Georgia`s economy has witnessed a rampant growth over the last decade and it is in no way going down the hill or even slowing down in the coming years.To keep the trend growing, the government of the country is taking many initiatives such as simplification of the taxation system, reduction and simplification of the rules and regulations of investment and business ecosystem, development of transportation and energy infrastructure and paving the way for easier property registration.
The economy of the country is focused primarily on tourism, agribusiness, logistics business, and wine-making. Georgia is an open economy that welcomes entrepreneurs from all over the world to come and set-up their business in this culturally and ecologically diverse nation. Georgia is trying to gain a strong foothold in the global economy by joining hands with the World Bank to achieve the government`s vision for the country as indicated in the `Georgia 2020` program.
Before you start your business, you must know about the various kinds of business entities that are allowed in Georgia so that you can smoothly get on with the process of company registration in Georgia.
Types of Business Entities in Georgia
According to the Civil Code known as The Law on Entrepreneurship of 1994, this is the complete list of enterprises that can be formed in Georgia.
1.Limited Liability Company (LLC)
- It is the most typical form of business entity that is registered in Georgia.
- The liability of each and every partner is limited to the share capital that he/she has contributed to the business.
- The shareholders and the directors of an LLC in Georgia don`t have to be natural Georgian citizens and all their details have to be made available to the public.
- Re-domiciliation is not allowed but there is no point in looking for this in Georgia as the country itself provides quite favorable tax legislation.
- All the LLCs have to submit their financial statements each year.
- 100% foreign ownership of an LLC is allowed.
2.Limited Partnership (LP)
- A handful of people come together under one name and perform various entrepreneurial activities.
- 2 types of partners in Limited Partnership Georgia.
- Commandites- These are the silent partners that are only liable to the capital invested in the beginning and later as per the scheme of liability. They are not personally liable for the debts of the partnership. They are also known as limited partners.
- Complementars- These are the members that are personally liable for the debts of the partnership. They are also known as general partners.
- Partners can be either natural citizens or legal entities or both.
- Profits and losses that go beyond an already mentioned amount are distributed proportionally amongst the partners if mentioned in the company charter.
3.General Partnership (GP)
- Several natural citizens of Georgia can come together and execute independent entrepreneurial activities under one name.
- All of the partners are of the nature of limited partners, that is, they are jointly liable before the creditors.
- Every partner in GP in Georgia has the right to review the accounting and bookkeeping records of the firm.
- If a partner decides to leave, then shares of that partner are distributed amongst the remaining ones according to the charter of the company.
- The remaining partners are required to relinquish the exiting partnerfrom all the company debts.
- An exiting partner also receives the amount due to him, in case of the company`s liquidation.
4.Joint Stock Company (JSC)
- These are usually the kind of companies where the members put together a large capital.
- The authorized capital that is divided into shares is mentioned in the charter of the company.
- Each issued share is of the same par value.
- 2 types of shares exist for JSC- ordinary shares and preferred shares.
- The liability of a member before the creditors is limited to the shares issued to the member.
- Regardless of the magnitude of losses incurred, the liability of a member does not extend to his personal property.
- A cooperative has to be registered at the Public Registry.
- It is a company formed for the furtherance of one business activity and to grow the profits of its members substantially (not in all cases).
- This business entity is liable before the creditors with its property.
- Anyone can become a member of a cooperative. All one has to do is submit a proper application with his/her intention of becoming a member.
- The shares issued to each member are decided by the founders of the cooperative. It is not necessary that each member is issued just one share.
6.Individual Enterprise (IE)
- It is not a separate legal entity as in the case of JSC. It is like a sole-proprietorship.
- It is formed to carry through entrepreneurial activity.
- The entrepreneur shoulders the entire liability of his/her legal relations with the creditors.
- Foreign citizens can also register for an individual enterprise in Georgia by filling an application providing their details and paying the required fee.
7.Branch Office (BO)
- A foreign corporation can register itself in Georgia with the Public Registry as a branch office without establishing itself as any of the above-mentioned business entities.
- It is not a separate legal entity.
- The founders are directly liable for the branch office.
- It is nearly similar to a branch office.
- It is not a separate legal entity.
- It is entitled to act on the behalf of the founding corporation as well as defend its interests when such a situation arises.
- It is registered with the Revenue Service of the Ministry of Finance of Georgia.
- It is usually incorporated by foreign corporations for enjoying the tax structure of Georgia.
Business Setup Worldwide helps you set-up your business in Georgia. We have experts in Georgia who have years of experience in providing services like company registration, corporate secretarial services, tax services, visa services, and accounting and bookkeeping services. Our services will help you achieve a competitive advantage and also provide your business with the required flexibility to carry out the core activities.
If you require more information about business entities in Georgia or any kind of advice, feel free to contact us.