The principal forms of corporate/business organisations in the Georgian jurisdiction are:

• limited liability company;
• joint stock company;
• limited partnership;
• general partnership;
• co-operative;
• individual entrepreneur.

Limited liability companies and joint stock companies are most widely used. They both provide shareholders with limited liability.

The principal sources of corporate governance requirements for companies in Georgia are provided by statutory provisions or orders/ordinances of various regulatory authorities. The Law of Georgia on Entrepreneurs (adopted on 2 August 2021) is the principal source of law on corporate governance requirements and regulates all forms of business organisations existing in Georgia. Furthermore, the Law of Georgia on Securities (adopted on 14 January 1999) regulates securities and entities trading on capital markets. A prominent example of a regulatory order is the Corporate Governance Code adopted by the National Bank of Georgia.

Companies with shares that are publicly traded shall be set up with a two-tier board system. Generally, in companies, other than banks, there is no requirement to have independent board members or to observe gender quotas.

Key requirements for such companies include the following.

• Supervisory board – Publicly traded companies shall establish a supervisory board comprising at least three members and not more than 21 members. The supervisory board oversees the activities of the management body and ensures compliance with corporate governance standards.
• Audit committee – Public-interest entities shall establish an audit committee within the supervisory board, which includes at least one independent member. The audit committee supervises the financial reporting process, the effectiveness of quality control, risk management and the internal audit of financial information.
• Disclosure obligations – Publicly traded companies shall disclose significant information, including financial statements and changes in registered data, to ensure transparency and accountability. This includes the publication of annual accounts, business reports and audit reports.

As of 2025, there are no major new corporate governance rules or reforms that stand out as particularly topical or transformative in the Georgian jurisdiction. The existing framework under the Law of Georgia on Entrepreneurs and related regulations remains largely stable, with no significant legislative amendments introduced in the area of corporate governance over the past year.

In light of the Russian sanctions regime, which has had and continues to have a far-reaching effect, the banks have been compelled to reassess their internal strategies and decision-making processes to remain compliant with the evolving legal landscape. Additional developments appear likely, particularly as certain Georgian officials are also subject to Western sanctions, a situation that underscores the fluidity of the current sanctions framework and its potential to demand further revisions of the banks’ risk management and governance protocols.

As for green or sustainability reporting, there have been no formal regulatory developments or mandates in Georgia to date. While some larger or internationally active companies have begun to voluntarily incorporate ESG principles into their operations and reporting practices, this remains limited and largely market-driven. There is currently no statutory obligation for Georgian companies to conduct sustainability reporting.

Georgian commercial banks and other financial institutions are required to disclose environmental, social and governance (ESG)-related information in a relevant, useful, consistent and comparable manner. The National Bank of Georgia has developed ESG Reporting and Disclosure Principles. These principles contain detailed guidelines for reporting entities to ensure that their disclosures are fair and comprehensive but concise, strategic, forward-looking and stakeholder-oriented. However, these principles provide non-binding guidelines and do not create additional legal obligations.

The governance and management of a company usually involve the following bodies with the following functions.

General Meeting of Shareholders

The general meeting of shareholders is the highest decision-making body in a company. It is composed of all partners or shareholders and is responsible for making key decisions that affect the company’s operations and governance.

Its functions are as follows:

• approving financial reports and annual accounts;
• electing and dismissing members of the management body and supervisory board;
• making decisions on the distribution of profits and dividends;
• approving amendments to the charter or instrument of incorporation;
• deciding on the reorganisation or winding-up of the company; and
• authorising significant transactions and changes in capital.

Management Body/Board of Directors

The management body/board of directors is responsible for the day-to-day operations and management of the company. It can consist of one or more managers who are appointed by the general meeting.

Its functions are as follows:

• managing the company’s business activities and operations;
• representing the company in relations with third parties;
• making decisions on issues that do not fall within the authority of the general meeting or supervisory board;
• ensuring compliance with legal and regulatory requirements; and
• preparing and submitting financial statements and business reports.

