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Partnership Formation

What is the difference between GP and LP?

In a General Partnership (GP), all partners have unlimited liability. In a Limited Partnership (LP), some partners have limited liability (investors).

Is a Joint Venture a legal entity?

A contractual Joint Venture (under Civil Code) is not a legal entity. A registered GP or LP is a legal entity.

Are partners personally liable?

In a GP, yes. In an LP, only the General Partner is personally liable; Limited Partners risk only their contribution.

Can foreigners form a partnership?

Yes, foreign individuals and companies can be partners in Georgian GPs and LPs.

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3 min

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Introduction: Types and Essence of Partnership

In Georgia, forming a "partnership" can take several forms depending on the partners' goals and liability levels. Primarily, these are registered business entities: General Partnership (GP) and Limited Partnership (LP). There is also a Joint Venture (Amkhanagoba), which is a contractual relationship without creating a legal entity. In a GP, all partners are fully liable for the company's obligations, while an LP has both general partners (full liability) and limited partners (limited liability). These forms are often used by professional service firms (auditors, lawyers) or investment funds where personal trust and liability are critical.

What Does This Service Cover?

The partnership formation service includes full legal support:

  • Selecting the Right Form: Consulting on which form (GP, LP, or contractual JV) fits the business model.
  • Drafting Partnership Agreement: Preparing a detailed document regulating profit distribution, management participation, and dispute resolution.
  • Registration: For GP and LP — registering the entity in the Public Registry.
  • Tax Arrangement: For contractual JVs — registering with the tax authority and establishing reporting rules.
  • Defining Liability: For Limited Partnerships — clearly distinguishing the status of limited and general partners in the charter.

Common Real-World Scenarios

Partnership forms are used in specific situations:

  • Investment Funds: Limited Partnership (LP) is a classic form for investment funds, where the manager (General Partner) runs the business, while investors (Limited Partners) only contribute capital and are not liable for obligations.
  • Professional Services: Law or audit firms sometimes choose GP to emphasize their reliability and personal liability to the client.
  • Joint Projects (JV): Two companies sign a partnership agreement (without a legal entity) to participate in a tender or for construction.

Georgian Legal Framework

GP and LP are regulated by the Law of Georgia on Entrepreneurs. The law defines the joint and several liability of partners in a GP (all partners are liable with all their assets) and mixed liability in an LP. As for the contractual partnership, it is regulated by the Civil Code of Georgia (Articles 930-940) and does not constitute a legal entity, although for the purposes of the Tax Code, it can be a separate taxpayer.

Service Process

Establishing a partnership requires detailed planning:

  1. Negotiation: Defining partners' roles and contributions.
  2. Drafting: Creating the charter or partnership agreement. This is the most critical stage.
  3. Registration: For legal entities — registration in the Registry. For agreements — notarization (optional) and tax registration.
  4. Bank Account: Opening a separate account for the GP/LP.

Why Use Legal.ge?

Partnership forms (especially LP and contractual JV) are less standard than LLCs and require deep legal knowledge. An incorrectly drafted agreement can lead to unforeseen liability for a partner with all their assets. Experts on Legal.ge will help you choose a safe form and draft partnership terms so that your interests are protected.

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