Joint-Stock Company (JSC)
Joint Stock Companies (JSC) are typically enterprises with large capital, although there are no legal requirements for it. In Georgia, some types of enterprises, such as banks and insurance companies, are legally obligated to hold this legal form. Authorized capital of a JSC is divided into shares of equal par value. A share is a bond confirming obligations of a joint stock company before the partner (stockholder) and the stockholder’s rights in the company. Management bodies of a JSC include General Meeting, Supervisory Council, and Directors.
Under the Law “On Entrepreneurs” stocks may be:
- Ordinary – One ordinary share ensures one vote at the general meeting of shareholders. Holders of ordinary shares have the right to receive dividends or funds distributed upon company liquidation only after the same right is fulfilled for holders of preferred shares
- Preferred – A preferred share ensures receipt of dividends at a fixed rate, the amounts and distribution procedures of which are stipulated in the company charter, and, if applicable, in the emission prospect. After repayment of debts, the property of a liquidated company is first distributed among holders of preferred shares. A preferred share does not grant any vote at the general meeting, except where the company charter or the emission prospect of these shares provides one vote per preference share in exchange for dividend retention.
Limited Liability Company (LLC)
A Limited Liability Company (LLC) is one of the most widely spread entrepreneurial forms in Georgia. According to the Law “On Entrepreneurs”, liability of an LLC before its creditors is limited to company assets, and partners are not personally responsible for company’s liabilities.
Capital of an LLC is divided into shares. There is no legal requirement for minimum or maximum amount of capital (charter capital). Rights and obligations of partners and terms and conditions for share transfers are stipulated by company charter.
A Limited Liability Company is founded by joining the partners’ capital. The company’s existence does not depend on its members; therefore, exit of a partner will not result in automatic liquidation. An LLC may be established by the state, by one or more individuals, legal entities or any combinations thereof.
Company partners exercise their management authority at the general meeting of partners. Competences of general meeting, procedures for carrying out decisions, responsibility and competences of directors and composition and functions of governing bodies are stipulated in the company charter.
General Partnership (GP)
GP is a company where several persons jointly carry out independent entrepreneurial activity under the common company name. In GP the obligations of one or several partners towards the creditors of the partnership is limited to their investments into the company (limited partners – Comandits), while the other partners (Complementars) are personally liable for any debts arising in course of operation of the GP.
Limited Partnership (LP)
Limited partnership is a company where several people, under the same firm name, carry out entrepreneurial activity. There are two types of partners in a limited partnership: those whose liability before the creditors is limited by the fixed guarantee sum – commandites – and those who are personally liable – complementars. Company partners may be both natural persons and legal entities.
Limited partners do not participate in company management. They may not object to actions by partners with personal liability within the routine operations. Limited partners only have the right to demand a copy of annual report and verify its accuracy per accounting records and other documents. Profits and losses of the financial year that exceed an established amount are to be distributed on a pro-rata basis among partners, unless otherwise stipulated by the company charter. Limited partners only have right to demand their due profit if their share in the capital is less than the agreed amount due to incurred losses or settlements.
Limited partners are not obligated to return any profits they have received in light of future losses. The guarantee sum of a partner in respect to the company’s creditors is determined by the sum recorded in the Public Registry, if this sum is already paid. Share of a limited partner may be transferred or succeeded without the consent of other partners, unless otherwise stipulated by the company charter. Notarized agreement is required for the share transfer.
A Cooperative is a legal entity based on Labor activity of its members or established with the purpose of developing business and increasing profit of its members. The goal of a cooperative is to fulfil its members’ interests. A cooperative is not primarily orientated at gaining profits.
A cooperative is responsible for its obligations before creditors only with its own property. Minimum share of a cooperative member is determined by founders. One member of the cooperative may have several shares. After a cooperative is registered in Public Registry, an outside individual can become its member if he/she presents a signed application of membership.
Individual Enterprise (IE)
Individual Entrepreneur is a firm owned by one natural person. This is the simplest and most affordable form of entrepreneurial activity and is most popular in agricultural sector. As the owner of an enterprise, an individual entrepreneur is a natural (physical) person whose entrepreneurial activity requires an organization arranged in an
entrepreneurial manner, regulated cash and bookkeeping. Individual Entrepreneurs act on their own behalf in legal relations, bearing personal liability for any obligation arising from their entrepreneurial activity.
Any foreign legal entity (commercial or noncommercial) without the purpose of incorporating any of the aforementioned separate legal entities under the laws of Georgia, may establish and operate its business through a Branch Office registered in Georgia. The Branch Office is the sub-unit of a business entity and is not considered as a separate legal entity. Therefore, the liability of its founder may not be limited to the assets of the branch itself. The latter denotes that the founder is financially liable for the obligations of the branch.
Registration requirements for JSC/LLC/GP/LP/CO:
Under the Law “On Entrepreneurs”, registration of a legal entity is performed by the National Agency of Public Registry (NAPR). Registration of legal entities is simplified, and the principle of “one window” is established.
To register an enterprise, the person(s) present copy of their identification documents, application, a charter in duly authorized form and signed by all partners or their authorized representatives and pay registration fee. Registration application includes:
- Firm name (firm)
- Organizational and legal form
- Location (legal address) and electronic address
- Name, date and place of birth, occupation and place of residence of each founding partner and director, or, if founder is a legal entity, firm name and registration records thereof – legal address, registration date and number, legal form, and information on authorised representative(s)
- Decision-making procedures for highest governing body. In case of a limited liability company information about each partner’s share of holding
- Information about any limitations for entity representatives
- In case of a limited partnership – notification on limited and personally liable partners.
In addition to above-mentioned documents, it is necessary to appoint natural person(s) to manage or represent the entity – a proxy, usually – a company director. If an entity has two or more persons authorized to represent it, then the document shall indicate whether they are representing an entity together or independently. Having consented to appointment, the proxy shall submit his/her signature specimen in notarized form or directly at the Public Registry.
Registration fees are as follows:
In one working day – GEL 100
On the same day – GEL 200
Registration of Individual Entrepreneur:
To register as an Individual Entrepreneur, the following documents are required:
- Applicant’s full name
- applicant’s place of residence
- applicant’s identification number
- applicant’s signature
- date of filing application
- identification document
payment receipt for registration service fee.
The same set of documents is required from foreign citizens opting to register as Individual Entrepreneur.
Registration fees are as follows:
In one working day – GEL 20
On the day of applying – GEL 50.
Registration of Branch office:
The Public Registry requires the following documents to be submitted by foreign legal entities of a branch: (including an application for registrations):
- Decision of the founder on opening a branch in Georgia;
- Charter (Articles) of the founder company;
- Document certifying the proof of registration of the founder company in the foreign jurisdiction; if the founder is a legal entity, the same or the separate document should indicate the names of the authorized representatives and other corporate details of the founder;
- Decision on appointing the Head of the
- Company (director) or the relevant Power of Attorney thereof and consent of the latter on such appointment;
- Notarized permission of the company’s legal address owner or rent agreement, if office area is rented
- Passport photocopies of the director to be appointed of a branch;
- Power of Attorney from the director (head) to be appointed at the branch;
- Receipt evidencing payment of registration fee