I. About This Article
LLC registration in Georgia is one of the most common legal ways to start a business. A limited liability company is frequently used by small, medium-sized and large businesses because it combines a flexible corporate structure, the idea of limited liability of shareholders and the possibility of fast registration with the Public Registry.
Business founders often choose an LLC when they want to operate through a legal entity, define shares between partners, appoint a director, enter into contracts in the company’s name and start business activity with a legally structured corporate form.
When registering an LLC, it is necessary to determine the company name, legal address, shareholders, shares, director, representation rules, standard or non-standard charter and the internal corporate framework that will regulate future relations between shareholders and the director.
In practice, problems during LLC registration often arise when founders focus only on completing registration quickly and do not assess future risks: share allocation, director authority, shareholders’ agreement, restrictions on share transfer, legal address or possible deadlock situations between shareholders.
This article will help you understand what an LLC is, what documents are required for registration, what the founding agreement should include, when a standard charter may be used, what the Public Registry deadlines and fees are and what businesses should consider before establishing a company in Georgia.
II. What Is an LLC?
A limited liability company, or LLC, is an entrepreneurial legal entity. Under the Law of Georgia on Entrepreneurs, entrepreneurial activity may be carried out in the form of an individual entrepreneur or an entrepreneurial company, while an entrepreneurial company is a legal entity.
An LLC participates in legal relations independently. It may have its own company name, legal address, property, bank account, rights and obligations.
The main practical advantage of an LLC is that it gives the business a separate legal entity form. This is important for contracts, relations with partners, liability management, attracting investment and conducting business professionally.
Unlike an individual entrepreneur, an LLC is a legal entity. For more information about individual entrepreneur status, see our blog: Individual Entrepreneur Registration – What You Should Know About Status, Liability and Registration Procedure.
III. Why Do Businesses Choose the LLC Form?
Businesses often choose the LLC form for several reasons.
The first is the idea of limited liability. An LLC is a legal entity and its obligations are generally the obligations of the company. This differs from the individual entrepreneur model, where the person is personally liable for obligations arising from entrepreneurial activity with all personal property.
The second is the possibility of defining shareholder participation. In an LLC, the shares of shareholders may be expressed in percentages and their total must amount to 100%.
The third is a flexible management model. An LLC may have one or several directors, individual or joint representation may be defined, and the charter may regulate the relationship between shareholders and the director in more detail.
For more information about the status of a company director, see our blog: Company Director – What You Should Know About the Powers of the Management Body, Fiduciary Duties and Representation Risks.
The fourth reason is business credibility. For clients, banks, investors and partners, an LLC is often perceived as a more structured and professional business form.
IV. When Is an LLC Considered Established?
Registration of an entrepreneur is mandatory. Under the Law of Georgia on Entrepreneurs, registration of an entrepreneur includes both state registration and tax registration.
An LLC is considered established from the moment of registration with the Public Registry. This means that the company legally exists only after the registering authority adopts a decision on registration and the relevant data is reflected in the registry.
After registration, information is electronically sent to the Revenue Service. In practice, this means that LLC registration includes both entrepreneurial and tax registration within one unified process.
For this reason, it is important to prepare all registration documents correctly so that registration is not suspended or delayed due to a request for additional documentation.
V. What Documents Are Required for LLC Registration?
For LLC registration, the following documents are usually submitted to the National Agency of Public Registry:
an application; the founding agreement signed by all founders and properly certified; identity document of the interested person; consent of each person authorized for management and representation to perform such function, unless this will is already expressed in the founding agreement; a document confirming the legal address, unless the address is real estate owned or used by the interested person or the registration address; and proof of payment of the service fee.
The founding agreement should also indicate the person authorized for management and representation who is entitled to manage the electronic portal, together with the person’s phone number and email address.
VI. What Is a Founding Agreement?
A founding agreement is required for the establishment of an entrepreneurial company.
The founding agreement is the main document that contains the company charter and the registration data required by law. It is made in writing and signed by all founding shareholders.
As a rule, signatures on the founding agreement should be notarized. However, notarization is not required if the signature is certified in accordance with the established procedure by the National Agency of Public Registry, another authorized administrative body or another authorized person, or if the signature is made in accordance with legislation on electronic documents and electronic trust services.
In LLC registration, the founding agreement should be prepared with particular accuracy because this document reflects the company’s main legal structure.
VII. What Information Should Be Included in the LLC Founding Agreement?
The founding agreement should include both general registration data and information specifically required for an LLC.
Generally, the founding agreement should indicate the company name, legal address, identification data of each shareholder, data of the director or another person authorized for management and representation, and the term of authority if such term is defined.
In the case of an LLC, it should additionally indicate issued shares, shareholder participation in the capital expressed in percentages and the total of these shares must amount to 100%.
Where applicable, the founding agreement may also include authorized capital, the number of issued shares, nominal value of shares and special conditions restricting transfer of shares.
