Deal Structuring under Georgian Law
Deal structuring — the choice between an asset deal and a share deal — is carried in Georgian law by the contract machinery of the Civil Code: the sale contract carries the asset transaction, the extension of its rules to rights carries the share transaction, the conditional transaction carries closing expectations, agreement on essential terms sets the mandatory barrier, and freedom of contract is the design space itself. At the same time, Georgian law knows no statutory "merger agreement" form for private companies: a strict-sense merger is a reorganization under the Entrepreneurs Law, while acquisition structuring in practice rests on the civil-law machinery of sale and condition. The tax asymmetry between the two wrappers is governed by the Tax Code and is treated on a separate page. The boundary between the two pages is drawn by the object of the transfer.
The Design Space — Freedom and Its Limits
Subjects of private law may freely conclude contracts and determine their content; constructions not provided for by law but not contrary to it are admissible. The limits are clear: where the validity of a contract depends on state permission for the protection of essential interests, this is regulated by a separate law; a party holding a dominant position bears the obligation to contract and may not groundlessly impose non-equivalent terms; an unjustified refusal to contract with persons satisfying vital needs is impermissible. Within these limits the design of the structure is free. Freedom is used through the price formula and the closing conditions.
The Asset Deal — the Sale Contract
Under a sale contract the seller must transfer to the buyer ownership of property, hand over the related documents and deliver the goods, while the buyer must pay the agreed price and accept the property. Where the price is not directly indicated, the parties may agree on the means of its determination — a mechanism that carries complex price formulas (earn-outs, adjustments). This is the core frame of the asset deal: ownership passes, documents are handed over, the goods are delivered. Each object of transfer is fixed by its own act of delivery.
The Share Deal — Transfer of Rights
The carrier of the equity transaction is a special norm of the same code: the rules governing the sale of a thing apply correspondingly to the sale of a right or other property. Buying a share is, no less than buying an asset, a sale — only the object is a right instead of a thing. On this fork stands the share-acquisition model: the buyer enters the company and receives its assets, contracts and debts as a whole. The seller seeks release from debts through a separate contract.
Closing Expectations and Essential Terms
A transaction is conditional where it depends on a future and unknown event such that performance is postponed until its occurrence or the transaction terminates upon it. On this mechanism stand closing conditions — expectations of regulatory consents, creditor agreements and transition-period tests. A contract is considered concluded where the parties have agreed on all essential terms in the form provided; essential are the terms on which agreement must be reached at a party's request or which are deemed such by law. In structuring, this list is a checklist to fear: object, price, transfer — an unsettled essential term leaves the contract unconcluded. The code also recognises the preliminary contract: a contract may give rise to an obligation to conclude a future contract, and the form required for the main contract extends to the preliminary one — the legal footing for pre-deal packages such as exclusivity and letters of intent. The preliminary documents carry their own binding discipline. The choice of structure begins with three questions: what is transferred — assets or shares; what remains with the seller — debts or warranties; and when closing occurs — conditionally or unconditionally. The answers to these three questions build the whole architecture of the document, and each of them is fixed by separate clauses rather than left to later correspondence.
Frequently Asked Questions
Below we summarise the questions that arise most often in practice on this topic.
How is a share deal formed in Georgian law?
Through the rules of sale — the norms on the sale of a thing extend correspondingly to the sale of a right or other property.
May closing conditions be set?
Yes — through the conditional-transaction mechanism: performance is postponed until the event or the transaction terminates upon it.
Which terms are essential?
Those requiring agreement by a party's request or by law — in practice the object, the price and the transfer.
Is there a separate "merger agreement"?
For private companies, no; structuring rests on sale and condition machinery, while a strict merger is a reorganization.
How We Help on Legal.ge
Our team will help you choose the structure — assets or shares — write the price formula, construct the closing conditions and draft the full contract. Contact us on Legal.ge — we will carry your transaction with the right legal architecture. The architecture reduces the risk of dispute in advance.