New corporate law of 01.01.2022 in Georgia, Tbilisi

On January 1, 2022, a new corporate law came into effect in Georgia, Tbilisi, which introduced several changes to the legal framework governing companies in the country. The new law aims to simplify and modernize corporate governance practices, while also enhancing transparency and accountability.

One of the key changes introduced by the new law is the requirement for all companies incorporated in Georgia to maintain a beneficial ownership register. This register must contain information about the individuals or entities that ultimately own or control the company, including their name, address, and shareholding percentage. This is aimed at increasing transparency and preventing money laundering and other illicit activities.

Another important change introduced by the new law is the requirement for companies to have a shareholders agreement in place. This agreement must outline the rights and obligations of the shareholders, as well as the procedures for resolving disputes and transferring shares. This is aimed at providing greater certainty and stability for shareholders and improving corporate governance.

In addition, the new law introduced changes to the rules governing the appointment and dismissal of directors. Companies are now required to have a director's agreement in place, which outlines the terms and conditions of their appointment, including their duties and responsibilities, and their remuneration. This agreement must be separate from any employment contract between the director and the company, and cannot be used as a substitute for a labour contract.

For companies incorporated before January 1, 2022, the new law requires them to update their articles of association and other corporate documents to comply with the new rules. This includes updating their beneficial ownership register and ensuring that they have a shareholders agreement and a director's agreement in place. Companies that fail to make these changes in a timely manner may face penalties or other enforcement measures.

Here is a numbered list of the main changes introduced by the new corporate law in Georgia, Tbilisi, effective from January 1, 2022:

All companies incorporated in Georgia are required to maintain a beneficial ownership register containing information about the individuals or entities that ultimately own or control the company.
Companies are required to have a shareholders agreement in place outlining the rights and obligations of the shareholders and the procedures for resolving disputes and transferring shares.
Companies are required to have a director's agreement in place outlining the terms and conditions of the director's appointment, including their duties and responsibilities and their remuneration.
The director's agreement cannot be used as a substitute for a labour contract between the director and the company.
Companies incorporated before January 1, 2022, must update their articles of association and other corporate documents to comply with the new rules.
Companies are required to hold annual general meetings of shareholders and prepare annual financial statements.
The new law introduces stricter rules on conflicts of interest involving directors and shareholders.
Companies are required to have a supervisory board in place if their annual turnover exceeds a certain threshold.
The supervisory board must oversee the management of the company and provide guidance and advice to the board of directors.
The new law introduces new rules on corporate mergers and acquisitions.
The new law provides for greater protection of minority shareholders.
Shareholders have the right to challenge decisions made by the board of directors or supervisory board that they believe are contrary to the company's interests.
The new law introduces stricter rules on the liability of directors for breaches of their duties.
Directors can be held personally liable for damages caused to the company or its shareholders as a result of their actions or omissions.
The new law introduces new rules on the distribution of profits and the payment of dividends.
Companies must allocate a certain percentage of their profits to reserve funds.
The new law introduces new rules on the transfer of shares and the registration of share transfers.
The new law introduces stricter rules on the disclosure of information by companies.
Companies are required to disclose certain information about their operations, financial performance, and governance practices.
The penalties for non-compliance with the new law can be significant and may include fines, suspension of business activities, or even criminal sanctions in some cases.

The penalties for non-compliance with the new law can be significant, and may include fines, suspension of business activities, or even criminal sanctions in some cases. It is therefore important for companies to take the necessary steps to comply with the new rules as soon as possible.

In conclusion, the new corporate law introduced in Georgia, Tbilisi, on January 1, 2022, represents a significant overhaul of the legal framework governing companies in the country. The changes introduced are aimed at increasing transparency and accountability, improving corporate governance, and providing greater certainty and stability for shareholders. Companies that fail to comply with the new rules may face penalties