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Articles of Association

Can the Charter be amended later?

Yes, the Charter can be amended at any time by a resolution of the Partners' Meeting. Amendments become effective upon registration in the Public Registry.

Is a bilingual Charter legally binding?

Yes, but for registration purposes in Georgia, the Georgian text prevails. Bilingual charters (e.g., English-Georgian) are standard for foreign investors.

What is the difference between the Charter and a Shareholders' Agreement?

The Charter is a public document filed with the registry. A Shareholders' Agreement is a private contract. Key terms from the SHA must be in the Charter to be enforceable against third parties.

Do I need a lawyer to draft the Articles?

While you can use a standard template, a lawyer is highly recommended for multi-partner companies to customize governance rules and prevent future disputes.

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Articles of Association Drafting: Creating Your Company's Constitution

The Articles of Association (Charter) is the primary corporate document, a sort of "constitution," that defines the rules of business management, partner relationships, and structure. In Georgia, many entrepreneurs make a mistake by choosing the Public Registry's "standard charter" when registering a company. However, since the enactment of the new "Law on Entrepreneurs," the standard charter often fails to meet the needs of complex businesses, multi-partner companies, and investments. Drafting individual Articles of Association is essential to avoid "deadlock" situations, define specific dividend distribution rules, and regulate the limits of directors' authority. Properly drafted Articles are the guarantee of a stable business and the best means of dispute prevention.

Legal.ge offers professional services for drafting company Articles of Association or modifying existing ones. Our platform's corporate lawyers will help you create a document that accurately reflects the specifics of your business and protects the interests of all partners.

What Does the Articles of Association Drafting Service Cover?

This service goes beyond filling out a simple template and includes full corporate structuring:

  • Defining Governance Structure: Delineating the competencies of the Board of Directors, Supervisory Board, and Partners' Meeting in compliance with imperative legal norms.
  • Voting Procedures: Establishing decision-making quorums (e.g., simple majority vs. qualified majority) for specific issues.
  • Share Transfer Rules: Integrating "Pre-emptive rights," "Tag-along," and "Drag-along" mechanisms into the Charter.
  • Dividend Policy: Outlining profit distribution rules to avoid misunderstandings among partners.
  • Conflict Resolution Mechanisms: Pre-defined scenarios on how the company should act when votes are split 50/50.
  • Legal Compliance: Full harmonization of the Charter with the latest edition of the "Law of Georgia on Entrepreneurs."

Common Scenarios When Individual Articles are Necessary

A standard charter is insufficient in the following cases:

  • Multiple Partners: When a company has several founders with different shares and roles (e.g., a passive investor and an active director).
  • Foreign Investments: Foreign investors almost always request specific rights (veto rights, audit rights) that must be reflected in the Charter.
  • Family Business: The need for specific regulations regarding inheritance and transfer of shares to family members.
  • Startups: When creating an Option Pool or outlining vesting mechanisms is necessary.
  • Joint Ventures: When two independent companies create a new legal entity and need strictly defined control mechanisms.

Georgian Legal Framework

The primary regulatory document when drafting Articles of Association is the Law of Georgia on Entrepreneurs. This law establishes imperative (mandatory) and dispositive (negotiable) norms. For example, the law strictly defines issues of director liability but gives partners the freedom to determine voting rules and profit distribution themselves. Also important is the Law on Public Registry, which sets formal requirements for charter registration. Incorrectly drafted Articles can be grounds for refusal of registration or, in the worst case, for parts of it to be declared void by a court in the future.

Steps in the Process with a Specialist

Working with a lawyer through Legal.ge involves:

  1. Consultation: Clarifying the partners' wishes and the business model.
  2. Drafting: Preparing the initial version of the Articles and reviewing it with partners.
  3. Agreement: Making changes and balancing the interests of all parties.
  4. Bilingual Version (if needed): If a partner is foreign, preparing the Charter in two languages (Georgian-English).
  5. Registration: Submitting the document to the Public Registry and monitoring the registration process.

Why Legal.ge?

Articles of Association are not just a formality; they are a tool that resolves disputes before they begin. Templates found on the internet are often outdated or do not comply with new legislation. Legal.ge allows you to find corporate law experts who will create "tailor-made" Articles for you, ensuring the safety and flexibility of your business. Start correctly with Legal.ge.

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