Overview of Georgian Legislation
There is a broad societal consensus in Georgia on the desirability of fast and deep integration of the Georgian economy with the global economy. Based on this consensus, since 1995 the Parliament of Georgia has been liberalizing business legislation. Georgia’s legislation is designed to open the Georgian economy to increased international business activity, and to create a business environment favorable to foreign investment.
LEGISLATION ON INVESTMENTS AND INVESTORS
The Law on Facilitation and Guarantees of Investment Activities:
- An Investment: any property, intellectual and material values or rights used for entrepreneurial activities on the territory of Georgia.
- A foreign investor: a foreign citizen; a person other than a permanent resident of Georgia; a non-resident Georgian citizen; a legal person registered outside of Georgia.
REPATRIATION OF PROFITS
- Foreign investor’s rights and guarantees are equal to those granted to Georgians.
- Profit and property repatriation is allowed. Only bankruptcy or breach of criminal or civil laws may restrict this right of an investor.
PROTECTION OF INVESTMENTS
- The law declares full and unconditional protection of an investment.
- Fair compensation is guaranteed if an investor is deprived of an investment according to the decision of a Georgian court of law.
RESOURCES FOR THE SETTLEMENT OF INTERNATIONAL DISPUTES
An investor may appeal to:
- Any internationally recognized Arbitration
- International Centre for the Settlement of Investment Disputes
- The presiding Georgian Court
The Law on State Promotion of Investments:
- Investments of special importance: investments over 8 million GEL, or over 2 million GEL in the case of investments in the highlands of Georgia, or those having significant influence on economic or infrastructure development.
- Preliminary licenses and permits: the right granted to a person to carry out activities subject to compliance with required conditions set out in the law. Certain timeframes may be fixed to meet these conditions.
- Investors may request the issuance of any license/permit personally or through Georgian National Investment Agency (GNIA). Any license/permission may be issued preliminarily, except for the license of use, construction permit and permit in the field of circulation of weapons and ammunition.
- Investors may request the purchase of state property necessary for their business activities and initiate accelerated privatization procedures (through auction or direct sale).
STATE SUPPORT TO INVESTMENTS
- GNIA is to act as “one stop shop” for all investors, to represent them in their relations with government agencies during the licensing and permitting procedures.
- GNIA shall examine every fact of state control over the implementation of “investments of special importance.” GNIA shall report any circumstances, which are illegally obstructing the implementation of the investment to the highest level of responsible government agencies.
LEGAL REGISTRATION OF PRIVATE ENTERPRISES
There are no restrictions on foreign ownership of companies in Georgia. As a result of changes to the Tax Code and Law on Entrepreneurs in 2005 and 2006, business registration is simple, cheap and efficient, taking only three days for legal entities and one day for individuals. State and tax registration of companies is now carried out by tax inspectorates under one single procedure.
DEREGULATION: LICENSING AND PERMITS
The Law on Licenses and Permits:
Georgia has dramatically simplified licensing and permitting requirements to ease constraints on business. The total number of licenses and permits was reduced by 84% in reforms that eliminated 756 licenses and permits and streamlined procedures. Only 86 licenses and 50 permits now exist. Georgia’s new licensing and permitting regime now provides that:
- Licenses and permits may be required only for reasons of:
- Safety and health protection.
- Security of living conditions and cultural environment of individuals.
- Protection of state and public interests.
- Reduced statutory time limits for government action: 30 days for issuing licenses and 20 days for issuing permits.
- “Silence is consent” – a permit or license is automatically granted if no government action is taken within statutory time limits.
EXPROPRIATION OF INVESTMENTS
The authorities may expropriate property in case of
- Threat to the life and health of the people, or the safety of the public or the state because of environmental and natural disasters or epidemics and epizootic diseases.
- War, or extraordinary conflict situations close to war.
- The decision is made by Central or Local authorities.
- The authorities define market value of a property and pay it before expropriation.
- An investor has right to appeal against the expropriation.
PROTECTION OF PRIVATE AND CORPORATE PROPERTY
- Property rights are guaranteed by article 21 of the Georgian Constitution.
- International treaties have direct legal force in Georgia according to the constitution.
Thus, property, investments and the rights of investors are protected and guaranteed in Georgia. The law defines simple and easily understandable schemes to make investments, to purchase (transfer) property or set up a company. The legislation provides clear and strictly defined mechanisms for the protection of property and investments, which, on the whole, ensure a liberal legislative environment for conducting business and making investments in Georgia.