Establishing Your Business Presence in Georgia: A Strategic Guide

Expanding your global footprint through a Georgian subsidiary offers significant advantages, including limited liability protection, enhanced market credibility, and potential tax benefits. Establishing a local entity signals commitment to the region, building trust with clients and partners who prefer working with companies that have a physical presence in Georgia. This strategic move can be a cornerstone for successful international growth.

Limited Liability Company (LLC)

The LLC is the most popular corporate structure for private enterprises in Georgia. It functions as a separate legal entity where shareholder liability is confined to their capital contributions. The company's assets are responsible for debts, shielding partners' personal assets.

A Supervisory Board is mandated by Georgian legislation.
Decisions typically require a majority vote based on share capital, unless the charter specifies otherwise.
Amendments to the charter generally need a three-fourths majority vote.
An annual general meeting must be convened within six months of the financial year-end.
Shareholders holding at least 5% of capital can request an extraordinary general meeting.

Joint Stock Company (JSC)

A JSC is characterized by its capital being divided into shares. Shareholders' liability is limited to their investment in the company.

Minimum authorized capital requirement is 100,000 Georgian Lari (GEL).
Share registration can be managed internally with up to 50 shareholders; beyond that, a licensed registrar is required.
Companies can opt for a one-tier (Board of Directors) or two-tier (with a Supervisory Board) management system.
The Annual General Meeting must be held no later than three months after the fiscal year ends, with 21 days' advance notice.
Special audits can be requested by shareholders owning more than 5% of shares.

Cooperative

This entity is formed based on members' labor or to support their socio-economic activities, prioritizing member needs over profit generation.

Liability is limited to the cooperative's property.
Requires a minimum of five founders, either individuals or legal entities.
Capital can be increased by admitting new members or through additional contributions.
A members' register detailing shares and identities must be maintained.
General Meetings are held at least annually. If membership exceeds 500, a delegates' assembly may replace the general meeting.
Profit or loss distribution is decided during the annual report approval.

Joint Liability Company (JLC)

Partners operate under a common trade name and bear unlimited, joint, and several liability for company obligations.

Requires a minimum of two partners, each typically authorized to represent the company.
Charter amendments usually require unanimous partner consent.
Partners can request a general meeting with one week's notice.
Partners are entitled to a dividend of up to 4% of their capital share from annual profits.
Necessary expenses incurred by partners for company activities must be reimbursed.

Limited Partnership (LP)

This structure includes at least one general partner with unlimited liability and one or more limited partners liable only up to their contribution.

Limited partners can only represent the company with a specific power of attorney.
They cannot act contrary to general partners in normal business operations.
Voting rights for limited partners are restricted and typically grant one vote per partner.
Profit share is proportional to the capital contribution.

Key Steps for LLC Registration

The National Agency of Public Registry (NAPR) under the Ministry of Justice oversees business registration. The process is streamlined and can be completed in approximately 10 days.

Application Submission: File an application with NAPR, including the company charter, proof of legal address, and relevant authorizations.
Registration & Tax ID: Obtain the company registration certificate and tax identification number.
Tax Registration: Register with the tax authority for corporate tax and, if applicable, Value Added Tax (VAT).
Company Seal: While optional under recent legal changes, a company seal is still commonly used.
Bank Account: Open a corporate bank account with the registration documents and notarized signature samples.
Commence Operations: Begin business activities after securing all necessary permits and licenses.

Ongoing compliance, including annual filings, record-keeping, and tax obligations, is crucial for maintaining good standing.

Entry Models for Foreign Enterprises

Foreign companies can establish a presence in Georgia through three primary structures:

Subsidiary: A separate legal entity, independently managed and taxed in Georgia. This is the most common route for active trading.
Branch Office: Not a separate legal entity. The foreign parent company retains full liability for the branch's operations and debts.
Representative Office: Suitable for non-trading activities like market research or promotion. It cannot generate profit in Georgia and has simplified reporting requirements.

Navigating Georgian Corporate Law

The Georgian Law on Entrepreneurs provides the legal foundation for corporate activities. It governs company formation, governance, shareholder rights, financial reporting, and dissolution. Key compliance areas include submitting annual tax returns (by April 15th), adhering to VAT regulations if applicable, fulfilling payroll obligations, and complying with data protection laws. Regular monitoring of legal updates is essential for risk mitigation.

Alternative: Employing Talent Without a Local Entity

For businesses seeking agility, SailGlobal offers an Employer of Record (EOR) solution. This allows you to hire talent in Georgia without establishing a legal entity. SailGlobal assumes the legal responsibilities of employment—including payroll, benefits, tax filings, and full compliance with local labor laws—enabling you to focus entirely on your core business operations and market expansion.

Company Registration in Georgia: A Guide to LLC, JSC & Business Setup