Acquisition transactions are subject to transparent and predictable legal regulation. The process of replacing the founders and directors can be finalized within 1-3 business days, and foreign citizens are permitted to possess 100% of the authorized capital. It is imperative to conduct a thorough legal investigation prior to purchasing a pre-existing enterprise in Georgia. This jurisdiction boasts one of the most steadfast administrations for foreign investors. The European Union has signed a Deep and Comprehensive Free Trade Agreement with the country, which provides direct access to progressive markets without duties.
Georgia is situated in a distinctive strategic position, which grants it access to critical trade routes. The country's transformation into a regional center is facilitated by a robust infrastructure that includes international airports, land transport corridors, and sea ports. Access to transit flows of products and services, as well as favorable logistics, provide a competitive advantage to an operating enterprise situated in Tbilisi, Batumi, or Kutaisi. Investors who are contemplating the acquisition of a pre-established company in Georgia frequently aim to expedite market entry, conserve time and resources, and acquire a pre-established organizational and legal framework.
The concept of a ready-made company
This term most often refers to a working organization that has already been registered with the state, has a legal address and identification number. It has a charter, completed constituent documents, and an open bank account. In some cases, such a company is already conducting actual activities. Such a structure may include active contracts, licenses, personnel, and an accounting history. The decision to buy a ready-made company in Georgia allows you to gain access to already established processes without having to go through all the stages of creation yourself.
From a legal point of view, the object of acquisition is a full-fledged business entity. The transaction is formalized through a change of founders and management in the public register, which is possible in just 1-2 business days. Proper legal and accounting due diligence before the purchase is mandatory. The legal essence of the object is that it is not just a shell, but a real business entity with a certain legal status and history.
The procedure for registering a new enterprise requires preparing statutory documents, filing applications with the registry, opening an account, and sometimes obtaining permits for activity. This takes up to several weeks, especially if we are talking about licensed industries. Buying a functioning company in Georgia allows you to avoid these time costs, since all the formalities have already been completed. The entrepreneur can immediately begin doing business, and in the case of an active enterprise, continue its ongoing development.
It is often possible to take advantage of existing relationships with banks, suppliers, clients and government agencies. This allows you to avoid a lot of introductory negotiations and reduce entry barriers. The situation is especially attractive when an operating organization already has a positive credit history, has participated in government tenders or received tax benefits. In such cases, the investor receives not only a legal form, but also a commercially valuable platform for development.
The degree of readiness of the enterprise for transfer depends on the goals of the seller. Some companies are created in advance specifically for further resale, and in such cases they have no operational activities, but are fully legally prepared. This is a good option when you need to buy a ready-made company in Georgia as an empty shell. There will be no risks associated with past operational activities. Other offers concern active businesses with an operating infrastructure - this is already a full-fledged asset, and here a deep check of the relevance of all data is important. The investor also needs to assess the market prospects of a particular industry, the level of competition, the structure of the client base and the presence of a team.
Legal environment when buying a ready-made enterprise in Georgia
The country has been actively reforming its legal system in recent decades, with a focus on deregulation, digitalization of public services, and adaptation to foreign norms. This renders it one of the most accessible and open jurisdictions for foreign capital in the post-Soviet region. Investors who are interested in purchasing an established company in Georgia can anticipate straightforward, expeditious, and meticulously regulated procedures that are founded on transparent legal provisions and judicial precedent.
The Law "On Entrepreneurs" is the primary regulatory act that governs the acquisition process. It specifies the rights and responsibilities of the company's participants, regulates the process for modifying the authorized capital, transferring shares, designating an executive body, and liquidating and reorganizing the company. In order to finalize a transaction to alter the proprietor, the parties must execute a share purchase and sale agreement and submit a corresponding application to the National Agency for Public Registry.
In order to register a ready-made business in Georgia as their property, an investor must undergo the registration process for changes in the composition of participants and administration. The electronic state register includes all of the company's current information, including its address, proprietors, director, registration date, and other parameters. This data is reflected in the register. It is imperative to prepare the minutes of the participants' meeting, which confirms the intention to transfer shares, and to certify the signatures of the parties before submitting the documents to the register. The application may be submitted either in person or via the electronic system.
