The Legal Framework of NGO Board Governance
Board governance of a non-governmental organization in Georgia is regulated by four norms of the Civil Code: governance and representation (Article 35), state control over activity and the response to entrepreneurial drift (Article 33), the purpose test for disposing of property (Article 36), and the rules of reorganization and liquidation (Article 38). These four form precisely the frame in which a board works: who holds which authority, what befalls the organization when governance errs, and how its life ends.
Governance and Representation — Article 35
Under Article 35, the founder or member is entitled to vest the sole conduct of affairs in one person, and/or to establish the joint governance or representation of two or more persons. The governing authority means taking decisions in the organization's name; the representative authority means appearing before third parties; unless the registration documents provide otherwise, the governing authority implies the representative authority as well. The organizational structure is regulated by the charter, which requires due certification; the general rules of the Law on Entrepreneurs extend to the arise and termination of these authorities. The board's practical question lies precisely here: who is empowered to sign, decide and litigate — and that circle is fixed by the charter and the data reflected in the registry. The rules on business letters and the website extend to the organization under the same article, so the definition of communication channels is likewise part of the governance documents: the manner of publishing public information gains formal weight even in relations with third parties.
State Control — Article 33
Article 33 ties the decision to suspend or prohibit the organization's activity to the court, which takes it in the cases defined by organic law. Where the organization has substantially moved to entrepreneurial activity, the court — on the claim of the registering organ or an interested person — examines suspension or prohibition; after a decision of prohibition, the registration is cancelled. For a board this means that governance decisions — the direction of income, the start of a new activity — must be assessed not only as internal policy but through the perspective of judicial control. A practical recommendation for boards: the matrix of authorities should be distributed in a written document — who signs at the bank, who executes the grant, who convenes the general meeting — because in a conflict it is precisely this matrix that becomes the court's first reference material. Such documentation also simplifies relations with donors and auditors: for them it is precisely these documents that become the initial evidence that the organization is governed consistently and transparently.
Disposal of Property and Exit — Articles 36 and 38
Article 36 ties the disposal of the organization's property to the purpose test: disposal is possible where it serves the activity, the organizational development, the achievement of the purposes or charitable purposes. Article 38 regulates the final stage of its life: a change of legal form is impermissible save transformation into a public-law legal person; the distribution of property remaining after liquidation among founders, members or officers is prohibited; absent an entitled person, the court transfers the property to another non-commercial person with similar purposes, and the power of distribution arises 6 months after the registration of the commencement of liquidation. On a criminal case, liquidation based on a conviction is carried out by a court-appointed liquidator. The conditions of alienation are defined by the law itself: alienation is possible where it serves the statutory goals of the non-entrepreneurial legal person, serves charitable purposes, or the property is transferred to another such person; the same conditions apply upon liquidation. A board decision on alienation must therefore always rest on one of these three grounds and be recorded in the established form. The instrument of state control is also defined: a decision to suspend or prohibit the activity of a non-entrepreneurial person is taken by a court, and where the organization has substantially moved to entrepreneurial activity, the court decides the issue on the claim of the registering organ or an interested person, with registration cancelled after prohibition. The form of governance is flexible too: the founder may entrust the conduct of affairs to a single person or establish the joint governance of two or more persons; unless the registration documentation provides otherwise, the competence of governance includes that of representation.
Frequently Asked Questions
Who governs the organization?
One person solely, or two or more jointly — by decision of the founder or members; unless the charter says otherwise, governance includes representation.
What happens on entrepreneurial drift?
The court examines suspension or prohibition; after prohibition, the registration is cancelled.
May property be distributed to founders?
No — distribution of the property remaining after liquidation is prohibited.
When may the form be changed?
Only by transformation into a public-law legal person.
The Practical Calendar of Governance
The annual cycle of a board is built on a calendar of documents: convening the general meeting, approving the annual report, renewing the term of the governing organ, and registering changes — each of these stages demands its own term and form of certification, and planning them in advance moves the board from a reactive regime into a procedural one. Moreover, the calendar reduces the risks of state control: a timely approved report and an updated registry are the simplest initial evidence of the lawfulness of the organization's activity, and they assist even in assessments concerning entrepreneurial drift.
How We Help on Legal.ge
Board governance requires a single architecture of authorities, property and control. On Legal.ge you can engage a non-commercial-law specialist who will put the governance documents in order and protect the organization from risks. Submit a request on the site, start putting the governance documents in order today and get qualified assistance.