|  Private sector and human-resource development in Georgia |
The following imported materials are
in the highest demand on the Georgian market:
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Ceramic Products (tile, mats)
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Insulated
American style windows, doors.
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Various
colored wood and flooring materials.
·
Heat,
ventilation, air conditioning systems.
·
Roofing
materials
·
Varnish
paints
·
Plastic
tubes for water communication
·
Wallpapers
·
Lights
and bulbs
·
Vinyl
sidings
Due
to the growing wave of construction, a large market share still remains
unoccupied and is ready for new companies and potential investors. The
construction sector will play an essential and important role in Georgia’s
further economic development and integration into the world economy.
Enterprise
register. Registration
of an enterprise is to be carried out by the Court by making due records in the
Enterprise Register. The information concerning the registration is to be
recorded into the Register Card. The Register Card specimens are presented
below:
Registration card (sample) for Limited Liability
Companies (LLC)
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Ser. No.
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Date
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Subject of activity and aggregate capital
of the society
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Name, date and place of birth,
occupation, address of partners
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Name, date and place of birth,
occupation, address of directors
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Name, date and place of birth, occupation
of members of the supervisory council (if any)
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Representation of directors
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Trade representatives (procurators)
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Registration card (sample) for Joint Stock
Companies (JSC)
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Ser. No.
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Date
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Subject of activity and capital
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Tapes of shares; sharing
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Name, date and place of birth,
occupation, address of directors
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Name, date and place of birth, occupation
address of members of the supervisory council
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Representation of directors
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Trade representatives (procurators)
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The
Law on Entrepreneurs provides that data on newly registered companies should be
published in the official newspaper. The Law also guarantees information on any
company entered into the enterprise register held by courts be available to the
public. Any person should be able to view the records and obtain extracts from
the registration file.
Procedure for registering (establishing) an enterprise. Figure
4.1.1.1 provides an outline of the sequence of the procedures to register and
establish a business in Georgia.
Figure 4.1.1.1 Business Registration
Procedures
* Statistical Department registration and stamp approval. Although the
law no longer requires these procedures, they are still being followed by some
entities and required by certain authorities due to uncertainty, lack of
information, and corruption.
In
practice, the entire registration process reportedly takes 2 to 3 weeks.
However, it is possible to register a company within few days by means of
unofficial payments.
Registration
with the Local Court.
In accordance with the procedures set forth in the Law on Entrepreneurs, all
legal businesses are required to register at the local court that has
jurisdiction over the legal address of the enterprise. Further, all registered
companies are required to officially record any changes in their registration
data.
In
order to register an LLC, the following documents must be submitted to a local
court:
(1) Application form signed by the founders.
Application form must include:
Firm
name (firm);
Organizational
and legal form;
Location
(legal address);
Subject
of the activity;
Information
on the start and end of the fiscal year;
For
each founder - the family name, first name, date and place of birth, occupation
and place of residence of the entrepreneur;
Representative
authorities.
(2) Charter (five copies)
(3) Minutes of the foundation meeting
(4) Founder’s decision to set up the company
(5) Director’s sample of signature
(6) Document
confirming the legal address of the company (this may be a lease agreement, a
certificate issued by manager of the company that subleases the office space,
or notarised consent of the owner of a flat)
(7) Copy of the
company founder’s passport, if the founder is an individual person; or a
registration certificate (e.g., extract from the register of enterprises), if
the founder is a legal entity. If the founder is a Georgian company, the
certificate of the local court should be less than 1 week old.
(8) The amount of the
authorized equity capital and the documents confirming payment of at least 50
percent of the equity capital (a certificate from the bank or, for in-kind
contributions, an auditor’s assessment of its value)
(9) A document confirming payment of the
registration fee.
To
register a JSC, the decision of the supervisory board to appoint directors is
required in addition to the above-listed documents.
The following supporting documents are
required to register a branch or a representative office:
(1) Charter of the foreign company
(2) Decision
of the foreign company to set up the representative office
(3) Document certifying the solvency of the
foreign investor (e.g., a letter from a foreign bank or a foreign tax service)
(4) Bylaws of the representative office.
All
registration documents must be submitted in the Georgian language and must be
notarized. Foreign documents must be certified by an apostille[21] or undergo a procedure of
legalization and be translated by a certified translator.
According
to the law, the courts are required to process registration applications
within 7 days. Registration of amendments to a charter or any other changes to
entries are to be processed within 7 days. No official expedited service is
available, but reportedly registration can be performed in 1 day if the court
registrar has the time and if an additional unofficial payment is made (roughly
100–400 GEL). Box II.2 provides a summary of the official registration fees.
A
company receives a court resolution when the company is registered. The law on
entrepreneurs provides automatic registration by default if the court fails to
respond within 7 days.
If
a company changes its legal address to an address that falls within the
jurisdiction of another local court, the company is not required to change its
court registration and its registration file stays at the initial court of
registration. However, the company must re-register with the local tax office
that has jurisdiction over the new legal address.