Furthermore, the provisions of the Civil Code should be considered, particularly in the context of corporate law and the law of obligations. It regulates the principles of freedom of contract, good faith, and the criteria for declaring a transaction invalid. An investor must guarantee that the transfer of rights is conducted in accordance with the form and procedure, and that there are no tax debts, asset seizures, or pending litigation at the time of the transaction in order to acquire a functioning enterprise in Georgia without any hidden risks. The Code also outlines the process for safeguarding the interests of third parties and minority participants, which may be pertinent in the event of a complex company ownership structure.
International agreements are a significant factor in the acquisition of a pre-established corporation, in addition to domestic legislation. The nation has executed numerous bilateral investment protection agreements with the states of North America, the Middle East, and Eurasia. These agreements guarantee that foreign investors will receive equitable, nondiscriminatory treatment. The provisions of the Association Agreement with the European Union and the DCFTA regime can be leveraged by an entrepreneur who elects to acquire a pre-established company in Georgia. The practice of the tribunals should be given special consideration. Even though Georgia lacks an Anglo-Saxon precedent system, the decisions of the Supreme Court and the Appellate Chambers significantly influence the development of a unified law enforcement practice. In recent years, the judicial system has consistently exhibited a trend in favor of safeguarding the rights of investors, particularly in cases involving corporate conflicts and violations of the procedure for changing the proprietor. The following documents are distinguished for buying a business in Georgia : registration certificate and extract from the state register; charter and internal regulations; contract of sale and purchase of shares; certificate of absence of any tax debts; minutes of the general meeting of participants; certified signatures of the parties; accounting and tax reports for the last 12-24 months; employment contracts, contracts with clients and suppliers; licenses, permits and certificates (if necessary).
In order to acquire an organization in Georgia, it is necessary to verify all documents for legal purity, which includes the absence of any concealed restrictions, third-party rights, tribunals, or pledges. It is advisable to conduct an audit and involve attorneys who specialize in mergers and acquisitions in certain instances. This is particularly critical when discussing a substantial asset or when the purchaser does not intend to modify the legal entity but rather to leverage its history, clients, licenses, and banking relationships.
Types of ready-made companies for purchase in Georgia
If a foreign investor decides to enter the market of this promising country by acquiring a legal entity, it is recommended to thoroughly understand the legal features and advantages of the most common legal forms of doing business in this country. First of all, it is worth noting that the most popular and frequently encountered organizational and legal forms that are chosen for purchasing a company are LLC and JSC.
It is between these two types of forms that the choice often occurs when wanting to purchase a registered company in Georgia, since each of them has its own unique features, structure, form of management, as well as different levels of regulatory burden and responsibility of participants. For entrepreneurs focused on fast and efficient business with minimal bureaucratic complications, LLC acts as a universal and optimal solution. It is ideal for SMEs, where the owner wants to personally control all the main processes, without creating complex hierarchical management systems. Acquisition of a share in the authorized capital of LLC, execution of a purchase and sale agreement and submission of the necessary information to the register.
All these procedures are quite simple and do not require long waiting or approvals, which allows you to quickly register your enterprise in Georgia and start commercial activities. The peculiarity of this form is that its structure does not require the creation of a board of directors or the issue of shares. The transfer of ownership is carried out through a simple agreement. This organizational and legal form is well suited for companies from various fields of activity - services, retail, tourism, logistics, IT.
In contrast, a joint-stock company is a more complex and large-scale form of business organization, which involves the issue of shares and the presence of participants who own them. This form is preferable for companies seeking to attract deposits, work with a large number of participants, and participate in capital markets. If there is an intention to acquire an existing enterprise in Georgia with an already established structure, a large scale of operations, and stable partnerships, then a JSC will be the optimal choice.
If the task is to start work as quickly as possible and with minimal costs, quickly acquire a registered company in Georgia and fully control its activities, then the first option is the most logical solution. If the business project is large, requires the involvement of third-party investors, the division of powers and responsibilities between several participants, and also plans large-scale development - in this case, preference should be given to JSC.
Legal due diligence check
The primary focus is on studying the entire registration history of the organization being acquired - analyzing documents related to the founding of the company, as well as all subsequent changes made to the state register. It is important to check:
- who was the founder at the time of creation;
- what changes occurred with the founding composition;
- who held the position of director and when;
- what changes occurred with the authorized capital.
