The Statutory Backbone of Minority Shareholder Protection
For issuers of public securities, minority shareholder protection in Georgia is codified in the Georgian Law on the Securities Market. The law gives minorities four enforceable rights: step disclosure of control concentration, the mandatory buyout offer, the special regime of interested transactions, and the information floor of periodic reporting. In unlisted companies, other minority remedies are governed by the current Law on Entrepreneurs, so this page is deliberately scoped to accountable issuers.
Step Disclosure of Ownership
A holder of public equity securities must submit a notification to the National Bank of Georgia and to the issuer if its share of voting securities reaches, exceeds or falls below the following thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%. This duty rests on the existing holder and, on falling below a threshold, the former holder; it also extends to each member of a group acting in agreement and to a holder of acquisition rights over the issuer's equity securities. A holder is a person holding securities in his own name for his own or another's interests, including a depositary receipt holder.
For a minority, the disclosure system works as a radar: through these notifications it becomes visible who stands behind each threshold. The issuer must make the received information public within the period set by the National Bank, and in case of violation the Bank may suspend the person's voting rights for a certain period.
The Controlling Party's Mandatory Buyout
If a person or a group acting in agreement acquires securities as a result of which it controls more than half of the total votes of the accountable enterprise, it must, no later than 45 days from the occurrence of that fact, make a tender offer to buy out all remaining securities or, within the same period, reduce the votes under its control below half. This is the minority's exit right: at the moment control is taken, an offer must be made to every remaining holder. The requirement does not apply where more than half was lawfully acquired through an earlier tender offer to all remaining holders, or where the buyer holds the securities for others — then the duty falls on the person directly or indirectly controlling more than half.
The offered buyout price must be determined by an auditor or a brokerage company and, for each class of securities, must not be less than the highest price the acquiring person paid for that class of securities of the enterprise within the last 6 months. The valuation is supported by documented circumstances, and the valuer is liable with all its property for negligent or deliberately incorrect valuation. Until the offer is completed, the buyer may not exercise more than half of the votes at a general meeting.