These issues are practically important because shareholder shares, restrictions on share transfers and the representation model may later become the basis for shareholder disputes or delays in transactions.
VIII. Standard Charter or Non-Standard Charter?
When registering an LLC, founders may use a standard charter or prepare a non-standard charter.
Standard charters of entrepreneurial companies are approved by an order of the Minister of Justice of Georgia and are available on the website of the Legislative Herald and the electronic portal.
For registration purposes, submission of a paper or electronic version of the standard charter to the Public Registry is not required.
If the founders want a different internal management model, special restrictions on ownership of shares, detailed regulation of shareholder rights, different representation rules or other individual conditions, it is advisable to prepare a non-standard charter. If a non-standard charter exists, a charter prepared and certified in accordance with the law must be submitted to the registering authority.
In practice, a standard charter may be sufficient for a simple, single-member or low-risk company. However, where there are several shareholders, an investor, an active director or future risk of share transfer, a non-standard charter and a shareholders’ agreement are often a safer choice.
IX. What Requirements Apply to the Company Name of an LLC?
The company name of an LLC is the name registered in the registry under which the company carries out its activities.
The name of an LLC must include an indication of its legal form – “limited liability company” or “LLC”.
The company name must be in Georgian and must differ from the name of an already registered entrepreneur. A name that misleads third parties regarding the company’s legal form, nature of activity or the content of relations between shareholders is not allowed.
If the name is identical or too similar to the name of another legal entity, it may be necessary to change it or use an additional element.
Before LLC registration, it is advisable to check the company name in advance in order to avoid the need for additional documentation or name changes during the registration process.
X. How Is the Legal Address of an LLC Determined?
Indication of a legal address is required for LLC registration.
Under the Law of Georgia on Entrepreneurs, the legal address of an entrepreneur is its physical address in the territory of Georgia.
If the legal address is real estate owned or used by the interested person, or the registration address, submission of additional documentation may not be required.
If real estate owned by another person is used as the legal address, properly certified consent of the owner of the location or a relevant agreement on use of the location is required.
The legal address is important for official notifications, registry records, tax communication and public identification of the company.
If you do not own real estate in Georgia or do not have a relevant legal address for LLC registration, TB Legal can assist you with this part as well, including providing an address required for registration and preparing the relevant documentation.
XI. Who Can Be a Shareholder of an LLC?
A shareholder of an LLC may be an individual or a legal entity.
A shareholder is a person who owns shares in an entrepreneurial company. In an LLC, shareholder participation is usually expressed in percentages.
A shareholder may be a Georgian citizen, a foreign citizen, a legal entity registered in Georgia or a foreign company, provided that the relevant identification data and documents are submitted.
The composition of shareholders and their shares must be reflected in the founding agreement. If investor entry, share transfer or special allocation of rights between shareholders is planned in the future, it is advisable to regulate these matters from the beginning.
XII. Can One Person Establish an LLC?
Yes, an LLC may be established by one person.
The Law of Georgia on Entrepreneurs expressly allows a single-member entrepreneurial company. An LLC may be established by one person from the beginning, or all shares may later be transferred to one shareholder.
A single-member LLC is practical when the business has one owner and the owner wants to conduct activity through a legal entity.
However, even in a single-member LLC, it is important to properly regulate director authority, legal address, tax issues, contracts and the company’s internal documentation.
XIII. What Should Be Considered When Appointing a Director?
When registering an LLC, a person authorized for management and representation must be defined – in practice, this is the director.
The director represents the company in relations with third parties, signs contracts, manages daily activities and is responsible for protecting the company’s interests.
For LLC registration, the director’s consent to perform this function is required, unless the director’s will is already expressed in the founding agreement.
If the company will have several directors, it is necessary to define whether they will act individually, jointly or under a mixed representation model.
For more information about director authority, fiduciary duties and representation risks, see our blog: Company Director – What You Should Know About the Powers of the Management Body, Fiduciary Duties and Representation Risks.
For more information about director liability to the company, see our blog: Director’s Liability to the Company -Misappropriation of Company Funds by a Director.
XIV. What Happens If Someone Acts on Behalf of the LLC Before Registration?
An LLC is considered established from the moment of registration in the registry. Therefore, acting on behalf of the company before registration requires particular caution.
Under the Law of Georgia on Entrepreneurs, for obligations undertaken on behalf of an entrepreneurial company before its registration, the founding shareholders and the persons who carried out such actions are directly and unlimitedly liable as joint debtors, unless otherwise agreed with the creditor.
If, after registration, the LLC approves the rights acquired or obligations undertaken on its behalf before registration, they may become the rights and obligations of the LLC itself.
Therefore, entering into contracts, receiving advance payments, undertaking obligations or carrying out commercial actions in the company’s name before registration is recommended only after clear legal assessment.
XV. What Are the Deadlines and Fees for LLC Registration?
LLC registration with the Public Registry is possible under standard or expedited procedures.
