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IPO Preparation

Does a company need to be profitable to IPO?

Not necessarily. Many growth companies IPO while still making losses, provided they can convince investors of their future potential and robust business model.

What is the role of an underwriter?

An underwriter (usually an investment bank) manages the issuance process, helps price the shares, and sells them to initial investors.

What are the ongoing costs of being public?

Public companies face higher costs related to auditing, legal compliance, investor relations, and listing fees on the exchange.

Can Georgian companies list abroad?

Yes, through Global Depository Receipts (GDRs) or by establishing a holding company in a foreign jurisdiction (like the UK) that owns the Georgian assets.

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IPO Preparation: The Path to Public Markets

An Initial Public Offering (IPO) is one of the highest peaks of a company's development, granting it access to unlimited capital and increasing its prestige and liquidity. However, an IPO is not merely a marketing event; it is a highly complex and regulated legal process requiring total transformation of the company. Transitioning from a private to a public company means adopting entirely new standards of governance, transparency, and reporting. For Georgian companies, an IPO can mean listing on the Georgian Stock Exchange (GSE) or entering international exchanges (London, Warsaw, New York). In both cases, the preparatory period requires close cooperation with lawyers, auditors, and investment bankers.

Legal.ge offers access to capital markets lawyers experienced in managing the IPO process. Specialists on our platform will help you prepare your company for publicity, meet regulatory requirements, and successfully complete the listing.

What Does IPO Preparation Service Cover?

Preparing for an IPO is a complex process that often lasts 12-24 months:

  • Corporate Restructuring: Converting the legal form to a Joint Stock Company (JSC), establishing a corporate governance structure (Supervisory Board, committees) in accordance with international standards.
  • Drafting the Prospectus: Compiling the main document that provides investors with detailed information about the company's business, risks, and financial condition.
  • Legal Due Diligence: A full audit of the company's assets, contracts, and litigation to identify risks.
  • Regulatory Interaction: Obtaining approval of the prospectus from the National Bank of Georgia or the relevant foreign regulator.
  • Implementing Compliance Systems: Developing policies for information disclosure, insider trading prohibition, and conflict of interest management.

Common Scenarios When an IPO is Considered

Companies start thinking about an IPO for the following reasons:

  • Massive Growth: When a company needs a large volume of capital for expansion that is difficult or expensive to raise through bank loans.
  • Exit for Early Investors: Venture funds or private investors are looking for a way to monetize their investment (Exit).
  • M&A Currency: Using public shares as currency to acquire other companies.
  • Prestige and Credibility: Public status increases the company's credibility in the eyes of partners and clients.

Georgian Legal Framework

The IPO process is regulated by the Law of Georgia on Securities Market and the Law on Entrepreneurs. The central figure is the National Bank of Georgia, which approves the issue prospectus. Legislation strictly defines information disclosure obligations. The company is obliged to publish annual and semi-annual reports, as well as immediately disclose any "material event" that may affect the share price. In the case of listing on an international exchange, the company will also have to meet the regulatory requirements of that country (e.g., UK, USA).

Service Process Stages

Managing the IPO process with the help of a specialist:

  1. IPO Readiness Assessment: Diagnosing whether the company is ready to go public.
  2. Team Formation: Selecting underwriters, lawyers, and auditors.
  3. Document Drafting: Preparing the prospectus and marketing materials.
  4. Regulatory Approval: Submitting the prospectus and incorporating comments.
  5. Roadshow and Pricing: Meetings with investors and determining the share price.
  6. Listing: Admission of shares to trading on the exchange.

Why Legal.ge?

An IPO is a process where you cannot afford to make mistakes. Incorrect information in the prospectus can lead to heavy fines and investor lawsuits. Legal.ge allows you to find qualified lawyers who understand the complexities of capital markets and will help ensure your company's path to the public exchange is successful and secure.

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