A detailed analysis of all this data helps to identify possible inconsistencies, gaps or controversial points even before the completion of the transaction to purchase a Georgian company. After all, in the future, they may become the cause of litigation or administrative sanctions. In parallel with this, a search and study of information on the presence of claims and enforcement proceedings related to the company is carried out. The presence of open court cases, debts or writs of execution can become a serious obstacle to normal business and lead to significant financial losses.
A legal audit of assets before formalizing the purchase of an enterprise in Georgia allows you to identify all existing rights to property and intellectual property, as well as check for the absence of encumbrances, liens or other restrictions.
Financial analysis of the reporting is an equally important part of due diligence - it allows you to verify the authenticity of accounting data, identify hidden debts, and assess the level of profitability and financial stability. Including the timeliness of payment of taxes and other mandatory payments is checked. This entire set of measures provides the investor with maximum confidence that the transaction to purchase a business will be legally clean and financially justified.
Only after conducting such a detailed check and eliminating all identified risks can one confidently proceed to the stage of registering the ownership of an existing Georgian enterprise. This approach protects against potential unpleasant surprises and creates the basis for successful business development, minimizing legal and financial risks.
Contact our experts and get answers to your questions.
Tax Features in Georgia
In the current code, the fundamental CIT rate is set at 15%. It applies to most sorts of business, making reasonable and basic conditions for companies in all segments of the economy. Be that as it may, there are exemptions: for budgetary education — banks, credit unions, microfinance organizations and loan specialists — the CIT rate is expanded to 20%. This separation is related to the specifics of the monetary division, its critical part in the economy and the requirement to guarantee supportability and straightforwardness of operations. This is critical to consider for financial specialists considering the plausibility of buying a working organization in Georgia.
The standard esteem included charge rate is 18%. This is a normal rate compared to other nations in the locale, but it remains competitive for universal companies. VAT is required on most sorts of products and administrations, but Georgian enactment gives for benefits and special cases. In specific, little organizations with an yearly salary of up to 500 thousand GEL have a chance to get freed of the commitment to pay this fee.
The rates on profits, intrigued and eminences merit uncommon consideration - a single rate of 5% is set for all categories. This is an exceptionally alluring arrangement for companies effectively participating with outside accomplices. It permits lessening assess costs in universal settlements and exchanges of stores. For business visionaries wishing to purchase a working company in Georgia with outside support, such conditions make extra motivating forces for growing worldwide participation and drawing in investment.
In expansion to essential charge rates, there is a framework of benefits and inclinations pointed at creating different businesses and supporting deliberately imperative regions of the economy. They offer assistance to decrease the burden and contribute to the development of commerce productivity. Fabricating endeavors in Georgia can take advantage of a get-away for up to 5 a long time. To get such inclinations, a company must fulfill conditions related to noteworthy capital speculations and the creation of modern employment.
Registration of transfer of ownership rights
The procedure requires careful compliance with all legal procedures and detailed preparation of a package of documents that must confirm the legality of the transaction and guarantee the safety of the new owner. First of all, when formalizing the acquisition of an existing company in Georgia, you will need to collect a full set of materials, which consists of:
- sales and purchase agreement - the main legal act that secures the transfer of rights;
- the company's statutory documents;
- confirmation of registration;
- payment of all necessary government duties and fees;
- documents certifying the authority of representatives of the parties involved in the transaction.
Notarization of the contract is a vital element that gives the transaction an additional level of security. The specialist checks the document's compliance with legislative norms, confirms the identity of the parties to the transaction and their legal capacity, and also certifies the voluntary and informed consent of both parties to conclude the contract. This approach allows minimizing the risks of possible disputes and litigation in the future.
Next, the agreement is submitted for registration to the State Register. Without this, the legal force of the agreement on the purchase of a Georgian enterprise is not recognized, and the new owner will not be able to fully dispose of the acquired company and its property. The registration process takes a certain amount of time and requires the submission of correctly executed papers, but modern electronic services significantly simplify and speed up this stage. The change of founders can occur in full or in part, depending on the terms of the transaction and agreements between the parties.