The registration deadlines and fees are:
within one business day – GEL 200;
on the day of submission of the application – GEL 400.
If signatures of the parties on the transaction submitted for registration are certified, GEL 7 is added to the registration fee.
If an extract is prepared in English, GEL 26 is added to the fee.
The calculation of the registration period begins on the day following registration of the application and ends upon expiry of the last day of the period. If the last day falls on a holiday or non-working day, the next business day is considered the last day.
Fees may change under applicable regulations, so it is advisable to verify current Public Registry tariffs before registration.
XVI. What Happens If Registration Is Carried Out Through a Representative?
LLC registration may be carried out through a representative.
If a representative applies to the Public Registry, in addition to the registration documents, the representative’s identity document and a properly prepared and certified document confirming representation authority, such as a power of attorney, must be submitted.
Representation authority requires proper certification. This is especially important where the founder is not present in Georgia or where a foreign citizen or foreign company participates in the registration.
In practice, registration through a representative is convenient for international clients, investors and persons who want to manage the process with the assistance of a lawyer.
XVII. Foreign Citizen or Foreign Company as Founder of an LLC
A foreign citizen or foreign legal entity may be a founder of an LLC.
In the case of a foreign individual or a legal entity of a foreign state, the founding document should contain data equivalent to those required for a Georgian citizen or Georgian-registered entity, which are used for identification during notarial actions in Georgia.
In the case of a foreign company, an extract from the registry of the relevant country, a document confirming representation authority, legalization or apostille and Georgian translation may be required, depending on the country and the form of the document.
When registering an LLC with participation of a foreign founder, it is advisable to assess in advance not only the registration procedure, but also bank account opening, tax matters, director status, legal address and regulatory requirements that may apply to the company’s future activity.
XVIII. Minor Shareholder or Director in an LLC
If a shareholder or founder of an LLC is a minor, registration is possible only with the consent of legal representatives.
Legal representatives may be parents, a guardian or a curator.
If a minor is appointed as a person authorized for management and representation, the consent of the guardianship and custody authority is additionally required.
Participation of a minor in an LLC requires particular caution because it involves issues of representation, validity of will, liability and management authority.
XIX. What Should a Business Consider Before LLC Registration?
Before LLC registration, a business should assess not only the Public Registry procedure, but also the future legal structure of the company.
First, the correct company name should be selected and checked to ensure that it is not identical or confusingly similar to the name of another legal entity.
Second, shareholder shares, participation in capital, restrictions on share transfer and, where necessary, the existence of a shareholders’ agreement should be defined.
Third, director authority, representation rules and whether prior shareholder consent will be required for specific transactions should be regulated.
Fourth, the legal address should be determined and, where necessary, owner consent or a use agreement should be prepared.
Fifth, it should be decided whether a standard charter is sufficient or whether a non-standard charter and additional corporate documents are required.
For more information about legal organization of a company, see our blog: Legal Structuring of a Company – How to Reduce Business Legal Risks.
For legal support in preparing corporate documentation, see our service page: Corporate Law Services in Georgia.
XX. How TB Legal Can Help
Within our corporate law services, TB Legal assists local and international clients with LLC registration in Georgia, preparation of founding agreements and charters, provision of a legal address, definition of director authority, proper structuring of shareholder shares and legal management of the Public Registry procedure.
Our approach is based not only on technical completion of registration, but also on prior assessment of the company’s real business goals, shareholder relations, director authority, tax and contractual risks.
If you do not have a relevant legal address in Georgia for LLC registration, TB Legal can assist you with this part as well – including provision of an address required for registration and preparation of the relevant documentation.
If you plan to establish an LLC, register a company with a foreign shareholder, prepare a charter or choose the correct legal form for your business, it is important to receive qualified legal advice before registration.
XXI. Conclusion
LLC registration in Georgia is a relatively fast procedure, but completion of registration alone is not enough for successful operation of a company.
When establishing an LLC, it is necessary to properly define the company name, legal address, shareholder shares, director authority, representation rules, charter and, where necessary, shareholders’ agreement.
A properly prepared founding agreement and well-structured corporate framework reduce the risk of future shareholder disputes, abuse of director authority, share transfer issues, tax risks or contractual problems.
Contact TB Legal if you want to register an LLC in Georgia or organize the legal structure of an existing company. We will help you prepare documents, manage the registration process and start your business on a legally sound basis.
XXII. Sources Used
This article is based on the following sources:
- Law of Georgia on Entrepreneurs.
- Public Registry-related registration practice and applicable procedures.
- Instruction on the Public Registry.
- TB Legal’s practical experience in corporate and business law.
Disclaimer
This article has been prepared for general informational purposes only and does not constitute individual legal advice or a legal opinion. Issues related to LLC registration, founding agreements, shareholder structure, director authority, legal address and Public Registry procedures may be assessed differently depending on the specific facts, founders, documents, business model and legal needs.
Before making a decision in a specific matter, it is recommended to obtain individual legal advice from a qualified lawyer.