Supervisory Board

The supervisory board oversees the activities of the management body and ensures that the company adheres to good governance practices. Generally it is not mandatory for a company to have a supervisory board; it is mandatory only for public-interest entities and companies with publicly traded shares.

Its functions are as follows:

• controlling and supervising the activities of the management body;
• reviewing and approving the annual accounts and business reports;
• representing the company in legal disputes against managers; and
• convening the general meeting when necessary.

The management structure may be one- or two-tier.

• One-tier structure – In this model, the company’s management is undertaken by managers or directors forming a single management body. This structure blends the management and oversight functions, with these individuals directly overseeing the company’s operations.
• Two-tier structure – Distinguished by a division of roles, the management tasks in a two-tier structure are carried out by one or more managers. Simultaneously, the supervisory board is responsible for overseeing the company’s strategic direction, ensuring alignment with laws and the company charter. Unlike managers, the supervisory board does not engage in day-to-day management but oversees the managers’ activities without issuing binding directives.

Managers in both structures are endowed with the authority to make decisions concerning daily operations. They, along with the supervisory board members in a two-tier system, are bound by fiduciary duties to prioritise the company’s best interests.

The general meeting of shareholders typically decides issues material to the operation and governance of the legal entity. It holds specific exclusive powers, such as the following:

• amendment of company charter;
• company liquidation or reorganisation;
• approval of financial reports and annual accounts;
• election and dismissal of managers and supervisory board members;
• increase or reduction of company’s capital; and
• distribution and payment of dividends.

The management powers can be divided between the two boards – the board of directors and supervisory board.

Any executive decision may be made by the board of directors. The directors are further empowered to represent the company before third parties. If the company has established a two-tier structure, it is likely that some material agreements and material decisions will be subject to approval of the supervisory board. The supervisory board can appoint and dismiss directors. In the one-tier structure, this power lies with the general meeting of shareholders.

General Meeting of Shareholders

The decision-making process is as follows.

• Agenda – The agenda of the general meeting is prepared and distributed to all partners or shareholders at least 14 days before the meeting.
• Quorum – The general meeting is authorised to adopt decisions if attended by partners holding a majority of votes (if not otherwise defined by the charter of the company). If the quorum is not met, a reconvened meeting can adopt decisions irrespective of the number of attending partners.
• Voting – Decisions are made by a majority of votes unless a higher threshold is specified by the charter or the law.
• Minutes – The minutes of the general meeting are drawn up within 15 days after the meeting and include details of the decisions made, voting results and any objections raised.

Ordinary general meetings of the shareholders shall be convened at least once a year.

A director or a shareholder or a group of shareholders holding at least 5% of the outstanding shares may call an extraordinary general meeting.

Board of Directors

The process is as follows.

• Meetings – The management body holds regular meetings to discuss and make decisions on operational matters. The frequency and procedures for these meetings are determined by the charter.
• Quorum and voting – Decisions are made by a majority of votes of the members attending the meeting. If votes are equally divided, the vote of the chairperson is decisive.
• Documentation – Decisions made by the management body are documented and communicated to relevant stakeholders as necessary.

Supervisory Board

The process is as follows.

• The supervisory board must include at least three members. In public-interest entities, it must include at least one independent member.
• Members of the supervisory board are elected by the General Meeting for a term of not more than three years.

Sessions of a board of directors and a supervisory board are subject to regulation under the company’s charter. Decisions are usually made by half of the board members. There are no mandatory rules in this respect and regulation of board sessions and decision-making are within the company’s discretion.

Boards of directors may be composed of any number of directors. The number of members of the board of directors is determined by the company’s charter. The members of the board of directors shall be elected for a period of not more than three years, although they can be re-elected.

Each member of the board of directors has the same role. There are no differences among individual board members. Although companies may wish to assign specific titles to directors, such as finance director, operational director, etc, this will not affect their voting power or responsibility before the company.

