The Georgian Machinery of Corporate Transparency
Corporate transparency in Georgia is a single system: the publicity of the public registry, the presumption of the reliability of its data, the requirements for business letters and the website, mandatory reporting and audit with an audit committee, the preparation of the annual report, the publication of voting results and the shareholder's right to information — all of this is established by the current Law on Entrepreneurs. At the same time, foreign models of beneficial-ownership registries and transparency acts of other states are non-Georgian law and cannot carry this page. The page is carried by the Georgian machinery of corporate transparency — from registry to shareholder.
Publicity of the Registry and the Presumption of Data
Data registered in the registry are public: any person has the right to examine them and receive an extract from the registering body. The extract is built on the data of the unified electronic portal and reflects the data in force at the moment of its preparation; electronic copies of documents submitted during registration are available on the portal free of charge. To be published are the data registered in the registry and every change made to them, and the amount of a joint-stock company's placed capital becomes public at least once a year. A presumption of reliability and completeness applies to the data: in relations with third persons the entrepreneur may rely on the registry data only after their publication; within relations arising within 15 days of registration and publication, reliance is admissible unless the third person proves it neither knew nor could have known.
Business Letterhead and Website
Transparency reaches down to everyday documents: every business letter of a limited partnership, a limited liability company and a joint-stock company must indicate the firm name, legal address and identification number. Where capital is indicated, the data must refer to the placed capital and its paid-up part. A company in liquidation indicates the corresponding addition next to its name; a person in insolvency proceedings indicates the specific regime as well. All data indicated on the business letter must also be placed on the company's website; the requirement is the same for paper and electronic form. Failure to perform this obligation entails administrative liability of the person authorized to represent.
Reporting, Audit and the Audit Committee
A public-interest entity that is a first- or second-category enterprise must annually ensure the audit of its financial statements; the preparation and submission of reporting is regulated by the Law on Accounting, and the entrepreneur's managers and supervisory board members are jointly responsible for its preparation and submission. The participation of shareholders, the governing body and the supervisory board in the audit must not threaten the auditor's independence and objectivity. An audit committee is created in the supervisory board of a PIE, composed of board members and at least 1 independent member; at least 1 member must be competent in accounting and/or audit, and an independent member is elected chair. The committee oversees the process of preparing reporting, internal control and audit, informs the board and issues recommendations.
The Annual Report, Voting and the Shareholder's Information
The governing body of a joint-stock company prepares the annual report, the report on economic condition and a proposal on the use of net profit; where there is disagreement, both proposals are communicated to the general meeting, which must choose. An accountable enterprise whose securities are admitted to trading on a stock exchange publishes the voting results on its website no later than 15 days after the general meeting. At the meeting itself, a shareholder has the right to ask questions of the governing body on agenda items and demand any information necessary for their proper consideration. Refusal is possible only in three cases: where the information would cause significant damage, where confidentiality would be breached, or where the answer has already been given on the website in a question-and-answer format; information voluntarily given to a shareholder must also be given to every other participant. A refusal may be appealed within 15 days of the preparation of the minutes, and where the court grants the claim, the information becomes available to all interested shareholders.
Frequently Asked Questions
Below we summarise the questions that arise most often in practice on this topic.
How public is the company's registry data?
Fully: any person may examine it and receive an extract; the presumption of reliability and completeness applies to the data.
What must a business letter contain?
The firm name, legal address and identification number; the same data are placed on the website.
Who creates the audit committee?
The supervisory board of a PIE — from board members and at least 1 independent member; the chair must be an independent member.
When may a shareholder demand information?
During the general meeting, on agenda items; a refusal may be appealed within 15 days of the minutes.
How We Help on Legal.ge
Our team will help you inventory the transparency duties of an enterprise — from registry data and business-letter form to the audit committee and information relations with shareholders. Contact us on Legal.ge — we will run your company's transparency system on the exact requirements of the law.