PIPE Transactions under Georgian Law
A PIPE (Private Investment in Public Equity) in Georgian practice means the private, non-public placement of a joint-stock company’s new shares, regulated by the Law of Georgia on Entrepreneurs. Through this route the company increases its capital by issuing additional shares and placing them with a specific investor on negotiated terms. As in other jurisdictions, shareholders by default hold a pre-emptive right, whose use — or lawful limitation — is a decisive element of the transaction plan. Where the offer becomes a mass offer, the public-offering regime established by the securities legislation may also come into play, so the placement circle must be planned precisely from the outset.
The legal framework of a private placement clusters around three articles: the decision on a capital increase and the pay-up requirements for the shares, the instrument of authorized capital, and the shareholders’ pre-emptive right. Each demands its own sequence, and neglecting any of them creates the risk of the decision being challenged or the transaction stalled.