PIPE (Private Investment in Public Equity) transactions represent one of the most effective and dynamic mechanisms for raising capital for public companies in Georgia. This process involves the private placement of securities (usually shares or convertible bonds) by a public company with institutional or accredited investors, at a certain discount to the market price. In Georgia, where the capital market is in a development stage, PIPE transactions offer companies an alternative to traditional bank loans and Initial Public Offerings (IPOs). This mechanism allows issuers to quickly attract needed funds from reputable investors, which often has a positive impact on the company's market value. However, PIPE deals require a high level of legal integrity to protect the interests of both the company and existing shareholders. The Legal.ge platform connects you with leading capital markets lawyers who provide full legal support for the transaction.
What does the PIPE Transactions service cover?
Legal services for PIPE transactions involve complex actions necessary for the successful completion of the deal. The service covers: structuring the transaction considering Georgian and international legislation; preparing investment agreements (Subscription Agreements); reviewing or drafting Shareholders' Agreements (SHA); preparing an emission prospectus or information memorandum (if necessary); preparing corporate resolutions (General Meeting, Supervisory Board); interacting with the registrar and the Central Securities Depository; compliance with National Bank of Georgia regulations; and tax consultations related to capital increase. Lawyers also conduct Due Diligence for investors, ensuring the transparency of the transaction and risk minimization.
Common real-world scenarios
PIPE transactions are often used in specific business situations. The first scenario is raising "growth capital" when a public company needs funds to finance a new project or acquire another company (M&A). The second scenario concerns financial restructuring when a company tries to reduce debt by increasing equity. The third scenario is bringing in a strategic investor who will bring not only capital but also experience and international connections. It is also common for a company to carry out "Down Round" or "Up Round" financing considering market conditions. Each of these cases requires an exact description of the share emission terms to avoid unjustified dilution of existing shareholders' rights and legal disputes.
Georgian Legal Framework
The legal basis for PIPE transactions in Georgia is the Law of Georgia on the Securities Market. This law regulates the rules for public and private offerings of securities, the obligations of accountable enterprises, and the scope of National Bank supervision. Also vital is the Law of Georgia on Entrepreneurs, which defines the legal norms for issuing shares, increasing capital, and shareholders' preemptive rights. Orders of the President of the National Bank of Georgia establish detailed rules for registering an emission prospectus and disclosing information. A lawyer's assistance is essential for the harmonization of these laws, especially when the investor is a foreign company and the deal requires the application of international law principles.
Step-by-step process when working with a specialist
The process begins with preliminary transaction planning and agreement on terms with the investor (Term Sheet). In the first stage, the lawyer checks the company's charter and existing obligations. In the second stage, the main transactional documents — the investment agreement and the share emission resolution — are prepared. In the third stage, if necessary, documentation is submitted to the National Bank for registration or information is disclosed on the stock exchange. In the fourth stage, the capital is paid, and the shares are reflected in the investor's account through the registrar. The fifth stage involves post-transaction procedures, such as reflecting changes in the Registry of Entrepreneurs and final reporting. The specialist ensures that this entire chain is legally flawless and protected from potential claims.
Why choose Legal.ge?
PIPE transactions require specific knowledge in financial law and capital markets. On the Legal.ge platform, you will find lawyers and consulting companies that have successful experience in large investment projects in Georgia. Our experts will help you in the legal formulation of complex financial instruments and ensure the protection of your business interests during the negotiation process. Through Legal.ge, you have access to professionals who are well-acquainted with both local legislation and international best practices. Find your specialist on Legal.ge and carry out a PIPE transaction safely and effectively.
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