Financial calculations for the acquisition of a ready-made Georgian company
The success of the transaction directly depends on the correctness of financial planning, the choice of the payment mechanism and the consideration of all related factors. It is extremely important to ensure maximum transparency and security of the procedures in order to avoid conflicts, delays and possible financial losses. The most common method is the use of escrow accounts, when the buyer's funds are blocked with a trusted intermediary - a specialized bank or law firm - and transferred to the seller only after all the terms of the agreement are fulfilled and confirmed by official registration authorities. This approach to settlements creates an additional level of trust between the parties, minimizes the risks of fraud and ensures compliance with all agreements.
Before finalizing the deal, it is necessary to carefully check all debts. These may be outstanding loans, overdue tax payments, fines, and other obligations that can significantly affect the value of the business and its future profitability. Without taking into account debts, the risks of an unexpected financial burden will fall on the shoulders of the new owner, which can seriously complicate the development and stability of the company in the future.
Therefore, professional legal and financial due diligence are mandatory stages before the registration of ownership of a registered organization in Georgia is completed. Special attention in financial planning is paid to currency fluctuations. The Georgian economy actively interacts with world markets, and many real estate and corporate transactions are traditionally carried out in US dollars. However, day-to-day accounting and taxation are conducted in the national currency - Georgian lari. Therefore, exchange rate fluctuations can significantly affect the cost of the transaction itself and the financial results of the enterprise in the future.
As for the market prices for buying a ready-made business in Georgia, they vary greatly in size, scope of activity and economic stability of the company. The acquisition of an existing enterprise with a limited turnover will cost the investor from 5 to 50 thousand USD. In terms of the national currency of the state, this is approximately 13.5 to 135 thousand GEL. Such companies are usually small service or trading firms that are suitable for a quick start with a minimum investment. They are often used by beginning entrepreneurs or those.
Larger small manufacturing businesses and online platforms with an established customer base and stable income are available for a price in the range of 50-200 thousand USD, which is approximately 135-540 thousand GEL. After acquiring a Georgian organization of this type, an entrepreneur receives greater opportunities for development. Similar enterprises have infrastructure and a well-established system of working with clients, which allows them to quickly reach profitability and expand their operations.
Large and promising companies with significant assets, including real estate, equipment and a developed customer base, can cost from 200 thousand USD and above. Such corporations are suitable for investors aimed at long-term investments, modernization and possible attraction of additional financing through investments or credit lines.
Seller's responsibilities in the process of purchasing a ready-made company in Georgia
A person selling his enterprise has a whole range of obligations, starting with full disclosure of information and ending with the provision of legal guarantees designed to protect the interests of the buyer and ensure the legitimacy and reliability of the transaction. First of all, it is extremely important that the seller ensures the disclosure of full information during the registration of a ready-made Georgian company. This implies an obligation to provide the buyer with comprehensive information on all aspects of the company's activities. This approach allows for an objective analysis and informed decision, avoiding unexpected problems and potential losses after the acquisition.
In the process of concluding a deal to acquire a full-fledged business project in Georgia, the seller is also obliged to provide a number of guarantees and assurances. He must confirm that the company is free from hidden debts, liens, property seizures, judicial, legal or financial litigation. The assurances concern the accuracy and completeness of the information provided, as well as the seller's obligations to compensate the buyer for any losses caused by the discovery of hidden defects or inaccurate information after the completion of the transaction. Such legal guarantees significantly increase trust between the parties and serve as an effective tool for minimizing risks.
Responsibility of the buyer of a ready-made company in Georgia
An investor wishing to acquire a working organization must clearly understand and strictly adhere to all requirements related to the financing of the transaction, timely notification of government agencies, and fulfillment of obligations stipulated in the sales contract. These factors affect the legal purity of the transaction and the buyer's reputation as a bona fide partner in the Georgian market.
The first and most important aspect is proper financing of the transaction when buying a ready-made company in Georgia. The buyer is obliged to ensure that there are sufficient funds to fully pay for the business within the timeframe stipulated by the contract. The successful completion of the transaction and the further operational stability of the enterprise depend on the correct planning and organization of financial flows. It is necessary that the financing is transparent and confirmed. This will help to avoid questions from regulators and banking institutions, especially if the sources of funds are foreign investments.
Untimely or incomplete transfer of funds may lead to the failure of the transaction, the occurrence of penalties and even the termination of the contract. Therefore, even before signing the contract, it is recommended to carefully agree on the payment schedule, the currency of settlements and the payment methods with the seller and ensure the availability of reserve financial instruments.
