Georgia Company Formation

1. Choosing the Legal Structure:

• Limited Liability Company (LLC) - (Georgian: შეზღუდული პასუხისმგებლობის საზოგადოება - შპს):
  • This is the most common and recommended structure for foreign investors.
  • Offers limited liability to shareholders.  
  • Requires at least one shareholder.
  • Relatively flexible management structure.  
• Joint Stock Company (JSC) - (Georgian: სააქციო საზოგადოება - სს):
  • Suitable for larger companies and those planning to raise capital through public offerings.  
  • More complex structure with stricter regulations.
• Branch Office (ფილიალი):
  • An extension of a foreign company.  
  • The foreign company remains liable for the branch's obligations.  
  • Simpler to establish than a subsidiary.
• Representative Office (წარმომადგენლობა):
  • Used for market research and liaison activities.
  • Cannot engage in commercial activities.
• Individual Entrepreneur (ინდმეწარმე):
  • For sole traders, not generally recommended for foreign investors that want to limit liability.

2. Key Steps in Company Formation:

• Registering with the Public Service Hall (PSH):
  • Georgia's PSH offers a streamlined online and in-person registration process.  
  • Most registrations can be completed within a short timeframe.
• Drafting the Articles of Association (წესდება):
  • This document outlines the company's purpose, share capital, management structure, and other key details.
  • It is advisable to have this document drafted by a legal professional.
• Appointing a Director:
  • Companies must appoint a director, who can be a foreign national.
• Opening a Bank Account:
  • A corporate bank account is required for business operations.
• Registering with the Revenue Service of Georgia:
  • Register for tax purposes, including VAT and corporate income tax.  
  • Obtain a tax identification number.

3. Key Considerations for Foreign Investors:

• Language:
  • Georgian is the official language, and official documents must be in Georgian.  
  • English is increasingly used in business, but legal documents should be in Georgian.
• Legal and Tax Advice:
  • Seek professional legal and tax advice from experts in Georgia.
  • This will ensure compliance and prevent potential issues.
• Due Diligence:
  • Conduct thorough due diligence before making any investment.
• Administrative Procedures:
  • Familiarize yourself with Georgian administrative procedures.
• Up to date information:
  • Ensure that you are using the most up to date information from the governing offices.