Close a Company in Georgia - Liquidation Procedure

The liquidation procedure can be started if the company’s founders are no longer interested in operating in a certain business field. Foreign investors who want to close a company in Georgia should make sure that all legal, tax and registry requirements are properly handled. Regardless of the reason of liquidation, our lawyers in Georgia can assist with the legal aspects that have to be met in this case.

Quick Facts
Types of company liquidation in Georgia	Voluntary and compulsory
Documents needed for voluntary liquidation	– liquidation resolution, – written notices to creditors, – asset sale documentation, – liquidation report, – audited financial statements, etc.
Initiating voluntary liquidation	By the company partners/shareholders at the general meeting. The liquidation resolution must be officially registered with the Entrepreneurial Registry.
Role of liquidator	– sale the company’s assets, – notify creditors, – register the liquidation resolution, – prepare liquidation report, – distribute remaining funds/assets, etc.
Audit requirements	Must be conducted within 90 days of initiating the liquidation process, but can be extended in some cases.
Voluntary liquidation duration	4 months (approx.)
Compulsory liquidation – characteristics	Initiated by the court due to bankruptcy, criminal activities, or other legal reasons.
Alternative to company liquidation	Reorganization can help the company to continue its activity. Our lawyers can help with company reorganization.
Who appoints the liquidator	Voluntary liquidation – the company’s decision-making bodies. Compulsory liquidation – the court.
Regulatory framework for company liquidation	Law of Georgia on Entrepreneurs; for insolvency, the Law on Rehabilitation and Collective Satisfaction of Creditors' Claims
Removal of a liquidator	If the liquidator does not perform his/her duties.
Distributing the proceeds from the liquidated assets	Must be first used to satisfy creditors’ claims. Any remaining proceeds are distributed to the partners/shareholders, according to their shares.
Selling assets	Within 90 days after initiating the liquidation process.
Closing a sole proprietorship	By submitting an application to the National Agency of Public Registry (NAPR). Our lawyers can help in this case.
Assistance we provide	Our law firm can prepare the necessary documents, handle financial audits, and manage the distribution of assets.

What types of liquidation are available in Georgia?

The liquidation of companies in Georgia can take several forms, depending on the reason for closing the company and the legal situation of the business.

The main types of Georgian company liquidation are:

voluntary liquidation – the shareholders decide to close the company because the business is no longer needed or active;
liquidation based on the company’s statute – the company is closed because a condition written in its charter has been met;
court-ordered liquidation – the court orders the company’s closure when there are serious legal or internal issues;
compulsory liquidation in criminal cases – the company is liquidated based on a final court judgment in a criminal matter;
liquidation following insolvency or bankruptcy – the company is closed because it can no longer pay its debts;
special liquidation for companies with state participation – extra rules apply when the state owns more than 50% of the company.

In practice, the most common form is voluntary liquidation. In this case, the shareholders decide to close the company, appoint or confirm a liquidator, settle the company’s debts and request deregistration from the Public Registry.

More details about the liquidation procedure in Georgia you can find our from our lawyers the infographic below:

What is the voluntary liquidation procedure for a company in Georgia?

The voluntary liquidation of a company in Georgia starts with a formal decision made by the shareholders or founders. Since this process involves legal, tax and registry formalities, foreign investors are advised to rely on local legal counsel or a company liquidation expert.

Here are the main steps for the voluntary liquidation procedure in Georgia:

the shareholders or founders approve the liquidation of the company and, if required, appoint a liquidator;
you must prepare the documents, including the liquidation decision, company identification details, information about the liquidator and other supporting documents;
the applicant submits the request to the Entrepreneurial Registry in order to register the start of the liquidation procedure;
creditors should be notified about the liquidation and the deadline for submitting or settling their claims;
the company must pay outstanding taxes, creditor claims, employee-related obligations and any other liabilities;
if the company owns assets, they may be sold in order to cover liabilities and any remaining assets can later be distributed to the shareholders;
once the company’s obligations have been settled, the liquidator prepares the final liquidation report and balance, confirming how the procedure was completed;
the final application is submitted to the Public Registry, after which the company is removed from the register.

In simple cases, the closing of a company in Georgia may be completed in a relatively short period, sometimes within a few weeks. However, if the company has debts, assets, employees, tax issues or ongoing contracts, the procedure can take several months.

Below, our lawyers invite you to watch a short video presenting the ways to wind up a Georgian company:

What is the procedure in case of court-ordered liquidation of a company in Georgia?

In case of court-ordered liquidation of a company in Georgia, the procedure starts after the court decision becomes effective and the winding-up is registered with the Registry of Entrepreneurial and Non-entrepreneurial Legal Entities. From that moment, the company enters liquidation, continues to exist only for liquidation purposes, and must use the mention “in liquidation” in its name.

A liquidator is appointed or determined according to the law, the company documents, or the court decision. The liquidator notifies creditors, informs the tax authority, prepares the liquidation balance sheet, completes ongoing operations, sells assets if needed, pays debts, distributes the remaining assets to shareholders, and then applies for the company’s deregistration.

In what situations can a company be liquidated based on its statute in Georgia?

Examples of situations that can be included in a Georgian company’s statute as liquidation grounds may include:

the company was incorporated for a fixed period, and that period has expired;
the company can no longer achieve the business purpose stated in its statute;
the partners/shareholders fail to make an important decision required for the company’s continuation;
the company loses a key licence, permit, asset, or contract without which it cannot operate;
a serious deadlock occurs between partners/shareholders and the statute provides liquidation as a solution.

These are only examples. In practice, liquidation based on the company’s statute depends on what the statute actually says and must comply with Georgian law. This law expressly allows winding-up a company in Georgia on “other grounds provided for by the statute.”

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.

Other services

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.

We can also help you if you want to close or open a business in Azerbaijan, through our local partners.

Businessmen who are interested in closing a company in Georgia are invited to contact our lawyers in Georgia.