{"id":9606,"date":"2025-04-07T10:46:32","date_gmt":"2025-04-07T10:46:32","guid":{"rendered":"https:\/\/fsgroup.ge\/%e1%83%9b%e1%83%94%e1%83%ac%e1%83%90%e1%83%a0%e1%83%9b%e1%83%94%e1%83%97%e1%83%90-%e1%83%a8%e1%83%94%e1%83%a1%e1%83%90%e1%83%ae%e1%83%94%e1%83%91-%e1%83%90%e1%83%ae%e1%83%90%e1%83%9a\/"},"modified":"2025-04-07T10:50:17","modified_gmt":"2025-04-07T10:50:17","slug":"the-new-law-on-entrepreneurs-a-guide-to-ensuring-compliance","status":"publish","type":"post","link":"https:\/\/fsgroup.ge\/en\/the-new-law-on-entrepreneurs-a-guide-to-ensuring-compliance\/","title":{"rendered":"The New Law on Entrepreneurs \u2013 A Guide to Ensuring Compliance"},"content":{"rendered":"
January 1, 2022, marked a significant milestone in the history of Georgian entrepreneurial law, as on this date, the old version of the \u201cLaw on Entrepreneurs\u201d from 1994 was declared invalid and a new law came into force. This law regulates the legal forms of entrepreneurs, the procedures for their incorporation and registration, as well as issues related to their activities.<\/p>\n

The goal of the reform was to create a legislative framework tailored to the needs of modern business, to simplify procedures for attracting investment, to develop flexible regulations adapted to investors\/partners, and at the same time to fulfill the obligations outlined in the Association Agreement signed between Georgia and the European Union.<\/p>\n

Three years after this significant date, it might seem logical for the \u201cnew\u201d law to now be considered \u201cold.\u201d However, the fact remains that despite simplified and flexible legislative possibilities, businesses are still struggling to comply with and adapt to the new legal requirements.<\/p>\n

Specifically, upon the adoption of the new law, enterprises were granted a two-year period from the law’s enactment to align their enterprise\/branch registration data with the new requirements.<\/p>\n

Later, this two-year deadline was extended until April 1, 2025, to give businesses more time for compliance. Subsequently, the deadline was postponed once again, and the current date for making these changes is set as April 1, 2026.<\/p>\n

According to the explanatory note to the legislative amendment, the purpose of extending this transitional period by one year is to facilitate enterprises\u2019 compliance with the legal requirements for registration data and to avoid disruption to their operations.<\/p>\n

All of the above logically indicates that enterprises are having difficulty ensuring compliance and require an extension of the deadline to support them in this process.<\/p>\n

In light of this need, we believe that the regulations established by the new \u201cLaw on Entrepreneurs\u201d remain highly relevant both for already established businesses and for those planning to register in the future. Therefore, in this article, we present an overview of Georgia\u2019s entrepreneurial legislative framework, covering the most important aspects of the field. The article serves as a guide for those aiming to align with the new legal requirements.<\/p>\n

Business Registration<\/strong><\/p>\n

According to the \u201cLaw on Entrepreneurs,\u201d registration of an entrepreneur is mandatory. To establish an entrepreneurial entity, an instrument of incorporation is required, which should include the statute (charter) and must be signed by all founding partners.<\/p>\n

The new law outlines a list of mandatory data that must be included in the instrument of incorporation. These include: the business name of the entrepreneurial entity, legal address, identification details of the founders, and identification details of the person(s) authorized for management and representation, among others.<\/p>\n

As for the statute (charter), it must contain, at a minimum, the legal form of the entrepreneurial entity, the scope of activity, information on any partnership agreements (if applicable), and more.<\/p>\n

Standard charters based on the legal forms of entrepreneurial entities are approved by the Minister of Justice of Georgia. Founders of an enterprise may choose whether to use a standard charter or to develop their own.<\/p>\n

While the use of a standard charter is fully sufficient for company registration, we always recommend that founders develop an instrument of incorporation and charter tailored specifically to their needs. Why? Because a charter or instrument of incorporation may establish rules different from those prescribed by law (except for mandatory legal provisions). A charter may also regulate matters that are not addressed by law at all or expand upon legal norms that do not comprehensively regulate certain issues.<\/p>\n

Therefore, the legislation offers investors\/founders significant freedom to establish the internal rules for their company themselves and to avoid potential disagreements, ambiguities, and disputes in the future.<\/p>\n

Developing a customized charter is the most solid guarantee for preventing potential risks and for protecting your interests as fully as possible.<\/p>\n

Tip: Don\u2019t use a standard charter! Create an individualized charter tailored to your interests!<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Bringing Registration Data into Compliance by April 1, 2026<\/strong><\/p>\n

Already registered companies are required to ensure that their registration data complies with the requirements of the law by April 1, 2026. To meet this obligation, they must submit an instrument of incorporation and charter that comply with the new law to the registering authority.<\/p>\n

Failure to fulfill this obligation will result in the suspension of the company\u2019s registration. This status will be reflected in the public registry, and no extract from the registry will be issued. Additionally, the information will be forwarded to the Revenue Service, the Service Agency of the Ministry of Internal Affairs, and banks operating in Georgia. Furthermore, the company will face restrictions on asset management, participation in tax-related operations, management of bank accounts, opening new accounts, accessing existing funds, and obtaining loans.<\/p>\n

In other words, by failing to meet your registration obligations, you risk halting your entire business operations and endangering its future.<\/p>\n

Tip: Don\u2019t wait until the deadline is near! Identifying the interests of the founders and potential risks\u2014as well as developing an individualized founding agreement and charter\u2014is a time-consuming process! Take steps to protect yourself from risks before the deadline approaches!<\/strong><\/p>\n

 <\/p>\n

New Types and Classes of LLC Shares<\/strong><\/p>\n

The new law allows limited liability companies (LLCs) to have a more complex share structure\u2014something that was not permitted before its enactment. Specifically, the law introduces the following types of shares:<\/p>\n