Incorporating the latest amendments to the New Law on Entrepreneurs, updated deadlines have been established for entrepreneurs registered in Georgia until January 1, 2022, to bring their registered data into compliance with the new regulations. Furthermore, the legislation outlines in a thorough manner the legal consequences in case of non-fulfillment of this obligation.
The article discusses in depth the implications for businesses based on the recent changes.
1..The deadline for complining registered data with the requirements
All entrepreneur registered in Georgia before January 01, 2022, except for individual entrepreneurs, are obliged to ensure compliance of their registration data with the requirements of the New Law On Entrepreneurs (also referred to as the "New Law") no later than April 1, 2025. For this purpose, the decision of the shareholders should be submitted to the National Agency of Public Registry.
It's important to note that, before the most recent legislative changes, entrepreneurs were required to comply with the New Law by January 1, 2024.
2. Consequences of Non-Compliance
Failure to fulfill the obligation of bringing the Company's registered data into compliance with the New Law results in the suspension of registration. This information will be reflected in the register, and subsequently, no extracts from the register will be issued. The registering body shares information about the suspension of registration with the relevant administrative bodies and banks. The suspension of registration limits:
the representative power of the person(s) with the representative power of the Company;
the right to dispose of property by the Company;
participation in tax operations;
the right to manage a bank account, open a new account, dispose of the money in the account;
Ability to take credit.
Therefore, the representative powers and operational capabilities of the Company will be restricted.
Registration will be restored as soon as the Company fulfills the obligation.
3. Public Notice and "Compliance Registration Platform"
The decision on the suspension of registration is published as information on the registered data page of the unified electronic Platform of the registering authority, designated specifically for posting details on re-registration (hereinafter referred to as the "Platform"). The Platform will serve as an "informative center" for compliance-related purposes.
Placing the decision on the Platform signifies its publication, and consequently, the decision becomes effective on the day of its publication.
4. “Grace“ Period and Status of a Defective Company
If a Company fails to fulfill its obligations by April 1, 2025, the registration authority shall, on its own initiative, make a decision on the identification of a defect and grant the Company the status of a Company with a defect, which will be indicated in the Registry and notified to the Company. An additional "Grace" period of 3 months will be set to rectify the defect.
The decision to identify the defect is also published on the Platform. The rule of publication has replaced other options, such as the rule of delivering the decision to the legal address or placing it on the electronic address of the Company. This modification allows the registering body to cancel the Company's registration within 3 (three) months from the date of the decision's publication.
While the status of the Company remains Defective, the validity of the registered data is suspended, and an extract from the Registry shall not be issued. A Defective Company, in its entirety, has limited representational powers and operational capabilities.
5. Revocation of Registration and Liquidation
If the defect is not rectified within 3 (three) months from January 1, 2026, the registering body will make a decision to cancel the entrepreneur's registration.
If, following the revocation of the registration of the Company, it is discovered, upon the initiative of an interested party, that the society still possesses assets, the liquidation of the Company proceeds in a standard manner. Upon application by a Shareholder or creditor of the Company, the court appoints the liquidator.
6. Exception for Individual Entrepreneurs and Non-Entrepreneurial (Non-Commercial) Legal Entities
The amendments have specified the addressees to whom the compliance obligations apply, and it has been determined that the obligation to bring them into compliance does not apply to individual entrepreneurs and non-entrepreneurial (non-commercial) legal entities.
The obligation to ensure the compliance of registration data with the requirements of the New Law does not extend to individual entrepreneurs. Additionally, a non-entrepreneurial (non-commercial) legal entity is entitled, though not obligated, to apply to the registration body to bring its registered data into compliance with the New Law.
Entrepreneurs have been granted an additional deadline until April 1, 2025, to comply their registered data with the provisions of the New Law. Non-fulfillment of the obligation within the established terms will result in the suspension of the Company registration at the first stage, followed by the determination of defective status, and ultimately resulting in the revocation of the Company's registration.