Company Formation - One Day at the Registry and Decisions That Last for Years
Registering a company in Georgia takes one day and minimal cost, and that speed is exactly what creates the problem: founders choose the standard charter, write the capital as "one lari", name one of themselves director and agree to settle the partnership terms "later". Later never comes until the first conflict begins, and then it turns out the standard charter decides everything by default and not the way the partners "had in mind".
This page describes the formation decisions that are easy on registration day and expensive afterwards: choosing the form by purpose and investor, the charter clauses the standard one lacks, documenting capital and contributions correctly, the specifics of foreign founders and remote registration, the bank account and licence questions, and choosing a branch or representative office of a foreign company instead of a subsidiary.
Updated · Practice area: Corporate lawyer
Which Form for Which Purpose - LLC, JSC, Sole Entrepreneur, Branch
The form determines liability, tax, the ability to attract investors and the complexity of governance. "Everyone sets up an LLC" is often right, but not always.
Forming It Right - From Structure to the First Contract
Planning the structure
Who the founder is (an individual or a holding), in what shares, who manages, whether an investor or an employee stake is envisaged, in which country the ultimate beneficiary sits. These decisions determine tax, bank compliance and future transactions; changing them after registration is harder.
Drafting the charter
A bespoke charter instead of the standard one: quorum and veto matters, the limit of the director's authority (transactions above a sum with partner consent), the rule for share transfers and pre-emption, partner exit and expulsion, profit distribution, a deadlock mechanism. The charter is public; confidential terms go into a shareholders' agreement.
Capital and contributions
The amount of capital is a signal to banks and counterparties; contributions in cash or in kind (equipment, intellectual property, real estate), with an in-kind contribution valued and transferred by act. Failure to contribute is a ground for expulsion; the charter must state the deadline and the consequence.
Registration and the remote route
At the Public Service Hall or online, with the founders present or by a notarised (abroad, apostilled) power of attorney. A foreign founder registers without coming to Georgia; the lawyer prepares legalisation and translation of the documents in advance.
Bank account and compliance
Banks require extra documents depending on the foreign beneficiary, links to sanctioned countries and the type of activity; this is often the longest stage of formation. The lawyer prepares the beneficiary chain documents, business plan and proof of source of funds to the bank's standard.
Tax status, licences, first contracts
VAT registration (mandatory above the threshold or voluntary), small-business or special statuses (virtual zone, international company), licences by activity. And the first templates: an employment contract, confidentiality, a service contract with clients.
A Georgian Company From Abroad - What Is Genuinely Simple and What Is Not
Georgia is one of the most open jurisdictions for a foreign founder: no citizenship, residence or local partner requirement, a foreigner can be the sole partner and director, and registration is done remotely by power of attorney in a day or two. The difficulty is not at the registry but at three other points: the bank, tax residence and the reality of management.
The bank: opening an account for a foreign beneficiary is a compliance procedure that takes weeks and sometimes ends in refusal, especially for nationals of certain countries and for certain activities (crypto, financial services, gaming). The lawyer checks the bank's requirements before registration and prepares the document package so that one visit is enough. Tax: the company is a Georgian resident and is taxed here, but the founder's home-country controlled foreign company rules and the double tax treaty are a matter of the founder's personal tax, to be analysed in advance.
Management: a director who is not in Georgia signs contracts electronically, but banking operations, tax filings and signatures require a local representative or an outsourced accountant, by a power of attorney whose scope must be precisely defined. The lawyer structures this so that the founder keeps control and the local representative cannot dispose of anything without them.
What the Standard Charter Lacks and a Bespoke One Must Contain
- Limit of the director's authority
- Transactions above a sum, borrowing, disposal of assets, guarantees, hiring above a salary: with partner consent. In the standard charter the director does everything alone.
- Qualified decisions
- Which matters are decided not by simple majority but by qualified majority or unanimity: charter amendments, capital increase, a new partner, reorganisation, liquidation. The main clause protecting a minority partner.
- Share transfers
- Pre-emption, a consent rule, a price formula, prohibited transferees (a competitor). In the standard charter shares are sold freely, and a competitor becomes a partner.
- Exit and expulsion
- A partner's right to exit and the calculation of the share's value; grounds for expulsion (failure to contribute, competition, damage) and the procedure. Without them, exit means court.
