Corporate adaptation deadline extended

Parliament extended the deadline for compliance of registration data with the new Law on Entrepreneurs until 1 April 2026.

On 2 August 2021, the new Law of Georgia on Entrepreneurs was adopted. The Law entered into force on 1 January 2022, providing substantive changes in how Georgian companies are set up, organized, managed, and maintained. Systematic changes relate to the redesign of limited liability companies (LLCs), introducing a minimum capital requirement for joint stock companies (JSCs), new capital formation & dividend distribution rules, etc.

The Law initially defined a two-year period for all pre-registered entities, including non-commercial organizations and branches, to adapt their registration data with the requirements of the Law - modify corporate registration documentation.

On 30 November 2023, Parliament amended transitional provisions of the Law and extended the deadline until 1 April 2025. In addition, the Law clarified the scope of the adaptation obligation and its consequences. Namely, non-complying entities were to get suspended registration and relevant notifications to be sent to tax authorities, the Ministry of Interior Service Agency, and commercial banks. Registration suspension would have resulted in the restriction of representation rights of directors, as well as the ability to dispose of property, participate in tax operations, manage bank accounts, open new accounts, dispose of funds on accounts, or take credit. If compliance was not achieved until 1 January 2026, entities would have been assigned defective entity status and granted a final 3 months for compliance. Failure to meet the obligation within the final period would have resulted in registration revocation subject to standard liquidation rules.

The 2023 amendments also clarified that non-commercial entities were not obliged, but rather encouraged, to change their registration data to comply with the corporate establishment rules of the Law.

As a result of the final amendments, the adaptation deadline was extended until 1 April 2026, and the time for determining entities as defective was set at 1 January 2027.