Private sector and human-resource development in Georgia (стр. 18 из 26)

The following imported materials are in the highest demand on the Georgian market:

· Ceramic Products (tile, mats)

· Insulated American style windows, doors.

· Various colored wood and flooring materials.

· Heat, ventilation, air conditioning systems.

· Roofing materials

· Varnish paints

· Plastic tubes for water communication

· Wallpapers

· Lights and bulbs

· Vinyl sidings

Due to the growing wave of construction, a large market share still remains unoccupied and is ready for new companies and potential investors. The construction sector will play an essential and important role in Georgia’s further economic development and integration into the world economy.

4. Business

4.1 Company Registration and Licensing System

4.1.1 Company Registration System

Enterprise register. Registration of an enterprise is to be carried out by the Court by making due records in the Enterprise Register. The information concerning the registration is to be recorded into the Register Card. The Register Card specimens are presented below:

Registration card (sample) for Limited Liability Companies (LLC)

Ser. No.	Date	Subject of activity and aggregate capital of the society	Name, date and place of birth, occupation, address of partners	Name, date and place of birth, occupation, address of directors	Name, date and place of birth, occupation of members of the supervisory council (if any)	Representation of directors	Trade representatives (procurators)

Registration card (sample) for Joint Stock Companies (JSC)

Ser. No.	Date	Subject of activity and capital	Tapes of shares; sharing	Name, date and place of birth, occupation, address of directors	Name, date and place of birth, occupation address of members of the supervisory council	Representation of directors	Trade representatives (procurators)

The Law on Entrepreneurs provides that data on newly registered companies should be published in the official newspaper. The Law also guarantees information on any company entered into the enterprise register held by courts be available to the public. Any person should be able to view the records and obtain extracts from the registration file.
Procedure for registering (establishing) an enterprise. Figure 4.1.1.1 provides an outline of the sequence of the procedures to register and establish a business in Georgia.

Figure 4.1.1.1 Business Registration Procedures

* Statistical Department registration and stamp approval. Although the law no longer requires these procedures, they are still being followed by some entities and required by certain authorities due to uncertainty, lack of information, and corruption.

In practice, the entire registration process reportedly takes 2 to 3 weeks. However, it is possible to register a company within few days by means of unofficial payments.

Registration with the Local Court. In accordance with the procedures set forth in the Law on Entrepreneurs, all legal businesses are required to register at the local court that has jurisdiction over the legal address of the enterprise. Further, all registered companies are required to officially record any changes in their registration data.

In order to register an LLC, the following documents must be submitted to a local court:

(1) Application form signed by the founders. Application form must include:

Firm name (firm);

Organizational and legal form;

Location (legal address);

Subject of the activity;

Information on the start and end of the fiscal year;

For each founder - the family name, first name, date and place of birth, occupation and place of residence of the entrepreneur;

Representative authorities.

(2) Charter (five copies)

(3) Minutes of the foundation meeting

(4) Founder’s decision to set up the company

(5) Director’s sample of signature

(6) Document confirming the legal address of the company (this may be a lease agreement, a certificate issued by manager of the company that subleases the office space, or notarised consent of the owner of a flat)

(7) Copy of the company founder’s passport, if the founder is an individual person; or a registration certificate (e.g., extract from the register of enterprises), if the founder is a legal entity. If the founder is a Georgian company, the certificate of the local court should be less than 1 week old.

(8) The amount of the authorized equity capital and the documents confirming payment of at least 50 percent of the equity capital (a certificate from the bank or, for in-kind contributions, an auditor’s assessment of its value)

(9) A document confirming payment of the registration fee.

To register a JSC, the decision of the supervisory board to appoint directors is required in addition to the above-listed documents.

The following supporting documents are required to register a branch or a representative office:

(1) Charter of the foreign company

(2) Decision of the foreign company to set up the representative office

(3) Document certifying the solvency of the foreign investor (e.g., a letter from a foreign bank or a foreign tax service)

(4) Bylaws of the representative office.

All registration documents must be submitted in the Georgian language and must be notarized. Foreign documents must be certified by an apostille[21] or undergo a procedure of legalization and be translated by a certified translator.

According to the law, the courts are required to process registration applications within 7 days. Registration of amendments to a charter or any other changes to entries are to be processed within 7 days. No official expedited service is available, but reportedly registration can be performed in 1 day if the court registrar has the time and if an additional unofficial payment is made (roughly 100–400 GEL). Box II.2 provides a summary of the official registration fees.

A company receives a court resolution when the company is registered. The law on entrepreneurs provides automatic registration by default if the court fails to respond within 7 days.

If a company changes its legal address to an address that falls within the jurisdiction of another local court, the company is not required to change its court registration and its registration file stays at the initial court of registration. However, the company must re-register with the local tax office that has jurisdiction over the new legal address.

Registration Fees. Registration fees are determined by the company’s legal form. The court stamp duty is currently $180 to register a JSC, $80 to register a LLC, $90 to register a branch of a JSC, and $40 to register a branch of a LLC. Fees for registering changes to entries are half of the fee for registering the respective type of company (i.e. $40 to register changes for an LLC and $90 for a JSC).

All the payments charged for notarization of an enterprise’s charter are different in each case and depend on the amount of the authorized capital. The percentage of the amount to be paid is reduced with the increase of the authorized capital and ranges from 3 to 0.05 per cent of the authorized capital. The charge must not be less than GEL 25 and must not be more than GEL 50. It should be noted that a 20% VAT is added to the sum charged for the notarization.