- Profit distribution
- A mandatory minimum dividend from profit, timing, a reinvestment rule, so the majority does not "take out" as salary what should be distributed as dividend.
- Deadlock mechanism
- For 50/50 or a veto: mediation, then a buy-out mechanism (one names the price, the other chooses) or liquidation. Without a mechanism, deadlock is the death of the company.
What Formation Needs - by Type of Founder
- An individual founder: ID or passport; for a foreigner, a passport copy, translation, and an apostilled power of attorney if signing abroad.
- A corporate founder: a registry extract, a resolution to form the subsidiary, the director's authority, the beneficiary chain for the bank, legalised and translated.
- A legal address: the owner's consent or a lease, for the registry and then for the tax authority.
- A (bespoke) charter and a shareholders' agreement if there is more than one partner; a resolution appointing the director and setting the representation rule.
- For an in-kind contribution: a valuation and a transfer act; for intellectual property, an assignment agreement.
- For the bank: a business plan or description of activity, proof of source of funds, a beneficiary declaration in the bank's form.
Three Formation Cases
Three founders on the standard charter
An IT startup with 40/30/30 shares on the standard charter; within a year the 30% partner sold to a competitor. Lawyer (too late): the standard charter had no pre-emption, so the sale was lawful. A new charter and shareholders' agreement for the remaining two; the competitor-partner bought out by negotiation at an above-market price. Before signing, this would have been one day's work.
A foreign founder refused by the bank
A European entrepreneur registered an LLC remotely; two banks refused an account over an unclear activity ("online consulting") and source of funds. Lawyer: a description of the activity with specific contracts, source-of-funds documents, the beneficiary chain, and selecting a target bank by compliance profile. An account at the third bank within 10 days.
Branch or subsidiary
A foreign company wanted an operation in Georgia and chose a branch "for simplicity". Lawyer: the parent is fully liable for the branch's obligations, a local licence and bringing in an investor are impossible in a branch, and the tax consequences follow the permanent establishment rules. A subsidiary LLC was formed with the parent holding 100% and a local director with limited authority.
Questions About Company Formation
An LLC with one lari of capital: is there any risk?
Legally no; the law sets no minimum. Practically, banks, licensing authorities and large counterparties read capital as a signal of seriousness, and running an "empty" company to creditors' detriment is a piercing-the-veil risk. The lawyer advises capital based on the business's real needs, not the minimum.
We are founding 50/50 with a partner. What should we write in so we do not end up in deadlock?
50/50 is the riskiest structure and needs a deadlock mechanism in the charter or shareholders' agreement: who decides operational matters (the director's authority), which matters need both, and what happens on disagreement: mediation, an independent director's vote, a buy-out mechanism. The alternative is 51/49 with one side holding a veto on material matters.
I am a foreigner and do not live in Georgia. Who should be the director?
You can be, without residence; the registry allows it. In practice the bank, the tax authority and counterparties require signatures and visits; the solution is a local representative with a precisely defined power of attorney, or a second director with joint representation, so that neither can dispose of anything without the other. The lawyer structures this while keeping your control.
At what stage is a licence needed?
By activity: financial services, medical, educational, alcohol and tobacco, gaming, security, transport require a licence or permit before starting the activity, not before registration. Registration without a licence is possible; the activity is not. Before formation the lawyer checks that the activity in the charter and the licence requirements match.
Virtual zone and international company status: who do they apply to?
The virtual zone applies to IT companies selling their product abroad: exemption from profit tax on exports. International company status applies to IT and maritime companies with a track record: reduced profit and payroll tax. Both statuses are obtained by application on meeting the conditions; the lawyer assesses eligibility before formation, since the structure is often planned around it.
Lawyers for Company Formation
Registration at the registry takes a day; the right charter, structure and bank compliance are the work that saves years afterwards. Within 15 minutes the coordinator connects you with a lawyer who forms companies for local and foreign founders.
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Call: 568 330 318Forming a Company - Alone, With a Partner, or From Abroad?
In a free consultation the lawyer tells you which form and structure fit your purpose, what the charter should say instead of the standard one, and how to pass bank compliance at the first visit - a coordinator will be with you in 15 minutes.