Key Changes Required for Georgian Companies Established Before January 1, 2022, under the New Corporate Law

 

The introduction of the new corporate law in Georgia on January 1, 2022, brought significant changes to the legal framework governing companies in the country. These changes have implications for both existing and newly established businesses. In this article, we will discuss the necessary changes that Georgian companies, established before January 1, 2022, need to make in order to comply with the new corporate law.

1. Beneficial Ownership Register: All companies incorporated in Georgia are now required to maintain a beneficial ownership register. This register should contain information about the individuals or entities that ultimately own or control the company. Existing companies must ensure they establish and maintain this register in accordance with the new requirements.

2. Shareholders Agreement: Under the new law, companies are required to have a shareholders agreement in place. This agreement outlines the rights and obligations of the shareholders, as well as the procedures for resolving disputes and transferring shares. Existing companies should review their existing agreements, if any, and update them to comply with the new provisions.

3. Director's Agreement: Companies are also required to have a director's agreement in place, which outlines the terms and conditions of the director's appointment. This agreement includes the duties, responsibilities, and remuneration of the director. Existing companies should ensure that they have a director's agreement in line with the new requirements.

4. Articles of Association and Corporate Documents: Companies established before January 1, 2022, must update their articles of association and other corporate documents to align with the new rules introduced by the corporate law. These updates should reflect the changes in beneficial ownership, shareholders' rights and obligations, and director's appointment terms.

5. Annual General Meetings and Financial Statements: The new law mandates that companies hold annual general meetings of shareholders and prepare annual financial statements. Existing companies should incorporate these requirements into their corporate practices and ensure compliance with the new regulations.

6. Stricter Rules on Conflicts of Interest: The new law introduces stricter rules on conflicts of interest involving directors and shareholders. Existing companies should review their policies and procedures to ensure they comply with the updated regulations regarding conflicts of interest.

7. Supervisory Board Requirement: If an existing company's annual turnover exceeds a certain threshold, it is now mandatory to have a supervisory board in place. This board oversees the management of the company and provides guidance and advice to the board of directors. Companies meeting this criteria should establish a supervisory board as per the new requirements.

8. Minority Shareholder Protection: The new corporate law provides greater protection for minority shareholders. Existing companies should review their governance practices and ensure they are in line with the enhanced protections available to minority shareholders.

The new corporate law in Georgia has introduced several significant changes that impact companies established before January 1, 2022. It is essential for existing companies to carefully review the new provisions and make the necessary changes to ensure compliance. By updating their beneficial ownership register, agreements, articles of association, and other corporate documents, companies can adapt to the new legal requirements and continue to operate in accordance with the law.

We can greatly assist companies in navigating these changes effectively.