.

Partners of a limited partnership may be limited when liability of one or more partners to the partnership’s creditors is limited to a certain guarantee amount; such partners are liable to the extent of the amount contributed by them. They do not participate in the partnership’s activity.

There are also general partners. They are full-fledged members of the partnership who make decisions on all matters of the partnership’s business and are liable to creditors of the partnership as joint and several debtors to the extent of all their property.

Both individuals and legal entities may be partners in a limited partnership. Partnership stakes may only be held by limited partners, unless the partnership agreement provides otherwise.

Limited liability company is a legal entity whose liability to creditors is limited to all its property. An LLC may be founded by one person.

Limited liability company (LLC) is the most common type of company. This form of incorporation is chosen due to simplicity of registration and administration.

Joint stock company is a legal entity whose capital is divided into a number of shares of a certain class as determined by the articles of association.

Share is an unmaterialized registered security that proves JSC’s obligations towards the shareholder and their rights in the joint stock company.

Shares may be held not only by the company’s founders but also by any third parties after they have been purchased on a securities market.

Liability of a joint stock company to its creditors is limited to all its property, and its members are not liable for its obligations to third parties.

Cooperative is a legal entity based on labor activity of its founders or formed for the purpose of economic development and increase of income of its founders.

A cooperative is normally formed by founders to perform specific tasks. And its activity is not primarily aimed at profit making. This goal is secondary in this case.

Georgia is considered one of the countries that have the simplest company incorporation procedures. And incorporation fees are quite low.

A Georgian company may be incorporated remotely.

Each company incorporated in Georgia must be entered in the Register of Entrepreneurs and Non-entrepreneur (Non-commercial) Legal Entities. The Register’s data is available to the public.

Registration is performed by the National Agency of Public Register (NAPR).

A registration resolution is effective after the parties have officially familiarized themselves with it or it has been published on the official website of NAPR.

When incorporating a company, the applicant shall provide 3 company name options (in order of priority) to be checked by the Registry of Companies. The Registry of Companies will check them in the stated order. At the Registry’s website, one can check if a company name is taken or not, which will not require the provision of 3 proposed name options. A company name must be in Georgian; an English version may also be registered.

The company name of a joint liability company must contain the name and surname of at least one of the partners and the abbreviation JLC.

The company name of a limited partnership must contain the name and surname of at least one general partner and the abbreviation LP.

A limited liability company may be incorporated in Georgia by non-resident individuals and foreign companies.

By the end of 2022, among the total number of new companies incorporated in Georgia (around 315 000) there were 303 000 limited liability companies.

1. To incorporate a company an incorporation application shall be signed by all its partners, certified in the prescribed manner and filed with the registration authority, and it shall contain:

• company name;
• form of incorporation;
• registered address;
• full name, place of residence and personal numbers of the founders of LLC;
• company’s management body, decision-making procedure, and data on founders’ stakes;
• full name, residential address and personal number of the manager of stakes of the founders of LLC (if any);
• obligations connected with restriction of property rights in the founders’ stakes;
• full name, residential address, personal number and term of office of the person authorized to manage and represent the company;
• full name, residential address and personal number of the procurator (if any).

Notarial certification of the incorporation application is not required if authorized persons sign it with the registration authority or it is certified in the prescribed manner by an authorized administrative authority.

The following must be provided along with the incorporation application:

• passport copies of the founders;
• memorandum and articles of associations of the company;
• prove of the registered address; and
• document proving that state duties have been paid.

A document proving that there is authorized capital is not required to be provided for incorporation purposes.

It should be noted that some kinds of business require special licenses.

Certain kinds of business also require a note in documents provided for registration.

2. After all required documents have been filed and the payment of incorporation fees has been proven, an identification number is assigned to the company, and a certificate of incorporation and certificate of tax registration are issued.

An extract from the Register is as valid as the certificate of tax registration.

3. After that, a corporate account is opened with a Georgian bank for the company’s operations.

Incorporation of a Georgian company takes 2 to 7 workdays.

A company must have a registered office in the country.

A company is registered at the address that it stated. The company’s legal address must be the address where correspondence (written notices) will be sent.

A company is not required to have a seal. But it is recommended as a seal may be needed when working with banks, tax authorities and civil contractors.

Redomiciliation of a company to or from Georgia is allowed by the law.

Georgia has free industrial zones (FIZ) with additional conditions and tax benefits (depending on the company’s kind of activity):

• Hualing;
• Tbilisi;
• Poti;
• Kutaisi.

Inside a free industrial zone payments are made in any currency. There is also a simplified procedure of obtaining licenses to certain activities.

There is preferential tax treatment for companies incorporated in FIZs. For those companies, the profit tax rate is 0%.

In addition, Georgia offers a preferential tax regime to IT companies - Virtual IT Zone.

A limited liability company may have one or more directors.

A director may be an individual; their residency does not matter.

A company’s directors’ data is available to the public.

A limited liability company may be established by one or more persons.

There are no restrictions in terms of residency. Both an individual and a legal entity may be a founder.

Shareholders’ liability is limited to the value of their shares.

A company’s shareholders’ data is available to the public.

Georgia does not have a register of beneficiaries yet, and information on the real owner of a company is confidential. But information on directors and shareholders is on a public register.

The authorized capital of a limited liability company may be of any size. The law does not contain any requirements regarding the size of the authorized capital of an LLC.

When planning to incorporate a Georgian limited liability company, one should take into consideration the fact that its capital is divided into shares.