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Close a Company in Georgia

Close a Company in Georgia

When opening a company in Georgia, businessmen should also become familiar with the procedure of closing it, in the situation in which such an event may occur, due to various reasons. Businessmen may be faced with closing a company in Georgia when the business experiences serious financial issues.

At the same time, the liquidation procedure can be started if the company’s founders are no longer interested in operating in a certain business field. Regardless of the reason, our lawyers in Georgia can assist foreign investors with the legal aspects that have to be met in this case.

Legal grounds for liquidation in Georgia  

The liquidation procedure is established under the Law of Georgia – About Entrepreneurs. The legislation stipulates two types of liquidationsvoluntary liquidation and compulsory liquidation, which is initiated by a local court in Georgia

The voluntary liquidation is initiated by the company’s representatives, following a major financial issue or other corporate matter, such as the inactivity of the company.

Liquidate a company in Georgia  

When closing a company in Georgia, it is necessary to receive legal assistance from a local expert. The liquidation procedure can take up to several months, depending on the size and the activities of the company.

However, the shortest period in which the liquidation procedure can be completed is minimum two weeks. In order to liquidate a company in Georgia, the investors are required to start the procedure by addressing to theNational Agency of Public Registry. 

Further on, the institution will report on the company’s current situation at theRevenue Services, which will perform tax related matters on the company. As a consequence, the company can enter the audit procedure and, in this case, our attorneys in Georgia can provide relevant information. 

Voluntary liquidation in Georgia  

Our law firm in Georgia has an in-depth experience in handling liquidation procedures and we can represent both legal entities and individuals who carry their own business activities. For legal entities, the procedure involves the following:

  • Article 14 of the Entrepreneurs Law of Georgia stipulates that the procedure can be initiated by the partners/shareholders of a legal entity, who can also appoint the liquidators, as long as the Charter of the company grants this right;
  • after the National Agency of Public Registry (NAPR) addresses the Revenue Services, the latter must provide  in maximum 10 business days information on the company’s tax liability (Art.14, paragraph 3);
  • a tax audit must be initiated in a period of 90 days since the company initiated the liquidation procedure (the 90 days timeframe can be prolonged to up to 2 months – the extension can only be granted once);
  • in maximum 90 days since the procedure was initiated, the sale of corporate assets must be started;
  • provided that the company has more than 50% state shareholding, the money obtained from the sale of the corporate assets must be deposited in the company’s accounts. 

The decision to close a company in Georgia must be first discussed during a general meeting based on the current context of the company (its financial situation, a new business direction the shareholders want to focus on, etc.). During the general meeting, the official documents to liquidate the company are set up, after which the company’s representatives will address the institutions mentioned above.

It must be noted that the law states that the NAPR will also inform the National Bank of Georgia on the initiation of the liquidation procedures. This is necessary following the rules of the Law on Georgia on Payment Systems and Payment Services

In a legal entity that is registered as a private company, the main concern during the liquidation of the company is to cover the claims of the company’s creditors. Therefore, the sale of any assets will initially made with the purpose of paying back the debts associated with creditors. 

In a company that has a state shareholding, the sale of the assets follow a different route, as mentioned above. Our attorneys in Georgia can provide additional information concerning these 2 procedures. 

What are the legal obligations of a company in the process of liquidation? 

A company that is in the process of liquidation is not automatically closed down the moment when the shareholders have decided to close it, nor does it close down once the Georgian authorities receive the initial documentation for liquidation

During the process, the company will still exist from a legal point of view, and it will have certain obligations to meet. For instance, one of the obligations of a legal entity entered into this process is to mention the expression “in process of liquidation” in all its formal documents. 

This also includes the company’s brand and any other official documents. Our Georgian lawyers can present additional obligations companies have. You must also know that this obligation is not limited only to corporate bodies, but to sole traders as well. The same applies to foreign companies which operate in Georgia through a branch office that will be closed down. 

You can rely on our law firm in Georgia to comply with all the legal requirements if you want to initiate this process. Our Georgian lawyers will make sure that the liquidation process will be completed following all the rules and stipulations of the law. 

Besides closing a companyour lawyers can also help you with legal advice and due diligence if you need to buy a property in GeorgiaOur lawyers can present the types of taxes charged during the sale of the property and any other financial obligations you can have as the owner of a property located in this country. We can assist you if you want to buy a house in Georgia, an apartment or another type of real estate.  

Of course, our lawyers can also provide legal representation to those who want to buy land in Georgia. We remain at your service for any inquiry you may have concerning the sale of a property.

We can also help you with setting up a company in Qatar or any other country with the help of our local partners. If you need to open or to close a company in other countries, such as New Zealand, we can put you in touch with our local partners.    

Businessmen who are interested in dissolving a company are invited to contact our lawyers in Georgia, who can provide in-depth legal advice on this procedure.