Crowdfunding Regulation in Georgia represents a new and promising stage in capital market development, allowing small and medium-sized businesses to raise investments from the general public. Crowdfunding, or "community financing," was officially regulated in Georgia in recent years, moving the sector from a "grey zone" into a legal framework. This regulation primarily aims to protect investors and ensure market transparency. Crowdfunding platforms in Georgia are required to obtain authorization from the National Bank and adhere to strict requirements for information disclosure and risk management. For businesses, this is an opportunity to receive financing without traditional bank loans, although the process requires a high legal culture. The Legal.ge platform offers access to lawyers who specialize in crowdfunding law and will assist in both setting up the platform and the legal preparation of investment campaigns.
What does the Crowdfunding Regulation service cover?
Legal services related to crowdfunding cover all aspects of a transaction, from platform licensing to placing a specific project. The service includes: registration and authorization of a crowdfunding platform operator with the National Bank of Georgia; preparing investment offering documentation (Prospectus) in accordance with the "Law on the Securities Market"; legal structuring of equity-based and lending-based crowdfunding models; preparing contracts for investors; implementing client "due diligence" (KYC/AML) procedures; ensuring compliance with personal data protection and cybersecurity standards; and developing investor limit control mechanisms. Lawyers also assist issuers in drafting information documents that must be clear and contain no misleading information.
Common real-world scenarios
Crowdfunding regulation is relevant during several typical business scenarios. The first is "Tech Startup Funding," where a company seeks to raise capital for product development from hundreds of small investors, requiring correct legal distribution of shares. The second scenario concerns "Real Estate Crowdfunding," where a developer offers the public participation in a project in exchange for a share of future profits. The third scenario is "P2B (Peer-to-Business) Lending," where loans are issued to businesses through a platform, requiring typification of loan agreements and setting up security mechanisms. It is also common for a platform to need consultation on creating a "Secondary Market" so that investors can sell their shares. Each of these cases requires meticulous adherence to National Bank requirements.
Georgian Legal Framework
Crowdfunding activities in Georgia are regulated by the Law of Georgia on the Securities Market, in which a special chapter defines the rules for providing crowdfunding services. Crucial is the Order of the President of the National Bank of Georgia on Approving the Rule on Providing Crowdfunding Services, detailing the platform operator's obligations, capital requirements, and investor categories. The Law of Georgia on Entrepreneurs is also applied regarding the emission of shares in joint-stock and limited liability companies. For AML/CFT, the Law of Georgia on Facilitating the Prevention of Money Laundering and Terrorism Financing applies. A lawyer's participation is essential to ensure the offer stays within "public offering" exemptions and avoid heavy penalties for the company.
Step-by-step process when working with a specialist
Collaboration begins with legal validation of the business model. In the first stage, the lawyer helps the client establish the platform operator and prepare documentation for National Bank authorization. In the second stage, platform Terms and Conditions are created, regulating the relationship between the investor and the issuer. The third stage involves the legal check of specific investment projects and preparation of the Key Investment Information Sheet (KIIS). In the fourth stage, a monitoring system is implemented to ensure transaction transparency. The process ends with platform launch and subsequent reporting to the regulator. A specialist ensures the platform constantly complies with changes in legislation.
Why choose Legal.ge?
Crowdfunding is a field where technological simplicity must merge with legal rigor. On the Legal.ge platform, you will find lawyers with practical experience in the authorization and management of the first crowdfunding platforms in Georgia. Our experts will help you easily implement complex financial regulations, protecting your business from legal risks. Through Legal.ge, you save time and receive a guarantee that your investment campaign will fully comply with National Bank requirements. Find your specialist on Legal.ge and develop your business using modern financing models.
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