LLC Operating Agreement in Georgia Country : What You Need to Include
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LLC Operating Agreement in Georgia Country : What You Need to Include
A Georgia Country LLC operating agreement is usually the company charter plus an optional private shareholders' agreement. In Georgia (the country), the charter filed with the House of Justice must cover the name, address, partners, shares and management. The private agreement should add profit distribution, voting, deadlock, exit and share transfer rules.
Most foreign founders arrive with a US template in mind. They expect one long document that the state never sees. Georgia works differently. The registry needs a charter, and that charter becomes a public record the moment your company exists.
Consider two co-founders, one in Berlin and one in Kyiv, splitting a startup 60/40. Their charter can be filed in 1-2 business days. A good split of clauses between the charter and a private agreement protects them for years. A bad split can lock them in a deadlock with no legal exit.
What an LLC Operating Agreement Means in Georgia
The phrase "operating agreement" does not appear in Georgian corporate law. The Law of Georgia on Entrepreneurs governs limited liability companies (LLCs, or "shps" in Georgian). It relies on the charter as the core governing document.
Why the US term causes confusion
In the US, the operating agreement is private and the public filing is minimal. In Georgia, the balance flips. The charter is filed with the National Agency of Public Registry (NAPR) through the House of Justice. Anyone can then look it up online.
This matters for founders who want privacy over profit splits or investor terms. Those details belong in a separate document.
The two documents that do the job
A Georgian LLC typically splits "operating agreement" content across two documents:
Charter: mandatory, filed at registration, publicly visible.
Partners' or shareholders' agreement: optional, private, binding only on the people who sign it.
Board or partner resolutions: used for individual decisions such as appointing a director or approving a distribution.
Who signs and where it goes
Every founding partner signs the charter. Signatures are verified either at the House of Justice or by a notary. Foreign founders who cannot travel usually sign a power of attorney abroad. The POA then needs an apostille and a notarised Georgian translation.
A single founder still needs a charter. A private agreement only becomes useful once there are two or more partners. For the wider registration sequence, see our guide on how to register a company in Georgia.
What the Charter Must Include for Georgia LLC Registration
NAPR rejects a charter that lacks the basic identifying clauses. A rejection costs you a resubmission and several more business days. Get these right first, then customise.
Mandatory content
Under the Law on Entrepreneurs, a Georgian LLC charter has to state the core facts of the company:
Company name with the LLC designation.
Legal address in Georgia, which can be a leased address if you have no office.
Partners' details, including names, ID or passport numbers, and addresses.
Share sizes for each partner, expressed as a percentage or fraction.
Management and representation, naming who runs the company and who can sign on its behalf.
The registry also asks for contact details, including an email address for official notices. Confirm the current list with the House of Justice before filing. Requirements on electronic contact details have changed in recent years.
Optional clauses worth adding
The charter can go further than the minimum. Clauses placed here bind third parties, banks and future partners, not just the signatories. That makes them stronger than private terms.
Director powers, such as a cap on contracts a director can sign alone.
Pre-emption rights on share sales to outsiders.
Quorum and voting thresholds for major decisions.
Take a Dutch designer and a Polish developer launching a digital agency in Tbilisi. They wrote a rule into the charter requiring both signatures for any bank payment above an agreed amount. When their bank opened the corporate account, it applied that rule automatically.
What not to put in the charter
Keep sensitive commercial terms out of the public record. Salary deals, vesting schedules and investor valuations belong in the private agreement. For a closer look at tailoring governance as a non-resident, read our article on the importance of the LLC charter.
Charter vs Shareholders' Agreement: Which Clauses Go Where
Feature | Charter | Shareholders' Agreement |
Required by law | Yes, for every LLC | No, optional |
Public visibility | Searchable on the NAPR registry | Private between signatories |
Binds third parties | Yes, banks and counterparties rely on it | No, binds only the parties who sign |
Changing it | Partner decision plus registry filing | Signatories amend by contract |
Typical content | Name, shares, director, voting rules | Vesting, exits, deadlock, non-compete |
Language | Georgian required for filing | Any language the parties agree |
Enforcement route | Corporate law and registry record | Contract law and court or arbitration |
When a charter alone is enough
A solo founder rarely needs a shareholders' agreement. A Canadian freelancer opening a one-person LLC has no one to disagree with. A clean charter and a clear director appointment cover everything.
