The Georgian Framework of Annual Reporting Compliance
Annual reporting compliance for Georgian companies is regulated by the Law on Accounting, Reporting and Audit. The law defines the preparation principles, the audit requirement, the management report, and the filing and publication duties — precisely the annual cycle whose smooth running is the compliance function of a company. At the same time, an issuer's reporting to the National Bank is a separate regime defined by the Securities Market Law; this page is focused on the accounting-law cycle and only cross-references that regime without merging them. The reporting rules of the current Entrepreneurs Law are no longer applied — the accounting law is the carrier.
Principles of Preparing Financial Statements
A subject prepares financial statements at least once a year, and they must be complete, correct and fair: for the comparable period they must reflect the subject's financial position, the results of activity, the movement of funds and capital, and explanatory notes. The information must correspond to the fundamental qualitative characteristics defined by international standards. Accounting policies and methods are applied consistently, and their change is allowed only within the framework of the chosen standards. A PIE and a first-category enterprise must additionally present in the notes information on revenue by activity categories and geographical distribution of markets, and on remuneration paid to the auditor. The statements must indicate the subject's name, legal form, legal address and, where liquidation has begun, information on that process.
The Audit Requirement — the Checkpoint of Annual Compliance
PIEs, first- and second-category enterprises and groups must ensure the audit of their financial statements; the requirement extends to a subsidiary included in a group. Third- and fourth-category enterprises and non-commercial legal persons are exempt from the audit obligation unless legislation provides otherwise. The category determination thus decides who is covered by audit and who is not; annual compliance planning begins exactly here. For an enterprise under the supervision of a regulator, the audit of interim statements is determined by sectoral legislation.
The Management Report
PIEs and first- and second-category enterprises must submit to the service a management report comprising an activity review, a corporate governance report and non-financial reporting. The activity review reflects an exhaustive analysis of the subject's development, results and position, its main risks and uncertainties, and includes development plans, a review of research, information on the activity of branches, a review of credit, market, liquidity and cash-flow risks, and data on the acquisition of own shares. The corporate governance report at a minimum contains a review of the corporate governance code and practice, an analysis of deviations, a review of internal control and risk-management systems, a description of shareholders' rights and the functioning of organs, and a review of the diversification policy. Non-financial reporting is prepared by a PIE corresponding to the first-category size criteria and having on average more than 500 employees in the reporting period. The management report also goes to the auditor, who expresses an opinion on its compliance and consistency with the financial statements.
Filing and Publication
A subject must submit to the service, together and immediately but no later than 1 October of the year following the reporting period, the financial statements, the management report, the report on payments to the state and, where applicable, the audit conclusion. The service publishes the submitted statements and conclusions, except those of fourth-category enterprises, within 1 month of filing, and ensures risk-based selective verification; where a defect is found, it requires the subject to cure it. Where the reporting period does not coincide with the calendar year, the deadline is 9 months from the end of the period. A PIE also publishes the statements on its own website or in print. The sum of these duties is exactly what is called annual reporting compliance.
The documents comprising the financial statements must directly indicate the entity’s name, the registering body, its registration number, legal form and legal address — and, where a liquidation process has commenced, information about that process. This requirement is not a formality: identifiability is where the completeness of the statements begins, and its absence affects the standing of the document itself.
Frequently Asked Questions
Below we summarise the questions that arise most often in practice on this topic.
Who is obliged to have an audit?
PIEs, first- and second-category enterprises and groups, including subsidiaries included in a group; third- and fourth-category enterprises are exempt.
How often are financial statements prepared?
At least once a year; they must be complete, correct and fair and reflect financial position, results, and the movement of funds and capital.
What does the management report comprise?
An activity review, a corporate governance report and non-financial reporting; it is submitted by PIEs and first- and second-category enterprises.
What is the filing deadline?
No later than 1 October of the following year; for a period not coinciding with the calendar year — 9 months from its end.
How We Help on Legal.ge
Our team will help you determine the reporting category, assess the audit requirements, plan the structure of the management report and build the filing calendar. Contact us on Legal.ge — we will run your company's annual reporting cycle without defects or delays.