Forms of business entities in Georgia
Following the recent reforms implemented by the Georgian Government, new liberal legislature has been adopted, empathizing particularly on the sphere of business.
when being an investor, having purpose of establishing business, primary interest lays upon aspects such as, regulations on setting up business, forms of business entities available in the country, ease of obtaining licenses and permits, restrictions for foreigners, overall business environment and etc.
The Law of Georgia on Entrepreneurs is characterized by very liberal regulations towards corporate governance. In this regard, general characteristics applicable to all business entities include:
- Single registration for both the state and tax Purposes. (one window principle)
- No minimum capital requirement.
- Charter (Partnership Agreement) can be in any language, except for the registration application part which is filed with the Public Registry.
The laws of Georgia provide the following exhaustive list of business vehicles to be suited to individual business preferences:
Sole Proprietorship (SP)- A Sole Proprietorship is a natural person, who acts in behalf of himself and is liable to creditors personally and whose assets are not separate.
Joint Venture (JV)- A Joint Venture is an association of two or more persons under a partnership agreement who act jointly for the accomplishment of common economic or other objectives without forming a legal entity. Partners are liable personally by their personal assets. There is no requirement to register a joint venture.
Branch Office (BO)-Sub-unit of a business entity which is not separate legal entity. Therefore, the liability of BO is not limited by the assets of BO, The founder is liable for the obligations of the branch.
Joint Stock Company (JSC)-A Joint Stock Company is a legal entity whose liability to creditors is limited to its own assets and whose capital is divided into shares, classes and quantity, which are set by the company charter. Unless otherwise noted in the charter, the corporation can issue ordinary and preferred shares. Shareholders are not liable for corporation’s obligations.
Limited Liability Company (LLC)- A Limited Liability Company is the most wide-spread business form in Georgia. it’s a legal entity whose liability is limited to its assets. The capital of an LLC is divided into shares. Unless otherwise noted in the charter, shares are freely transferable assets. The company may be established by one person.
General Partnership (GP)-A General Partnership is a legal entity in which two or more partners conduct business together under the same company name and are liable to company creditors personally by their assets.
Cooperative-A Cooperative is a membership based legal entity whose objective is to serve members’ goals through organized collaboration, develop their business and increase their revenue. The main priority of the cooperative is not profit-making. A Cooperative’s liability to creditors is scoped to its assets.
Limited Partnership (LP)- A Limited Partnership is hybrid form of business, it’s a mix of LLC and GP. Limited Partnership is a legal entity in which one or more partners’ liability is limited to their investment in the company, while general partners’ liability is personal as like of a partner in LLC.
Also may be interesting: Taxation system in Georgia
