Why the Choice of Business Form Matters for a Gambling Operator
Entering the gambling business begins not with the permit application but with the creation of the entity that will hold that permit. The Law of Georgia on Entrepreneurs establishes the rules under which an entrepreneurial society operates — from founding documentation through registration to the contribution and the placed capital. It is this law that determines in what form a legal person comes into being, who effects its registration, and what the amount contributed by the partners into the society means.
Permit requirements, fees and the tax profile of the activity are established by separate laws, yet all of these layers attach to the figure of the entrepreneur: the permit holder, the fee payer and the taxpayer are one and the same registered entity. Therefore, when a gambling group plans its structure, the first question remains which entrepreneurial form best reflects the plan of ownership, management and contribution of capital. Below we discuss the norms of the law that give this choice its legal foundation.
The Founding Agreement and Its Form
Under the fourth article of the law, a founding agreement is necessary to establish an entrepreneurial society. It is concluded in written form and is signed by every founding partner of the society. The signature is attested in notarial form; however, notarial attestation is not mandatory if the signature has been attested, under the established procedure, by the National Agency of the Public Registry — that is, the registering organ — or by another administrative organ or other person authorized by the registering organ, or if the signature has been executed in accordance with the Law of Georgia on Electronic Document and Electronic Trusted Service.
Special attention is devoted to representative authority: where a founder acts through a representative, the authority of that representative requires notarial attestation or the execution of the signature as a qualified electronic form. For a gambling operator this is practical in that the documents evidencing the powers of persons delegated by a foreign group must be prepared in advance and without formal defects.
Entrepreneur Registration: Obligation, Organ and Effect
Under the eighth article of the law, the registration of an entrepreneur is mandatory and covers both state registration and tax registration. Registration is effected by the registering organ. Information on the data held in the registry of entrepreneurs and non-entrepreneurial legal persons is sent electronically by the registering organ to the Revenue Service — the state and tax layers of registration are thus automatically interconnected.
What must be registered in the registry is the partner or founder of a society of solidarity responsibility, a complementary society and a limited liability society. Responsibility for the authenticity of the data and documents submitted to the registering organ lies with the organ recognized by the law or by the founding agreement as authorized to create those data; the registering organ is responsible only for the correspondence and security of the registered data and the documents held by it. The procedure for maintaining the registry and the conditions of registration are determined by the Law on the Public Registry, by the Instruction and by other normative acts. An entrepreneur is deemed created from the moment of registration in the registry, and the decision on registration enters into force as soon as it is placed on the unified electronic portal of the registering organ.
Preconditions of Registration
The ninth article of the law provides that, for the registration of an entrepreneurial society, the registering organ is presented with the founding agreement and the consent of each person authorized to manage and represent the society to perform that function — except where their will is expressed in the founding agreement itself. Georgian legislation may also establish other preconditions of registration, so the list of requirements applicable to a specific project always needs to be verified as of the time of filing.
For a gambling operator, the practical weight of this norm lies in the fact that the consents of the management circle must be documented in such a way that the registration procedure does not become the fragile link of the project schedule — a defect admitted at this stage will later echo even during the permit review.
Contribution and Placed Capital
The twenty-first article of the law defines the concept of the contribution: a contribution is property transferred into the ownership of an entrepreneurial society, the economic value of which is reflected in the balance of the society. This means that the resource contributed by a partner — monetary or in kind — is transformed into the property of the society, and its value is recorded on the balance sheet.
The concept of placed capital is defined by the twenty-eighth article of the law: the placed capital of an entrepreneurial society is a monetary amount determined by the society, which must be equal to the sum of the nominal values of the placed shares. Where the society has also placed shares without nominal value, the placed capital must exceed the sum of the nominal values of the placed shares. And where a society, other than a joint stock society, has placed only shares without nominal value, the placed capital may be determined by any amount. When an operator plans its capital, these definitions are the basis for seeing how the group's investment is reflected in the structure of the society.
Frequently Asked Questions
What is the founding document of an entrepreneurial society?
The founding agreement. It is concluded in written form and must be signed by every founding partner. The signature may be attested in notarial form, by the registering organ or by a person authorized by it, or by means of an electronic trusted signature.
Is notarial attestation of the signature mandatory?
Notarial attestation is not mandatory if the signature has been attested under the established procedure by the registering organ or by another organ or person authorized by it, or has been executed in accordance with the law on electronic documents. Representative authority, however, requires notarial attestation or an electronic trusted signature.
When is an entrepreneur deemed created?
An entrepreneur is deemed created from the moment of registration in the registry of entrepreneurs. The decision on registration enters into force upon its placement on the unified electronic portal of the registering organ, and registration covers both state and tax registration.
What is the difference between a contribution and placed capital?
A contribution is property transferred into the ownership of the society, whose economic value is reflected on its balance. Placed capital is a monetary amount determined by the society, which must equal the sum of the nominal values of the placed shares; where shares without nominal value exist, the capital exceeds that sum.
How We Help on Legal.ge
The Legal.ge team will help you choose the entrepreneurial form for a gambling operator and structure its capital: we will draft the framework of the founding documentation, review the preconditions of registration and plan the steps that will connect your group structure with the Georgian legal field.
Contact us through Legal.ge — tell us about your project, and we will link the legal analysis with your business plan so that the stage of creating the entity passes without disruption.