Forms of Public Sale and Legal Qualification
Organizing a public token sale in Georgia revolves around one question: is the token a security? Under the Law on Securities Market, a public offer of securities is a proposal to not fewer than 100 persons, or to a number not specified in advance, for the direct or indirect sale of securities in the issuer's name (Article 3, part 1). Where a token bears the features of a security, its wide placement falls precisely within this concept — and the whole prospectus architecture is activated.
The exceptions are in the law itself: the offer and sale of securities only to experienced investors is not regarded as a public offer — that relationship remains within a licensing and contractual frame. And a utility token — one oriented to the internal use of the project and not representing an object of investment — is not subject to any special regime at all: its launch on a decentralized platform does not proceed under the rules of a public offer, and this boundary must be shown precisely in the project's documentation. Silence about the boundary is itself a risk: the market asks the qualification question late, in the phase of dispute.
The Prospectus and Approval at the National Bank
In the case of a security token, a public offer may be carried out only through the publication of an issuance prospectus — a document describing the issuer, its governance, the last 2 years of activity, audited statements and the terms of the securities to be issued. Within 15 days of the application the National Bank reviews the prospectus; where no information is conveyed it is deemed approved, while the current financial information in the final prospectus must not be older than 18 months (Article 4).
The approved prospectus is provided to investors before the sale begins, at its start or during the sale (Article 5, part 1) — the version placed on a distribution platform or exchange must satisfy precisely this requirement. Where a material change occurs during the offer period, the issuer submits an amendment to the bank, announces the cancellation of the existing offer and unwinds every contract without discount; subscribers have the right to reject, and the price is refunded within 10 days of the rejection (Article 5, parts 2 and 3).
The Involvement of the Exchange and the Broker
Placement on a centralized platform rests on rules established by law: the issuer must conclude a securities offering agreement with a brokerage company or a licensed financial institution for the placement (Article 3, part 2). From this follows the licensing angle as well: the platform's role in a placement service touches the licensing requirements for financial institutions, and this layer must be explored in advance when organizing the project.
A decentralized launch — where placement happens on an open protocol — remains outside this frame only where the token is not a security. If the qualification shows otherwise, the decentralized form turns into a regulatory breach — and the risk of dispute comes from the buyers' side too, since the sale of securities placed without a prospectus may be cancelled at the buyer's request.
The Practical Order of Organization
The first step is qualification: the economic substance of the token — investment or utility — must be assessed in advance. The second step is the audit of the audience: orientation towards experienced investors or a narrow circle takes the sale outside the public offer regime, but this boundary must be documented properly. The third step is the preparation of the prospectus and communication with the bank; the fourth is the selection of the placement channel with the licensing angle in view.
The fifth step is offer management: the notice procedure for changes, the mechanics of rejection and refund, and the report on results. Skipping these stages risks not the choice of the sale form but the whole project. A qualification performed before launch protects the project from both outcomes — a regulatory breach and buyer claims — because disciplined documentation keeps the sale on the right side of the boundary.
Frequently Asked Questions
When is a token sale a public offer?
When the token is a security and the proposal addresses at least 100 persons or an unspecified number (Article 3). An offer only to experienced investors is not subject to this regime.
Does a utility token need a prospectus?
No — a utility token that is not an object of investment is not subject to a special regime. But the qualification boundary is refined, and the assessment requires professional analysis.
How does exchange-based placement work?
Through a placement agreement with a brokerage company or a licensed financial institution (Article 3, part 2), while the prospectus is provided to investors before or during the sale (Article 5).
What happens if the terms change during the sale?
The issuer submits an amendment and unwinds every contract without discount; subscribers may reject, and the price is refunded within 10 days (Article 5).
How We Help on Legal.ge
The Legal.ge team conducts the organization of a public token sale from beginning to end: qualification assessment, proper documentation of an experienced-investor orientation, preparation of the prospectus and communication with the bank, placement agreements and offer management. We draw the boundaries of the regime for each form and remove the risk before it is placed. Contact us to discuss your launch plan.