Nonprofit Law covers a wide range of legal services designed for Non-Entrepreneurial (Non-Commercial) Legal Entities (N(N)LE). In Georgia, this form is the primary legal status for non-governmental organizations, associations, foundations, clubs, and public unions. Unlike business companies, the main goal of an N(N)LE is not to generate profit and distribute it among founders, but to carry out social, cultural, educational, or charitable activities. Nevertheless, nonprofit organizations are subject to strict legislative regulations regarding registration, governance, taxation, and reporting. A correctly structured charter and sound internal documentation are essential for the organization's effective operation and for gaining trust with donors.
What does Nonprofit Law service cover?
Specialists on Legal.ge offer full legal support at all stages of the N(N)LE lifecycle:
- Registration and Incorporation: Drafting the organization's charter, executing minutes of the founders' meeting, and registering with the Public Registry.
- Governance Structure Setup: Delineating the powers of the board, general assembly, and executive director; developing conflict of interest policies.
- Tax Consultation: Specifics of N(N)LE taxation, declaring income and property tax, tax accounting of grants and donations.
- Internal Regulations: Employment contracts for staff and volunteers, procurement rules, and code of ethics.
- Reorganization and Liquidation: Changing the legal form of the organization, merger, or termination of activities in compliance with legislation.
Common Scenarios
Lawyer assistance is needed in situations such as:
- Creating an Association: A professional group (e.g., doctors, farmers) creates an association to protect members' interests. Legal formalization of membership rules and fees is required.
- Founding a Sports Club: Establishing an amateur or professional sports team in the form of an N(N)LE, regulating relations with sponsors.
- Economic Activity: A nonprofit organization wants to carry out auxiliary economic activities (e.g., selling souvenirs) to fund its goals. A lawyer explains where the line lies between business and nonprofit activities.
- Change of Governance: There is a disagreement among board members, or old members need to be replaced with new ones, requiring procedurally accurate documentation.
Georgian Legislation on N(N)LEs
The activities of nonprofit organizations are mainly regulated by the Civil Code of Georgia (articles on N(N)LEs), which defines their legal nature and capacity. Registration procedures are outlined in the Law on Entrepreneurs (which also applies to nonprofit entities regarding registration). Tax obligations are regulated by the Tax Code of Georgia, and relations with donors by the Law on Grants. The Law on Accounting, Reporting and Auditing is also important, establishing financial reporting standards (for Category IV enterprises).
Process Stages
- Consultation: Clarifying the organization's goals and selecting the structure.
- Drafting: Preparing the charter and founding documents.
- Registration: Submitting documents to the Justice House (Public Registry).
- Tax Registration: Registering with the Revenue Service.
- Commencing Operations: Opening a bank account and signing the first contracts.
Why Legal.ge?
The nonprofit sector requires specific knowledge. Business lawyers may not know the nuances of grant taxation or the legal nature of membership fees. Legal.ge allows you to connect with experts who specialize specifically in NGO law. This ensures the sustainability of your organization and full compliance with the law.
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