If a company’s management body consists of multiple members, they shall exercise representative authority jointly, unless the charter provides otherwise – such as authorising individual representation by one or more members, joint representation by certain members, etc.

In commercial banks, the Corporate Governance Code mandates gender diversity and independent directors. Moreover, board members are required to fulfil qualification requirements. There are no requirements for legal entities other than commercial banks.

Directors are usually appointed and removed by a decision of the general meeting. In two-tier structures, this power lies with the supervisory board. Directors may be dismissed at any time without cause. Any agreement that contradicts this provision is considered void.

There are certain restrictions on who may be appointed as a director or officer of a company. For instance, a member of the supervisory board of a joint stock company cannot simultaneously be a member of the management body of the same company. Additionally, the company charter may provide for a list of positions that cannot be combined with the role of a member of the supervisory board. In regulated entities, especially within the financial sector, individuals proposed for appointment as directors or officers must not only meet standard legal and fiduciary obligations but also satisfy specific suitability and qualification requirements imposed by the relevant regulatory authorities.

The corporate governance code applicable to financial institutions defines directors’ independence as their ability to function objectively and independently without influence or potential influence from any third parties.

Directors who have a conflict of interest should disclose such interest and abstain from voting. A director may be deemed to be an interested person if they or persons related to them, in the case of the entry into a transaction by a public company or its subsidiary (a company in which the reporting company holds more than 50% of shares), meet one of the following conditions. The person:

• is the other party to the transaction;
• directly or indirectly holds 20% or more of the total number of votes of the other party to the transaction;
• is a member of the governing body of the other party to the transaction;
• is appointed/elected as a member of the governing body of the reporting company upon the proposal of the other party to the transaction or of the holder (holders) of 20% or more of the total number of votes of the other party to the transaction;
• receives monetary or any other benefits on the basis of the transaction, which are not related to the ownership of shares in the reporting company or to membership of the governing body; or
• is considered an interested person under the charter of the reporting company.

Conflict of interest cases may be further regulated by the company charter as well as the service agreement concluded with the director.

The principal legal duties of directors and officers of a company are as follows.

• Duty of care – Act diligently and in good faith, like a prudent manager, and liable for harm caused by negligent or intentional breaches.
• Duty of loyalty – Respect the rights of the company and all partners equally, avoiding actions that harm the company or its stakeholders.
• Avoiding conflicts of interest – Disclose personal interests in transactions and cannot vote on related matters. Certain transactions require prior approval.
• Acting within authority – Operate within the legal and statutory limits of their role and follow decisions of authorised company bodies.
• Insolvency filing – File for insolvency within three weeks if the company becomes insolvent, to protect creditors’ interests.
• No misuse of opportunities – Cannot exploit company-related business opportunities for personal or third-party gain without consent, even for up to three years post-dismissal.
• Non-competition – Cannot engage in competing activities or manage a competing company without consent, for up to three years after leaving the role.

The directors and the members of the supervisory board shall conduct the company’s business in good faith. In particular, they shall take care as an ordinary person of sound mind in a similar capacity and under similar circumstances would, acting in the belief that their action is in the best interest of the company. If directors fail to fulfil the above obligation, they shall be jointly and severally liable for damages incurred by the company. Moreover, while managing the company, directors shall not have personal interests that conflict with the interests of the company. Directors shall not be entitled to make decisions in accordance with their interests or interests of related persons with respect to the opportunities of the company. In the event of conflict, the interest of the company shall prevail.

The directors owe their duties to the company. This encompasses acting in the best interests of the company as a whole, which includes considering the interests of its shareholders. In some cases, directors may be required to comply with the instructions of shareholders. However, their primary duty is still owed to the company and, if following the shareholders’ instructions they damage the company’s interests, the directors will be liable for breach of duty. The directors must conduct the company’s business with the diligence of a manager in good faith, acting with the care that an ordinary person of sound mind would exercise under similar circumstances. This duty of care ensures that directors act in the best economic interests of the company.

