The Question of a Legal Form for a Decentralized Organization
A decentralized autonomous organization is not singled out in Georgian legislation as a separate legal form — for the law its existence begins when it takes shape in one of the existing forms. Article 2 of the Law of Georgia on Entrepreneurs provides that an entrepreneur is a natural or legal person who has an enterprise, and an enterprise is an organized system for carrying out entrepreneurial activity — entrepreneurial activity being lawful, non-one-time, independent and organized activity carried out for the purpose of making a profit. Where a group project meets these features, it needs a legal form.
The law establishes the list of forms for entrepreneurial activity: an individual entrepreneur or an entrepreneurial society. A society with joint and several liability, a commandite (limited partnership) society, a limited liability company, a joint-stock company and a cooperative are entrepreneurial societies, and an entrepreneurial society is a legal person — an individual entrepreneur is not. For projects built on decentralized structures this means: speaking of an "organization" is legally complete only when legal-person status has been obtained in the appropriate form.
The Freedom to Choose a Form and the Role of the Statute
Article 1 sets the boundaries of legal organization: the Law on Entrepreneurs governs the legal forms of entrepreneurs and their establishment and registration; where the same matter is governed by another legislative act or an act of the National Bank, that act prevails. The principle of dispositive freedom is particularly important: by the statute or the agreement of partners of a joint-liability, commandite or limited liability society, or of a cooperative, rules different from those established by law may be defined — except where the norm is imperative by its content and purpose. The statute may also govern matters that the law does not regulate exhaustively.
For a decentralized project this means that most of internal governance — voting rules, the distribution of shares, termination of membership, disposal of funds — can be freely written into the statute, and it is precisely this document that becomes the place where the organization's technological logic is translated into legal language.
The Obligation of Registration and the Register
Under Article 8, the registration of an entrepreneur is mandatory and covers both state and tax registration; registration is carried out by the registering organ, and an entrepreneur is deemed created from the moment of registration in the register. Information on registered data and changes to them is sent electronically by the registering organ to the Revenue Service.
Several details deserve attention at registration: only the partner or founder of a joint-liability, commandite or limited liability society must be registered in the register; responsibility for the authenticity of the submitted data lies with the organ authorized to create the documentation; and the decision on the registration of an entrepreneur is effective from the moment of its placement on the unified electronic portal of the registering organ. The procedure for maintaining the register is determined by the Law on the Public Register and by the instruction of the Minister of Justice.
The Limited Liability Company as a Wrapper
The most common legal wrapper for decentralized autonomous organizations is the limited liability company. Under Article 123, a limited liability company is an entrepreneurial society whose capital is divided into shares and in which the partners' liability for the society's obligations is limited: the company is liable to the creditor with all its property, while the company is not liable for the obligations of its partners.
This two-sided protection — the isolation of the members' personal property and the isolation of the company from the members' debts — is precisely the quality that projects with a changing circle of participants need: capital divided into shares works as the natural legal analogue of decentralized token-holding, and the dispositive freedom of the statute tailors the governance rules to the needs of the project.
Frequently Asked Questions
Is there a separate legal form for a decentralized organization?
No — the legislator does not single it out; one of the existing forms must be chosen, and legal existence obtained through registration.
Which form is most suitable?
In practice, most often the limited liability company: its capital is divided into shares, the partners' liability is limited, and the autonomy of the statute freely shapes the governance rules.
When is an entrepreneur deemed created?
Under Article 8 — from the moment of registration in the register; registration is mandatory and covers state and tax registration.
May a statute establish rules different from the law?
Yes — under the principle of dispositive freedom, save for imperative norms; the statute also fills matters the law does not regulate exhaustively.
How We Help on Legal.ge
Structuring a decentralized autonomous organization depends on three decisions: the choice of form, the content of the statute and the correctness of registration. The form determines the liability regime, the statute the logic of governance, and registration legal existence — the harmony of these three elements decides whether the wrapper works with the technological reality of the project.
The lawyers working on Legal.ge will help you choose the form, prepare the draft statute — framing the rules of governance, voting and membership in legal language — and accompany the registration process. Contact us for a consultation — a structure that is built correctly at the start never needs to be rebuilt.