A Foreigner’s Business in Georgia — Two Forms and One Decisive Question
A foreigner runs a business in Georgia in two principal forms: as a limited liability company (LLC) or as an individual entrepreneur (sole proprietor). The registration of the company or the entrepreneur takes place in the public registry under the rules set by other legislation, but registration is only the first step of the business: to operate, you need a bank account, and it is exactly in the relationship with the bank that the question defined by anti-money-laundering legislation arises — who is the beneficial owner of your business.
This question is not a formality: the bank identifies the beneficial owner before opening the account and during transactions, and the precision of the answer decides the fate of the account. Below we explain how the law defines this and what it means for a foreigner registering an LLC or a sole proprietorship in Georgia.
Beneficial Owner — the Central Legal Definition
For the purposes of the law, the beneficial owner is the natural person who is the client’s final owner or final controller and/or on whose behalf a transaction is prepared, concluded or executed. Particularly important is the rule for legal entities — including LLCs: the beneficial owner of a legal entity is the natural person who directly or indirectly owns 25 percent or more of the shares or voting rights of that legal entity, or otherwise exercises final control over it.
In other words, the bank is not satisfied with the answer that the company’s co-founder is some foreign company: it needs to see the natural person at the end of the chain — the human being standing behind the corporate structure. The compliance measures apply to that person.
Direct and Indirect Ownership — How the 25 Percent Threshold Is Counted
Direct ownership of shares or voting rights means the ownership by a natural person of 25 percent or more of the shares or voting rights of an entrepreneurial legal entity. Indirect ownership means ownership by a legal entity that a natural person (or natural persons) controls, or by several legal entities controlled by one and the same natural person or persons.
In practice: if a foreign natural person controls a holding company, and the holding owns 25 percent or more of the shares in a Georgian LLC, the beneficial owner is precisely that natural person. Where the control chain has several tiers, the bank establishes every step of it — which is why the ownership structure must be open and documented from the start.
A separate case is a trust or a trust-like legal structure: where such a structure exists, the bank’s measures extend to the trustee, the settlor, the protector (if one exists), the beneficiary, and any other natural person exercising effective final control over the trust. And if the beneficiary is not predetermined, the bank obtains sufficient information about the class of persons for whose benefit the structure operates.
If, after all possible measures, the bank is satisfied that no beneficial owner can be identified under the 25 percent rule, the measures are applied to the person or persons holding the client’s senior managing authority — this fallback is fixed by the law.
What This Means When Opening a Business Account
In banking practice these definitions mean that, together with the application, the bank will request documents confirming the ownership chain, registry extracts and documents from the country where the intermediate ownership structure is registered; it will ask questions about the distribution of shares, the form of control exercised and the direction of financial flows. For an individual entrepreneur the ownership chain is simple — the ultimate owner is the entrepreneur personally — although the bank still examines their activity and sources of income.
The concrete list of documents, account-opening timelines and tariffs are defined by each bank’s own policy — confirm them with the bank before filing. In our experience, the complexity of foreign ownership chains usually creates problems exactly at the documentary stage, not in the law itself.
Our Service — From Registration to a Business Account
We handle the full cycle for a foreigner’s business: we help decide between the LLC and sole-proprietor forms and carry out the registration; we analyse the ownership chain and determine who will be the beneficial owner for the bank; we prepare the documentary package matching the 25 percent rule, with explanations of the ownership structure; and we bring the bank application to the bank whose policy best fits your profile.
Frequently Asked Questions
Below we answer the most frequently asked questions about registering a foreigner’s business and a business bank account.
Can a foreigner register as an individual entrepreneur in Georgia?
The registration procedure for individual entrepreneurs and LLCs is governed by enterprise legislation, and in practice both forms are available to non-residents. In the banking relationship the definition is simple: for an individual entrepreneur the ultimate owner and controller is the entrepreneur personally — the natural person on whose behalf the transactions are executed.
Why does the bank ask for the whole ownership chain and not only the local company?
Because the law understands the beneficial owner to be exactly a natural person: direct or indirect ownership means holding 25 percent or more of the shares or voting rights, or otherwise exercising final control. Indirect ownership describes precisely the cases where the share is held by another legal entity that a natural person controls.
What happens if no one reaches the 25 percent threshold?
If, after all possible measures, the bank is satisfied that no such person exists, the measures are applied to the person or persons holding the client’s senior managing authority. The account is not blocked for this reason — the focus simply shifts to management.
How is the beneficial owner fixed in the case of a trust?
Where a trust or trust-like structure exists, the bank’s compliance measures extend to the trustee, the settlor, the protector (if one exists), the beneficiary and any other natural person exercising effective final control over the structure. Where the beneficiary is not predetermined, the class of persons for whose benefit the structure operates must be identified.
How We Help You on Legal.ge
Contact us if you plan to start a business in Georgia or already have a registered LLC or individual entrepreneur and need a business account. At the first consultation we will assess your ownership structure, identify the beneficial owner in a form the bank understands, and prepare the documentary package that speeds up the account opening on Legal.ge.