Peripheral services can be provided by private lawyers and related professionals at additional cost. Lawyer charge in the range of $300-600 to draft a company’s charter and to provide advice. A notary public typically charges about $30 to certify the documents and about $2 per page to certify copies of the documents.

Taxation Department Registration. In accordance with the Cabinet of Ministers Decree 899 (December 31, 1994), within 10 days of completing the company registration process, an investor must register with the local office of the taxation department that has jurisdiction over the legal company address. This registration requirement applies to all tax types except the value-added tax (VAT). VAT registration is required for all firms with total taxable transactions greater than GEL 24,000.

A taxpayer registration application package should contain the following documents:

(1) Taxpayer registration form (4 copies)

(2) Court resolution showing company registration (notarised copy)

(3) Charter (original or notarised copy)

(4) Minutes of the foundation meeting (original or notarised copy)

(5) Decision to set up the company (original or notarised copy)

(6) Director’s sample of signature (notarised)

(7) Document confirming the legal address of the company (original or notarised copy).

In accordance with Decree 899, the Taxation Department is required to issue a taxpayer registration certificate within 10 working days. The compliance with the 10-day limit depends on whether or not operations at local taxation offices are computerized. There is no fee for taxpayer registration.

Taxpayers are assigned a 9-digit taxpayer identification number (TIN). The first digit specifies the taxpayer type (1 is for an individual person, 2 is for a legal entity), the next 7 digits are sequential numbers (each local tax office has its own block of 7-digit sequential numbers), and the last digit is a control digit. There is no relation between a court registration number and a TIN.

If a company changes its legal address, opens a branch, changes bank accounts, or makes any other changes that require registration at the enterprise register, then the investor is required to notify the tax department within 10 days of the change.

As of June 2001, sole proprietorships are no longer required to register with the courts. They need only to register with the relevant local taxation office.

If a company’s total taxable transactions over the previous 12 months equal or exceed 24,000 GEL, the company is required to register for VAT within 1 month of the change in tax liability status. A separate VAT registration certificate is issued.

Stamp Approval. In accordance with the amendments to the Law on Entrepreneurs (effective June 1, 2001), company stamps are no longer required, and state institutions have been explicitly prohibited from requiring a company to present a stamp for any purpose. Information regarding this change in the law apparently has not been widely disseminated because in July 2001, many companies and lawyers still complied with the old requirements for company stamps. Further, it appears that the police department continues to issue stamp approvals (at a fee of 10 GEL) despite the change in the law.

Department for Statistics Registration. Amendments to the Law on Entrepreneurs and the Administrative Code have eliminated the requirement that a business must register with the Department of Statistics. Under the new regulations, this requirement has been replaced by a notification process between the courts and the Department of Statistics. The new regulations may be summarized as follows:

In accordance with the Law on Entrepreneurs,[22] the courts are required to send copies of the court business registration resolutions to the Statistical Department on a monthly basis. This information should be submitted by the 5th day of every month.

On June 19, 2001, parliament amended the Law on Entrepreneurs and abolished the provision that the courts must assign tax and statistics codes when a company has registered with the relevant bodies.

Amendments[23] to the Administrative Code in July 2001 have removed the provision that companies must provide a statistical code in order to open a commercial bank account.

However, in practice, companies throughout Georgia still go to the central bureau of the statistical department in Tbilisi to register in order to comply with the previous provisions of the law.

Public Availability of Information. Company registration data are recorded in the registration card as approved under the law (see in the above). The same format is used to respond to requests for company registration information. The following information is required to complete a registration card:

· Name of the local court

· Court registration number

· Company name

· Address

· Activities

· Equity capital

· Names of partner(s), their occupations, and addresses

· Names of director(s), their occupations, and addresses

· Members of the supervisory board, their occupations, and addresses (if a supervisory board was established)

· Representation powers of director(s)

· Trade representative (procurator)

· Legal status

· Date of registration

· Remarks

As mentioned above, a company may be registered in any one of 66 local courts throughout Georgia.

4.1.2 Company Licensing System

General. The law of Georgia on "Licensing of Entrepreneurial Activity" adopted on 14 May, 1999 defines those business activities which can be carried out only by licenses issued by the corresponding state agencies.

The law lists those types of business activities about which corresponding state bodies must be notified. The law does not cover export-import relations, environmental control and utilization of natural resources, electric power, oil and natural gas, communication and post services, where licensing procedures are regulated by special legal acts.

Activities to be Licensed and Licensing Agencies. The types of business activities that require obtaining a license and the respective state licensing agencies are as follows:

a) Insurance activities and intermediary (agency) services in the field of insurance – Insurance State Supervision Service of Georgia;

b) Banking activities, activities of foreign currency exchange points – National Bank of Georgia;

c) Production, repair of and trading with arms and ammunition – Ministry of Justice of Georgia (within the limits defined by National Security Council of Georgia);

d) Air transportation of passengers and goods or/and carrying out aviation related work at the territory of Georgia, maritime transportation and hauling – Ministry of Transport and Communications of Georgia;

e) Activities of the regulated participants of the securities market (brokerage companies, brokers, stock exchanges, central securities depositary and securities registrars) – Ministry of Finance of Georgia;

f) Organizing lotteries and other money-making games – Ministry of Finance of Georgia;

g) Production of medicines and substances that are subject to special control, medicines used in veterinary, activities of health care organizations – Ministry of Labor, Health and Social Protection;

h) Activities of diagnostic centers for technical examination of motor vehicles –Ministry of Internal Affairs of Georgia;