The second important block of responsibility is the timely informing of state bodies about the process of acquiring a working enterprise in Georgia. Based on the legislation, the buyer is obliged to:
- notify authorized bodies about the change of ownership;
- register changes in state registers;
- update information about the company's management and beneficiaries.
Failure to comply with these procedures may result in administrative fines, delays in subsequent transactions and even tax problems. It is especially important to control the processes of filing documents with the National Agency of Public Registry and other competent authorities. Information must be complete and reliable, with all necessary supporting documents attached.
In addition, the buyer is responsible for fulfilling the obligations under the contract when purchasing a ready-made company in Georgia. These obligations include:
- financial settlements;
- delegation of authority;
- compliance with deadlines for the transfer of documentation;
- staff retention;
- fulfillment of contracts with counterparties.
Failure to comply or delay in the fulfillment of these conditions may become a reason for claims by the seller, litigation, and damage to the business reputation of the buyer. Therefore, timely and precise fulfillment of contractual obligations is the key to long-term success and trust in the Georgian market.
Qualified legal support for a transaction in Georgia to purchase a company helps to competently go through all stages of the registration procedure. This approach allows the investor to quickly and without significant time costs enter the market with an already operating structure, an established client base and a system of conducting business activities. However, the success of this process largely depends on the responsibility of the buyer himself.
Business acquisition agreements in Georgia
The first and one of the most dangerous problems is the lack of warranty clauses. When a buyer enters the market with the intention of making a deal, he expects transparent information about the state of the business, its assets, liabilities and legal history. However, in practice, the seller often provides only superficial information, avoiding providing guarantees regarding the actual state of the company. We are talking about undisclosed tax liabilities, hidden loans, unfinished litigation and other important details. This is especially critical when acquiring a full-fledged company registered in Georgia, since large assets and existing business operations carry significant risks.
The second typical error is insufficient detailing of conditions. This most often manifests itself in:
- unclear definition of key stages of the transaction;
- an unclearly defined mechanism for the transfer of assets;
- unspecified deadlines for fulfilling obligations;
- the absence of a refund procedure in case of violation of the agreement.
Very often, investors, wishing to register the purchase of an organization in Georgia as quickly as possible, do not insist on an extended legal analysis of the contract. They rely on the seller's good faith and standard document templates. However, the lack of developed points on the procedure for changing founders, appointing new directors, transferring bank accounts and mandatory reporting may entail delays in legal registration, blocking accounts or loss of control over assets. Each contract must include an indication of all the necessary documents for purchasing a business in Georgia. Only a detailed list of the parties' responsibilities, an agreed registration procedure and the transfer of all necessary data and materials guarantee the stability and transparency of the procedure.
The third, no less dangerous threat is the problems of translation and terminology when buying a ready-made company in Georgia, especially if the transaction is carried out with the participation of foreign citizens or legal entities. Due to the peculiarities of local corporate law, as well as language differences between the parties, many situations may arise in which the meaning of the agreements is interpreted differently. This is relevant if the agreement is drawn up using unverified legal templates or translations without legal adaptation.
Conclusion
It is safe to say that the decision to purchase a ready-made business in Georgia opens up vast opportunities for investors. This is a quick way to start a business and a strategically sound step that allows you to bypass the initial barriers associated with registration, finding partners, licensing and organizing operational processes. In the jurisdiction under consideration, you can buy a company with licenses, which already has a legally structured structure, contracts with counterparties, a financial profile and even an established reputation in the business environment. The transaction is implemented quite quickly - with professional support, the procedure can take only a few days.
It is necessary to take into account the peculiarities of taxation. In case of an error, the future owner may unknowingly inherit the obligations of the former owner. Professional legal and consulting support is a successful investment in the security and success of the project. Our agency has practical experience in the field of corporate law of Georgia, tax structuring and support of M&A transactions.
We will help clients at all stages - from selecting a company to the moment when you can officially purchase a ready-made business in Georgia. Independent actions in this area are fraught with serious consequences. By contacting our team, entrepreneurs get a reliable guide in the world of business. We speak the language of law, numbers and results - and do everything to ensure that the purchase is effective, safe and fully consistent with investment goals.
Our telegram channel
