Liquidation process
The Georgian Law on Entrepreneurs regulates the issues of liquidation of an enterprise. One of the grounds for initiating the liquidation process is the decision of the partners of the entrepreneurial society, in which the issue of liquidation of the enterprise is discussed and which is adopted by a ¾ majority of votes. The representative of the enterprise submits this decision to the registering authority (Register of Entrepreneurs and Non-Entrepreneurial (Non-Commercial) Legal Entities of the National Agency of Public Registry) for registration of the initiation of the liquidation process.
Upon registration of the commencement of the liquidation process, the liquidator publishes an announcement on the dissolution of the enterprise on the unified electronic portal of the registering authority or on its website. After 5 months from the date of this publication, it applies to the registering authority for the cancellation of the enterprise's registration.
The registering authority shall send information about the registration of the commencement of the liquidation process to the Revenue Service via electronic communication, and the Revenue Service shall, within 10 days, provide the registering authority with information on the existence of possible/or existing tax liabilities, with an indication of the period for conducting a tax audit, which shall not exceed 90 days from the registration of the commencement of the liquidation process of the enterprise, and if necessary, the period may be extended once, for no more than 2 months.
Liquidator and his/her responsibilities
According to Georgian legislation, the liquidator may be either the managing person(s) of the enterprise or another person(s) (if the charter or the decision of the general meeting provides for this). The managing person is obliged to apply to the registering authority with an application for registration of the liquidator(s) in the register. And upon each change in the liquidator or his/her powers, the liquidator(s) shall submit an application for registration in the register.
When carrying out activities related to liquidation, liquidators enjoy the same rights and are subject to the same obligations as management personnel, except for the prohibition of competition. In particular, the obligations of liquidators include: completing current cases, selling assets, fulfilling the obligations of the entrepreneurial company, and drawing up a balance sheet as of the date of the commencement of liquidation upon appointment.
Protection/satisfaction of creditors during the liquidation process
During the liquidation process of an entrepreneurial company, the protection of the interests of creditors is of paramount importance, therefore, the law stipulates that the distribution of property among the partners may only take place after the company's obligations have been paid and 5 months have passed since the publication of the application for liquidation of the company, unless there is a court decision based on the conclusion of an independent auditor that all obligations have been fulfilled. In this case, the distribution of property may take place 3 months after the publication of the application for liquidation of the company.
During the liquidation process, the company may also have a disputed obligation or claim, the fulfillment of which will not be due at the end of the liquidation process. Accordingly, in this case, the property may be distributed among the partners only if other security equivalent to the obligation is presented to the creditor.
Distribution of property to partners
The property that remains after the company's obligations are paid/creditors are satisfied, in accordance with Georgian legislation, is distributed to the partners in accordance with the rights associated with their shares, and in the event that any partner has not made a full contribution, the contributions or their value will be returned initially and the remaining property will be distributed in accordance with the rights associated with the shares.
In the event that the remaining assets are not sufficient to repay the partners' contributions, the remaining assets will be distributed in accordance with the rights attached to the shares.
Canceling the registration of the society
Deregistration of a company is the final stage of liquidation/termination of the existence of a company, which occurs after the payment of liabilities and the distribution of remaining assets to the partners. Deregistration of a company is also carried out by the Public Registry, based on the application of the liquidator.
The liquidation of a company must be completed no later than 4 months from the registration of the start of its liquidation process, and it is extended by 1 month if the tax audit period continues.
Our help
The REVERA Georgia team can assist you in managing the liquidation process, fulfilling obligations and distributing assets, as well as in communicating with administrative authorities and bringing the liquidation process to completion (deregistration of the enterprise).
Authors: Svanidze Melano, Iashagyan Oksana
Contact our legal team to learn more
Write to lawyerDear journalists, the use of materials from the REVERA website in publications is possible only with our written permission.
To coordinate materials, contact us at e-mail: i.antonova@revera.legal or Telegram: https://t.me/PR_revera
