Running a Company in Georgia: Governance and Ongoing Rules

Registering a company is only the first step. The Law of Georgia on Entrepreneurs also regulates how a company is governed, managed and operated after its incorporation. While the law gives shareholders considerable flexibility to organise the company’s affairs through its charter, certain statutory rules are mandatory and cannot be overridden.

Company bodies

Depending on its legal form, a company may have up to three governing bodies:

• the General Meeting of Shareholders;
• the management body (one or more directors); and
• a supervisory board.

A supervisory board is required only where the law or the company’s charter so provides.

In a typical Limited Liability Company (LLC), the General Meeting of Shareholders makes the principal corporate decisions, while the director(s) are responsible for the company’s day-to-day management and representation.

The General Meeting of Shareholders

All shareholders have the right to participate in the General Meeting of Shareholders, which is the company’s supreme governing body.

The company must hold an annual general meeting at least once each year, no later than six months after the annual financial statements have been prepared. The meeting is convened by the management body, unless the law or the charter provides otherwise.

Unless a higher majority is required by law or the charter, resolutions are adopted by a majority of the votes cast.

Where the company has a single shareholder, that shareholder exercises the powers of the General Meeting and records its decisions in writing.

Directors

The director (or directors) is responsible for the company’s day-to-day management and represents the company in its dealings with third parties.

Unless the charter provides otherwise, each director is authorised to represent the company independently. The charter may instead require joint representation or otherwise regulate the directors’ powers of representation.

The directors are responsible for implementing resolutions of the General Meeting that fall within its competence.

Directors’ duties and liability

Directors owe their duties to the company and must act in good faith, with the care that an ordinarily prudent person in a similar position would exercise, and in the best interests of the company.

Where two or more directors breach their duties through a joint act or omission, they are jointly and severally liable to the company for the resulting damage.

Resolutions of the General Meeting of Shareholders adopted within its statutory powers are binding on the shareholders, the directors and the company’s other governing bodies.

Keeping the public register up to date

Companies must ensure that the information recorded in the National Agency of Public Registry remains accurate and up to date.

Any changes to the registered information—such as the company name, registered office, directors, shareholders or charter—must be registered in accordance with the Law on Entrepreneurs. As the register is public, these changes become publicly available once recorded.

The law also requires certain significant events to be registered, including the establishment or closure of a branch, the commencement or completion of liquidation, the appointment or removal of liquidators, and the commencement of insolvency proceedings.

Business correspondence issued by a Limited Partnership (LP), Limited Liability Company (LLC) or Joint Stock Company (JSC) must include the company’s prescribed identifying information.

Financial statements

Companies must prepare annual financial statements, which form the basis for the annual General Meeting of Shareholders.

Certain companies and branches are subject to additional financial reporting and publication requirements under Georgian accounting and auditing legislation. For example, branches of foreign LLCs and JSCs may be required to publish the financial statements of their parent company where prescribed by law.

The detailed accounting, audit and publication requirements are governed by separate legislation, particularly the Law of Georgia on Accounting, Reporting and Auditing, and depend on the company’s size and classification.

Reorganisation

The Law on Entrepreneurs provides several ways to reorganise a company, including:

• conversion into another legal form;
• merger with another company; and
• division into two or more companies.

In a merger, the surviving company succeeds to all rights and obligations of the merging company or companies.

In a division, the recipient or newly established companies become jointly and severally liable for the divided company’s obligations, up to the value of the net assets allocated to each of them.

The law also protects creditors. A creditor whose claim arose before the reorganisation may, within three months of the registration of the reorganisation, require adequate security if it can demonstrate that the reorganisation jeopardises satisfaction of its claim.

Redomiciliation

The Law on Entrepreneurs also allows certain foreign companies to redomicile to Georgia. Instead of incorporating a new Georgian company, an eligible foreign company may continue its legal existence under Georgian law, subject to the statutory conditions and the law of its home jurisdiction.

Frequently asked questions

What bodies govern a Georgian company?

A company is governed by the general meeting of partners and a management body. A supervisory board exists only where the law or the company's charter provides for one.

How often must a company hold a general meeting?

A regular general meeting must be held at least once a year, no later than six months after the annual balance sheet is drawn up. The management body is responsible for holding it.

What happens if a company has a single owner?

If a company has a sole partner, that partner exercises the powers of the general meeting, and decisions taken within those powers must be documented in writing.

Do I have to report changes after registration?

Yes. Changes to registered data must be filed with the registration authority, and the registry remains public. Managers must also report events such as branch closure, liquidation or insolvency.

Can a Georgian company be merged, divided or converted?

Yes. The law provides for reorganisation by conversion, merger and division, with a three-month window for creditors to require security for their claims after the reorganisation is registered.