Can the debtor still vote with seized shares?

Yes. Until the shares are officially sold at auction to a new owner, the debtor retains their voting rights at shareholder meetings, but they cannot sell the shares or collect dividends.

How are shares of a private (closed) company sold?

Shares of a private joint-stock company are sold through the National Bureau of Enforcement's standard electronic auction system, starting at a price determined by an independent auditor's valuation.

What happens if a promissory note is seized?

If a promissory note held by the debtor is seized, the enforcer notifies the issuer of the note (the person who owes money to the debtor). The issuer must then legally pay that money directly to the enforcement bureau instead.

Seizure of Securities in Georgia | legal.ge

Introduction: The Importance of Securities in the Enforcement Process

The seizure of securities (shares, bonds, promissory notes) is one of the most specific and intellectual areas of modern enforcement law. When a debtor—an individual or a corporation—owns securities, it means they possess serious financial assets that may far exceed the balances in their bank accounts or even the value of their real estate. Securities are intangible property rights that cannot be physically held in most cases (as they are registered in electronic format), yet they carry immense financial weight. Placing a seizure on these assets implies restricting the debtor's right to dispose of (alienate, pledge) these papers and blocking the income (e.g., dividends) derived from them. This stage of enforcement is critically important in large business disputes and the forced execution of corporate obligations.

What the Securities Seizure Service Entails

The legal service for seizing and subsequently enforcing against securities covers a complex procedural cycle that requires a deep understanding of financial and corporate law. The service begins with tracing the securities belonging to the debtor, which is carried out by sending official requests to registration bodies (for example, independent securities registrars, brokerage companies, or the National Bank). The lawyer ensures the issuance of a seizure act by the enforcer and its immediate reflection in the relevant registry. The service also includes collecting dividends or interest from the seized shares or bonds in favor of the creditor. Additionally, the service involves organizing the appraisal of the securities and putting them up for realization at a specialized electronic auction, so that the recovered funds cover the debt.

Common Practical Scenarios

In practice, the seizure of securities is primarily used during large business disputes, conflicts between partners, and the recovery of million-dollar debts by banks. The most typical scenario is when the founder (shareholder) of a large company is an individual debtor who has no money in personal accounts but owns 50% of the company's shares. In such times, the enforcer seizes their shares. This step is also psychologically very effective, as seizing shares can disrupt the management process of the entire company and force the shareholder to quickly find the money to pay the debt. Another scenario involves enforcement against investment companies or brokers, where the debtor's main assets are placed precisely in bonds and promissory notes. Additionally, promissory notes held by the debtor are seized, which means the issuer of the note becomes obligated to pay the money not to the debtor, but to the enforcement bureau.

Georgian Legislation and Procedural Specifics

The Law of Georgia on Enforcement Proceedings, together with legislation on the securities market, determines the rules for seizing these specific assets. The legislation distinguishes between certificated (existing in paper form) and uncertificated (existing as electronic records) securities. If a security is certificated, the enforcer is obliged to physically confiscate it and keep it secure. However, the absolute majority of modern securities are uncertificated and stored with registrars or banks. In such cases, a seizure implies sending an official order to the registrar to block the transfer of shares on the debtor's account. It is also important that the seizure does not deprive the debtor of their voting right as a shareholder (until the shares are sold), but it prohibits them from receiving financial benefits (dividends) from these shares and disposing of them.

Stages of Realization and Auction of Securities

The realization of seized securities is one of the most difficult processes in enforcement proceedings because determining their market value requires specific financial knowledge. The process begins with an independent auditor examining the company's financial condition to determine the real price of a single share or equity stake. After the appraisal is completed, the securities go to a public electronic auction. If the shares belong to a public (publicly traded) company, the realization can occur directly through the stock exchange with the help of a brokerage company, which is a faster mechanism adapted to market principles. After the sale, the registrar is obliged to record the shares in the name of the new buyer (the auction winner), and the received funds cover the creditor's debt.

Challenges and Debtor Strategies

One of the main challenges when enforcing against securities is their timely identification. It is often difficult to determine which registrar or broker holds the debtor's shares because there is no single central, open database for securities (unlike the Public Registry for real estate). Furthermore, debtors frequently use offshore companies or nominal owners to hide shares, complicating the identification of the real owner (beneficial owner). The second major problem is the appraisal of illiquid (hard-to-sell) shares: selling the shares of closed joint-stock companies at auction often ends fruitlessly due to a lack of buyers. At such times, the creditor faces a dilemma—take the shares in kind and become a shareholder in a problematic company, or continue searching for other assets.

The Role of legal.ge and Highly Qualified Legal Assistance

The seizure and realization of securities require not only enforcement expertise but also top-level knowledge of corporate and stock market law. Acting independently in such cases or hiring an inexperienced lawyer often ends in fatal errors and the loss of millions of Lari. The legal.ge platform is a unique space in Georgia that allows you to find elite lawyers and law firms specializing in financial and corporate disputes. In our system, you can review their experience in complex enforcement cases, compare profiles, and choose the professional who will ensure the discovery of the debtor's hidden securities, their seizure, and the maximum protection of your financial interests. Choose reliability with legal.ge.