Georgia is considered a politically stable, corruption-free investment destination with low cost of incorporating a business. The country’s impressive progress report in improving business climate over the years has been documented in a number of international indices. An investor interested in entering the Georgian market can opt for opening a company in Georgia. The main forms of Georgian businesses are divided into companies and partnerships. The investors may choose between companies with limited liability or joint stock companies. The partnerships that can be set up in Georgia may be general or limited. Also, foreign companies may enter the local market by opening a subsidiary or a branch office.
Today, we will be discussing how to set up a General Partnership in Georgia.
What is a General Partnership?
General Partnership is a company where several persons jointly carry out independent entrepreneurial activity under a common company name. In a GP in Georgia the obligation of one or several partners towards the creditors of the partnership is limited to their investment in the company (limited partners - Commandite), while the other partners (Complementar) are personally liable for any debts arising in course of operation of the GP.
How to Set Up a General Partnership in Georgia?
A general partnership in Georgia is formed by two or more partners, equally liable for the company’s profits and losses. They both have the decisional power. The registration, filing, and tax requirements for general partnership are same as any other business entity in Georgia. With some minor changes, here are the steps for setting up your Georgian general partnership.
1. Choose a Business Name for Your Partnership
The first step towards registering your business in Georgia is to register your business name. The name must be unique and must not be the same as any existing Georgian company.
2. Draft and Sign a Partnership Agreement
Although not required legally, it is recommended that you sign a partnership agreement with all the partners laying out the rules and responsibilities of the partners. A well-drafted partnership agreement will help you decide in advance for handling future situations. Here’s a list of items that should be covered in your partnership agreement:
- Each partner’s contribution to the partnership
- The allocation of profits, losses, and draws
- The partner’s authority and management duties
- Voting rules for decision-making
- How to admit new partners
- What happens upon the bankruptcy, withdrawal, or death of a partner, and
- How to resolve disputes
3. Draft the Articles of Association
The Charter or the Articles of Association must be drafted by mentioning all the partners’ information and company’s information. After which, it must be signed by every partner and notarized in Georgia unless the partner of the company shall sign the Charter before the representative of Public Registry.
4. Open a Bank Account
It is a good idea to keep your business's finances separate from your personal accounts. A better way to do this early on is by opening a bank account for your business. You will probably need a Tax ID number and either a copy of the partnership agreement or a business name filing indicating the partner’s names.
If you are interested in opening a general partnership firm in Georgia, we at Business Setup Worldwide can help you with the same. Our advisors in Georgia are well-versed with the legal framework and can assist you efficiently. Contact us today to discuss in depth about the company formation process in Georgia.