The same applies if you only plan to invoice clients for a year or two. In that case an LLC may be the wrong vehicle altogether. An Individual Entrepreneur with Small Business Status pays 1% on turnover up to the annual threshold. It also needs no charter or partner documents. Check the current threshold on rs.ge first.
When the private agreement carries the real weight
The private agreement earns its value once money or people change. Picture three founders forming a virtual zone LLC for a SaaS product. One of them leaves after eight months. Without a vesting clause, that founder keeps a full third of the company.
Virtual Zone status adds a second layer. The company pays 0% profit tax on foreign-source IT income. The partners still pay 5% tax on any dividends they take out. A shareholders' agreement can set when distributions happen and how they are split. That gives partners a planning tool the charter usually leaves blank. Annual status obligations are covered in our guide to Virtual Zone annual compliance.
The fix is consistency. Draft both documents together, ideally in the same week, before company registration in Georgia is final. Then cross-check every voting and signing rule against the charter text.
The Clauses Your Shareholders' Agreement Should Cover
Take two founders, a Ukrainian developer and a German marketer, splitting a Tbilisi LLC 60/40. The charter names them as partners and sets voting by share size. It says nothing about what happens if the marketer quits in month eight.
That gap is what the private agreement fills. For most foreign founders, the Georgia Country LLC operating agreement in practice means this second document.
Ownership and Transfer Clauses
The Law of Georgia on Entrepreneurs sets default rules for share transfers. Your charter can adjust some of them. The private agreement then adds the commercial detail the registry does not need to see.
Cover these points in writing:
Pre-emption: existing partners get first refusal before any share goes to an outsider.
Drag-along: a majority seller can force minority partners to join a sale on the same terms.
Tag-along: a minority partner can join a sale the majority negotiates.
Vesting: founder shares earn out over time, often 3-4 years with a 1-year cliff.
Good and bad leaver: the buyback price depends on why a partner leaves.
Vesting matters most for early teams. A founder who leaves after three months should not walk away with 40% of the company.
Money Clauses: Contributions and Dividends
Georgia taxes company profit only when it is distributed. Corporate income tax is 15% on distributed profit, and dividends paid to individuals generally carry a 5% withholding tax. Retained profit stays untaxed at company level, as our corporate income tax guide explains.
This structure makes your dividend policy a real tax decision. Partners who want cash now and partners who want to reinvest will disagree. Settle it in advance with a clause on:
Payout trigger: a fixed share of net profit, or a vote above a set majority.
Reserve floor: a minimum cash balance the company keeps before any payout.
Extra capital calls: how much each partner must contribute and what happens if one refuses.
Dilution if a partner does not contribute
A capital call clause should say what happens to a partner who skips a contribution. Common options are dilution at a pre-agreed valuation or a shareholder loan from the paying partner. Pick one in writing.
Deadlock, Exit and Dispute Forum
A 50/50 company with no deadlock clause can freeze. Neither partner can pass a resolution, and the director may lack authority to act. Choose a mechanism before you need it:
Casting vote: a chair or named partner breaks ties on defined topics.
Mediation first: a 30-day window with a neutral mediator.
Shotgun clause: one partner names a price, and the other must buy or sell at it.
Third-party valuation: an independent valuer sets the exit price.
Name the dispute forum too. Georgia is a party to the New York Convention, so foreign arbitral awards are generally enforceable in Georgian courts. Founders often pick arbitration in a neutral venue for exactly that reason.
How to Draft, Sign and Register Both Documents
A standard LLC filing at the National Agency of Public Registry (NAPR), usually done through a House of Justice branch, is processed in about 1 business day. Faster same-day service costs more. Confirm the current state fee on napr.gov.ge before you budget, since fees are revised periodically.
Drafting and Translation
The charter you file must be in Georgian. Most firms prepare it bilingually, with Georgian and English side by side. The private agreement can stay in English only, because the registry never receives it.
Follow this order:
Agree the commercial terms in a short term sheet.
Draft the private agreement from that term sheet.
Draft the charter so its voting and signing rules match the agreement.
Translate the charter and have a lawyer check that both language versions say the same thing.
Translation errors are a quiet risk. A word like "unanimous" mistranslated as "majority" changes who controls the company.