Breach of director’s duties can be enforced by the company directly or by its shareholders acting derivatively by filing a derivative suit. In particular, one or more shareholders can initiate legal action to require directors to compensate for damage inflicted on the company. This includes claims for the transfer of any profit earned from transactions conducted on behalf of the directors or third parties. Shareholders are considered eligible claimants if they have requested the company to file a lawsuit and the company has not acted within 90 days, or if waiting for this period would cause irreparable harm to the company. If a court rules in favour of the shareholders, the company must reimburse the shareholders for reasonable expenses related to the lawsuit.

Directors who breach their duties are liable for any damage incurred by the company. They may be required to compensate for the damage or transfer any profit earned from transactions conducted on behalf of themselves or third parties to the company. The liability for intentional failure to fulfil the duty of good faith cannot be limited by the charter or the shareholders’ decision.

In cases of breach of duties, directors can be dismissed from their position immediately by the general meeting or the supervisory board, depending on the company’s structure.

Other bases for claims or enforcement against directors or officers for breaches of corporate governance requirements may be contractual. Companies usually sign service agreements with their directors and officers. Those agreements will set out the director’s obligations as well as their liabilities. The agreements may also envisage penalties. The company may rely on the agreement to seek compensation for its breach. The same agreement may limit the director’s liability to a specific sum. Although not common, a director’s liability insurance may also be procured.

No approvals are required in connection with the remuneration, fees or benefits payable to directors and officers. The director’s remuneration is usually set by the general meeting of shareholders. Reporting entities and entities trading on stock markets will likely have adopted a remuneration policy. They may even have a remuneration committee in their supervisory board.

A company does not have to make disclosures in relation to the remuneration, fees or benefits payable to directors and officers.

This relationship is primarily defined by the rights and obligations of shareholders, the structure of company management, and the mechanisms for shareholder participation in company decisions envisaged under applicable law or the charter of the company.

Shareholders have several key rights, including the right to participate in general meetings, vote on important company matters, receive dividends, and access company information. They also have the right to dispose of their shares freely, unless otherwise restricted by the company’s charter.

Shareholders are obligated to make contributions for their shares and provide updated information to the company or the licensed securities registrar. They must also comply with any additional duties specified by law or the company charter.

As a general rule of limited liability, shareholders of a joint stock company and of a limited liability company shall not be liable for the obligations of the company. However, shareholders of a joint stock company and of a limited liability company shall be liable if they abuse the rule of limited liability, in which case their joint and unlimited liability for the company obligations may be determined by the competent court.

The data registered with the Registry (as defined below), including information on shareholders in relation to the limited liability companies, is public. Any person has the right to access this data and obtain an extract from the registration authority. Electronic copies of the documents submitted during the registration process are published on the central electronic platform of the registration authority and are available for free. Information about shareholders in joint stock companies is not public and cannot be accessed through the Registry’s data. These companies maintain their own shareholders’ registry as an internal document, which is available only upon request. A joint stock company with more than 50 shareholders must maintain its shareholders’ register through a licensed securities registrar.

Shareholders can be actively involved in the management of a company. As a rule, they adopt material decisions regarding the company, such as its reorganisation, liquidation and decisions relating to its capital. However, the shareholders may wish to undertake a more active role in the management. In such a case, the charter may envisage operational decisions that cannot be taken without shareholder approval, such as the following:

• investments;
• taking out loans;
• selling the company’s business; and
• certain transactions with a value higher than a specific threshold.

The shareholders are able to direct the management of a company to take, or refrain from taking, certain actions in the business. However, directors may refuse such instructions if they do not benefit the company’s interests.

Shareholder meetings are required unless a unanimous written decision is taken by all shareholders. For the rules that govern the holding and conduct of such meetings, see 3.3 Decision-Making Processes.

Shareholders may have several claims against the company or its directors, as follows.