Registration
Fees.
Registration fees are determined by the company’s legal form. The court stamp
duty is currently $180 to register a JSC, $80 to register a LLC, $90 to
register a branch of a JSC, and $40 to register a branch of a LLC. Fees for
registering changes to entries are half of the fee for registering the
respective type of company (i.e. $40 to register changes for an LLC and $90 for
a JSC).
All
the payments charged for notarization of an enterprise’s charter are different
in each case and depend on the amount of the authorized capital. The percentage
of the amount to be paid is reduced with the increase of the authorized capital
and ranges from 3 to 0.05 per cent of the authorized capital. The charge must
not be less than GEL 25 and must not be more than GEL 50. It should be noted
that a 20% VAT is added to the sum charged for the notarization.
Peripheral
services can be provided by private lawyers and related professionals at
additional cost. Lawyer charge in the range of $300-600 to draft a company’s
charter and to provide advice. A notary public typically charges about $30 to
certify the documents and about $2 per page to certify copies of the documents.
Taxation
Department Registration. In accordance with the Cabinet of Ministers Decree 899 (December
31, 1994), within 10 days of completing the company registration process, an
investor must register with the local office of the taxation department that
has jurisdiction over the legal company address. This registration requirement
applies to all tax types except the value-added tax (VAT). VAT registration is
required for all firms with total taxable transactions greater than GEL 24,000.
A
taxpayer registration application package should contain the following
documents:
(1) Taxpayer registration form (4 copies)
(2) Court resolution showing company registration
(notarised copy)
(3) Charter (original or notarised copy)
(4) Minutes of the
foundation meeting (original or notarised copy)
(5) Decision to set up
the company (original or notarised copy)
(6) Director’s sample
of signature (notarised)
(7) Document
confirming the legal address of the company (original or notarised copy).
In
accordance with Decree 899, the Taxation Department is required to issue a
taxpayer registration certificate within 10 working days. The compliance with
the 10-day limit depends on whether or not operations at local taxation offices
are computerized. There is no fee for taxpayer registration.
Taxpayers
are assigned a 9-digit taxpayer identification number (TIN). The first digit
specifies the taxpayer type (1 is for an individual person, 2 is for a legal
entity), the next 7 digits are sequential numbers (each local tax office has
its own block of 7-digit sequential numbers), and the last digit is a control
digit. There is no relation between a court registration number and a TIN.
If
a company changes its legal address, opens a branch, changes bank accounts, or
makes any other changes that require registration at the enterprise register,
then the investor is required to notify the tax department within 10 days of
the change.
As
of June 2001, sole proprietorships are no longer required to register with the
courts. They need only to register with the relevant local taxation office.
If
a company’s total taxable transactions over the previous 12 months equal or
exceed 24,000 GEL, the company is required to register for VAT within 1 month
of the change in tax liability status. A separate VAT registration certificate
is issued.
Stamp
Approval. In
accordance with the amendments to the Law on Entrepreneurs (effective June 1,
2001), company stamps are no longer required, and state institutions have been
explicitly prohibited from requiring a company to present a stamp for any
purpose. Information regarding this change in the law apparently has not been
widely disseminated because in July 2001, many companies and lawyers still
complied with the old requirements for company stamps. Further, it appears that
the police department continues to issue stamp approvals (at a fee of 10 GEL)
despite the change in the law.
Department
for Statistics Registration. Amendments to the Law on Entrepreneurs and the Administrative Code
have eliminated the requirement that a business must register with the
Department of Statistics. Under the new regulations, this requirement has been
replaced by a notification process between the courts and the Department of
Statistics. The new regulations may be summarized as follows:
In
accordance with the Law on Entrepreneurs,[22] the courts are required to send
copies of the court business registration resolutions to the Statistical
Department on a monthly basis. This information should be submitted by the 5th
day of every month.
On
June 19, 2001, parliament amended the Law on Entrepreneurs and abolished the
provision that the courts must assign tax and statistics codes when a company
has registered with the relevant bodies.
Amendments[23] to the Administrative Code in July
2001 have removed the provision that companies must provide a statistical code
in order to open a commercial bank account.
However,
in practice, companies throughout Georgia still go to the central bureau of the
statistical department in Tbilisi to register in order to comply with the
previous provisions of the law.
Public
Availability of Information. Company registration data are recorded in the registration card as
approved under the law (see in the above). The same format is used to respond
to requests for company registration information. The following information is
required to complete a registration card:
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Name of the
local court
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Court
registration number
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Company name
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Address
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Activities
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Equity
capital
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Names of
partner(s), their occupations, and addresses
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Names of
director(s), their occupations, and addresses
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Members of
the supervisory board, their occupations, and addresses (if a supervisory board
was established)
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Representation
powers of director(s)
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Trade
representative (procurator)
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