Source: Ministry of Construction and Urbanization
* The construction of dwellings in Georgia is mainly based on up-front deposits made by people who will live there after the construction is completed.
According to the table investments in main capital from 1995-2002 constitutes 2396 million Georgian Lari (1109 million USD) which includes: Government investment – 906 million GEL (419 million USD) – 37.8%, personal funds of the population – 335 million GEL (155 million USD) – 14.0%, foreign investment – 1155 million GEL (534 million USD) – (48.2%). Derived from this data we can state that investment in main capital shows a trend toward a positive increase (+2.7) from 1995-2001 compared to 1995. In addition, the increase in foreign investment is quite noticeable. This was mainly due to the construction of the oil pipeline and Supsa oil terminal in 1998.
In 2002 the positive developments in the construction sector continue to accelerate, resulting in construction of 545 buildings, among theses are the construction of a new Marriott hotel, 62 stores, 38 gas stations, and 12 food outlets (all in Tbilisi).
Market demand (Construction Materials). Even though several local construction material manufacturing plants have been restructured and rehabilitated, the goods manufactured by them do not have a high demand among Georgian customers. Mainly this is due to low quality and narrow assortment. The only Georgian made product of comparatively good quality is cement, produced by the Rustavcement and Kaspicement companies. This situation represents a good opportunity for U.S. firms to invest in and/or upgrade local building materials manufacturing plants. Presently, product imported from Turkey, Dubai, Iran and Russia occupies almost 95% of the Georgian building materials market. Even though they are perceived to be of a lower quality, the majority of people still buy them because of the low price. Nevertheless, another Georgian customer segment, the high income family, still prefers building materials made in the U.S. or Europe, due to the high quality and regardless of the higher price.
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)
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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) |
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Registration card (sample) for Joint Stock Companies (JSC)
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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) |
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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.
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