LLC Formation: the Legal Basis
The limited liability company is the most widespread enterprise form in Georgia. The law defines it as an enterprise whose capital is divided into shares, with the partners’ liability for the company’s obligations limited. The company answers to creditors with all its property and is not liable for the partners’ obligations.
This form may also be founded by one person: under Article 19, an LLC may be founded by a single person, and where all shares pass to one partner the company becomes a one-person enterprise, a fact reflected in the register.
Note the address as well: under the law, the entrepreneur’s legal address is its physical address on the territory of Georgia.
The Mandatory Content of the Founding Agreement
The founding agreement contains the charter and the data prescribed by law. For a company of any form, together with the charter it must contain the firm name, the legal address, the identification data of every partner — name, surname, residential address and personal number, or, for a legal person, its firm name, legal address and identification number — as well as the data of the person authorized to manage and represent, supervisory-board members where such a board exists, and, where applicable, a general trade representative and the manager of a partner’s share.
Where no charter has been developed by the founders, the standard charter is considered part of the founding agreement. For an LLC, the agreement must additionally state the number of shares issued for consideration and the partners’ proportional participation, expressed in percentages whose sum must equal 100 percent.
Additional possible elements include the maximum amount of authorized capital, the number of issued shares and the redistribution of shares upon placement, nominal values, and a special condition restricting the alienation of shares. In preparing the document, note also that the founding agreement may set a minimum contribution for shares of a particular class, and nominal values of different classes may differ — the very basis of dividing shares into classes.
Where a founder is a non-citizen or a foreign legal person, the founding document must contain equivalent identification data.
The amendment regime is calibrated too: changes to the firm name, the legal address, the supervisory-board data, a differing form of representation and the authorized and issued capital require the same majority as an amendment of the charter.