The Charter in the Legal System of Entrepreneurs
The charter is the centre of the founding documentation of an entrepreneurial society and is regulated by the Georgian law on entrepreneurial societies. To establish a society, a founding agreement is required: it is made in written form and signed by all founding partners; the signature is certified notarially, unless it has been certified in the established manner by the National Agency of the Public Registry or another person authorized by the agency, or executed in accordance with the law on electronic documents and trusted electronic services. A power of representation requires notarial certification or execution of the signature under that electronic law.
The practical significance is that a breach of form at establishment or amendment becomes an obstacle to registration: at best it costs time, at worst it raises the question of the binding force of the transaction. This is why a charter project should be built around the requirements of the law from the very beginning.
The Mandatory Content of the Charter
The charter of an entrepreneurial society of any legal form must contain at minimum: the legal form of the society; the object of its activity, which may be indicated as general entrepreneurial activity or a specific object; an agreed restriction among the partners relating to the right of ownership of a share, where such agreement exists; and information on the existence of a partners' agreement, if such an agreement exists. This minimum list is mandatory, although in practice a charter often contains more — governance bodies, voting rules, conditions for the transfer of shares.
The law also recognizes standard charters, approved by the Minister of Justice by legal forms. An important guarantee is that a change or cancellation of a standard charter does not require an amendment to the charter of a society that used the standard charter in force at the moment of registration — except where the reason for the change is an amendment of the law obliging the society to bring the charter into conformity with imperative requirements.
Registration of Changes to Registered Data
Changes to the data envisaged by the founding documents must be registered in the registry. A change is in principle carried out on the application of the person authorized to manage and represent the society, unless the charter or the transaction submitted provides otherwise; special cases exist too — upon disposal of a share, the change may be carried out on the request of the disposing partner or the acquirer, and upon inheritance on the request of the heir. In the case envisaged by the law on copyright and neighbouring rights, a request to change the firm name may also be submitted by the National Center of Intellectual Property — Sakpatenti.
A charter amendment, unless the founding agreement establishes otherwise, is signed by the chair of the general meeting; where a notary attends the meeting, the notary also draws up and signs the protocol. The partners' signatures on a charter amendment or its new edition are not required unless the founding agreement provides otherwise, and the notarization of the amendment follows the rule applicable at establishment. When amending the founding agreement, a consolidated text must be submitted together with the text of the amendment — a defect in it is an obstacle to registration.
The Competence of the General Meeting
The general meeting decides on matters assigned to it by law and by the charter, and it is precisely the meeting that adopts amendments to the charter and its new editions. For joint-stock companies the law lists the matters within the competence of the meeting: change of the management system, reorganization, dissolution and appointment of a liquidator, approval of liquidation balances, permission for the buyback of shares, changes of placed capital, the composition and election of governance bodies, approval of the audit report and selection of the auditor, approval of the financial report and distribution of dividends, determination of the number and classes of shares, and others.
Two rules balance this system: by the charter or by a decision of the meeting, the authority to decide certain matters may be delegated to the supervisory board or the directorial organ; and the meeting has no right to decide matters within the competence of other organs, unless those organs themselves apply to the meeting. When drafting a charter, precision in this delineation is decisive, because a decision adopted in breach of competence becomes contestable.
Frequently Asked Questions
What must a charter contain at minimum?
The legal form, the object of activity, any agreed restriction on the ownership of a share, and information on the existence of a partners' agreement.
Is notarial certification mandatory?
The signature is certified notarially unless it is certified in the established manner by the Public Registry agency or an authorized person, or executed under the electronic trusted services law; a power of representation always requires the notarial or electronic form.
Who signs a charter amendment?
The chair of the general meeting, unless the founding agreement establishes otherwise; where a notary attends, the notary draws up the protocol, and the partners' signatures are not required.
How does the law protect users of standard charters?
A change or cancellation of a standard charter creates no obligation to amend an existing charter, except where the reason is an amendment of the law and conformity is established by imperative requirements.
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