Signing From Abroad
Partners in Tbilisi can sign the charter at a House of Justice or before a Georgian notary. Partners abroad usually sign before a local notary, then apostille the document. A certified Georgian translation completes the package, as set out in our apostille and notary legalization guide.
Many founders skip travel by granting a power of attorney to a Georgian representative. The POA itself needs notarization and an apostille. Expect 5-10 business days for that step, depending on your home country's apostille office.
Registration and What Comes After
NAPR reviews the charter, registers the company, and issues an identification code that also works as your tax ID with the Revenue Service. The private agreement takes effect on the date the partners sign it. No filing is needed.
After registration, update three parties:
Your bank: banks request the registered charter and often ask about any side agreements affecting control.
Your accountant: dividend and capital call rules affect monthly filings.
Your partners: each keeps a signed original of the private agreement.
Which Founders Need Which Documents
Founder setup | Charter alone enough? | Private agreement | Clauses to prioritize | Charter change needed when |
Solo owner, 100% | Yes | Not needed | Director powers, succession | Ownership changes |
Two founders, 50/50 | No | Essential | Deadlock, shotgun, vesting | New partner joins |
Majority plus minority | No | Essential | Tag-along, reserved matters | Voting thresholds change |
Founder plus angel investor | No | Essential | Anti-dilution, information rights | Investor takes shares |
Founder plus employee equity | Partly | Recommended | Vesting, leaver terms | Shares actually issue |
Foreign parent owns the LLC | Yes, usually | Group-level only | Director authority limits | Parent restructures |
When an LLC Is the Wrong Vehicle
Consider a Polish freelance designer billing EU clients alone. She does not need partner clauses, voting rules, or a dividend policy. An Individual Entrepreneur with small business status pays 1% turnover tax up to the annual threshold, and setup is simpler.
For her, an LLC adds a charter, company accounting, and dividend tax on every withdrawal. Our guide to IE small business status covers that route. An LLC becomes the better choice once you add partners or outgrow the turnover cap. Confirm the current cap on rs.ge before you plan around it.
When to Revisit Your Documents
Treat both documents as living records. Review them at defined trigger points:
New money: any investor or loan convertible into shares.
New people: a partner joins, leaves, or a key hire gets equity.
New status: applying for Virtual Zone or International Company status.
New country: a partner changes tax residency.
A Kazakh SaaS founder who adds a US angel in year two should amend the charter before the investor transfers funds. Registering the new share at NAPR takes about 1 business day. Fixing a missed amendment after a bank flags it can take weeks.
Frequently Asked Questions
How much does it cost to prepare a charter and shareholders' agreement in Georgia?
The state registration fee is modest and published on napr.gov.ge. Most of the cost is legal drafting time, which grows with the number of partners and custom clauses. A solo-owner charter built on a standard template costs far less than a bespoke two-founder agreement with vesting and deadlock terms.
Can our private agreement be governed by English or another foreign law?
Yes, partners can choose foreign governing law for the contract itself. Corporate matters such as share registration, director authority, and partner meeting rules still follow Georgian law and your charter. Many founders pair foreign governing law with international arbitration for the contractual disputes only.
What happens to a partner's share if they die?
Under general rules, a share can pass to heirs like other property. Your charter can limit this, for example by giving remaining partners a right to buy the share at a set valuation. Without that clause, you may end up co-owning the company with a partner's relatives.
Can I convert my Individual Entrepreneur registration into an LLC?
No direct conversion route exists for most founders. You register a new LLC and move contracts, clients, and assets across. Plan the switch at the start of a quarter so your IE and LLC tax filings separate cleanly.
Do we need a new charter if the LLC gets Virtual Zone status?
Usually not, as long as the charter's activity description covers your IT services. Some founders still amend the charter to describe software development explicitly. That makes the status application and later Revenue Service reviews simpler.
Can a nominee hold shares for us under a private agreement?
Georgian banks apply strict beneficial ownership checks. They will usually ask who ultimately controls the company, regardless of the names in the charter. Undisclosed nominee arrangements often lead to account refusals or frozen accounts, so disclose real owners from day one.
What if a partner refuses to sign a charter amendment the agreement requires?
The registry only accepts amendments approved under the charter's own voting rules. Your remedy lies in the private agreement, through damages, a forced buyout, or arbitration. Draft a clause obliging each partner to vote and sign whatever is needed to give effect to the agreement, so a holdout breaches a clear duty.