• Breach of duty – Directors must act with diligence and good faith. Shareholders can claim for damages if directors fail to fulfil their duties.
• Conflict of interest – Directors must disclose any conflicts of interest and obtain approval for related transactions. Shareholders can claim for damages if these rules are violated.
• Material transactions – Consent from the supervisory board or general meeting is required for transactions involving 25% or more of the company’s assets. Shareholders can void transactions if procedures are violated.
• Abuse of dominant influence – Dominant shareholders abusing their influence can be held liable for damages to the company or other shareholders.
• Right to information – Shareholders can request company information and inspect documents. If refused, they can appeal to a court.
• Redemption of shares – Shareholders can require the company to redeem their shares at a fair price if a decision substantially impairs their rights or involves reorganisation.

If a director breaches any of the fiduciary duties, a shareholder may launch a derivative suit on behalf of the company and seek from the director reimbursement of damages to the company.

There are no direct disclosure obligations on shareholders in publicly traded companies. However, in regulated entities any acquisition or transfer of shares may be subject to regulatory approval. Moreover, ultimate beneficial ownership information shall be supplied to commercial banks and insurance providers.

In accordance with Georgian legislation, companies must prepare and submit reports to the regulatory authorities annually, by October 1st of the year following the reporting period.

The financial statements include the following forms:

• balance;
• report about income and material losses;
• explanations on the movement of funds in the accounts of the organisation;
• annual results of the economic activity of the company;
• current financial position; and
• explanatory note.

Disclosures on corporate governance arrangements in financial reports usually follow the reporting standards. Georgia uses International Financial Reporting Standards (IFRS) for financial reporting.

In addition, major decisions, such as amendments to the charter, reorganisation and dividend distribution, must be approved by the general meeting and documented. Information about the composition of the supervisory board, including the election of the chairperson and any changes, must be disclosed.

The management body is required to prepare annual accounts and a business report, including a proposal for using net profit, and submit them to the supervisory board and general meeting for approval. These documents must be published on the company’s website (if any) at least one week before the annual meeting and displayed at the company’s office.

In Georgia, the National Agency of Public Registry, under the Ministry of Justice (the “Registry”), is responsible for the incorporation and registration of companies. Companies must file an incorporation agreement, which includes the company’s charter and essential data such as the company name, legal address, and identification data of each shareholder. A separate written consent from individuals with management and representative powers must also be submitted unless included in the incorporation agreement. An application for registration, signed by authorised persons and accompanied by necessary documents, is also required. Any changes in registered data, such as amendments to the charter or changes in the management body, must be registered with the Registry.

The data registered with the National Agency of Public Registry is public, and any person can access this data and obtain an extract. Electronic copies of registration documents are published on the central electronic platform and are available for free.

Failing to make the required filings can result in the suspension of registration, restricting the company’s representative powers, property disposal rights, tax operations, bank account management and credit access. Continued non-compliance can lead to the revocation of the company’s registration and subsequent liquidation. The management body may also face administrative liability for failing to fulfil disclosure obligations.

The Registry has supervisory powers to ensure compliance with registration requirements. It verifies compliance, identifies defects in registered data, and grants the status of a company with a defect, suspending the validity of the registered data until the defect is remedied. The registration authority must be informed of any changes in registered data and is responsible for publishing electronic copies of registration documents and ensuring public access to this information.

Certain reporting companies (such as commercial banks) must appoint external auditors in connection with their financial statements. Their names must be disclosed. The right to appoint the external auditor is reserved to the general shareholders’ meeting. External auditors are allowed to provide non-auditing services and this might undermine their independence. Rotation of the external auditor is not required.

Requirements prescribed by Georgian law in relation to directors in connection with the management of risk and internal controls in the company are provided in 4.6 Legal Duties of Directors/Officers, 4.8 Consequences and Enforcement of Breach of Directors’ Duties and 4.9 Other Bases for Claims/Enforcement Against Directors/Officers.