The Status and Legal Form of a Factoring Company
A factoring company may exist only in the legal form of a limited liability company or a joint-stock company. It is obliged to create a supervisory board, to which the rules established by the law on entrepreneurs for the supervisory board of a joint-stock company must be applied. The supervisory board thus operates under the same standard as in joint-stock companies, which provides additional rigour in corporate governance.
Participatory share in a factoring company is prohibited for a commercial bank, a microbank, a microfinance organisation and their related persons. This prohibition serves the separation of the interests of participants in the factoring market.
A terminological monopoly is also protected: no one has the right to use the term "factor" or "factoring company" or any other wording containing that term without being registered as a factoring company. An exception applies where the use of the term or wording is established or recognised by law or an international treaty of Georgia, or where it is clear from the context in which the term is used that the respective entity does not carry out the activity provided for by the law on factoring.