Ensuring Regulatory Compliance: Re-registration Demands for Companies Established Before 2022
The Law of Georgia “on Entrepreneurs” was amended in January 2022, resulting in enhanced regulations for corporate governance and business transparency in the country within the entrepreneurship landscape. One salient modification pertained to companies that had been registered prior to 2022, signifying its significance in the realm of entrepreneurship in Georgia. Namely, a company registered before the entry into force of this Law is obliged to adjust its registration data to the requirements of this law within 2 years after the entry into force of this law.
Previously, a record of a company’s incorporation sufficed for registration purposes. However, with the amendments, a founders agreement at this moment constitutes an essential requirement for establishing the company. This agreement comprises the articles of association and other mandatory information prescribed by law. The legal framework requires that the founder’s agreement contains a minimum amount of data, alongside the articles of association. Specifically, this pertains to information such as the company name, partner details, and legal address.
In accordance with the law, the articles of association impose an obligation on entrepreneurs to identify several key elements. These include:
- determining the legal entity form of the entrepreneurial company;
- specifying the subject of entrepreneurial activity, which may encompass general or specific activities;
- agreeing on any limitations concerning ownership of shares among partners;
- additionally, information on the existence of a partnership agreement must be provided, if applicable.
By December 31, 2023, all companies that were registered prior to January 1, 2022, are required to establish a personal account on the electronic portal. This portal will operate alongside the Public Registry and will be accessible to the company director as well as any third party. All relevant documents such as decisions on amendments, general meeting notices, etc. must be uploaded to the personal account in order for changes to be registered with the Public Registry or made publicly available in accordance with applicable law.
Failure to comply with these requirements within the designated timeframe prompts the registering authority to grant an additional three-month period for entrepreneurs to rectify any discrepancies. If the issue remains unresolved after this period, the registration of the company or its branch is revoked. Liquidation is only permissible if assets remain after revocation, and liquidators are appointed based on a partner’s or creditor’s application.