May 23 , 2025
Understanding Directorship and Nominee Arrangements in Georgia
Georgia, located at the crossroads of Europe and Asia, continues to attract international businesses due to its liberal economic environment, strategic location, low tax rates, and simplified company formation process. The country provides a favorable setting for both local and foreign entrepreneurs seeking to establish or expand their operations.
This blog explores the concept of directorship in Georgia, including the legal obligations of directors, and provides an overview of nominee director and nominee shareholder services, along with their practical and legal implications.
1. Directorship in Georgia: Structure and Key Features
A director in Georgia is legally responsible for managing and representing a company. The country’s business legislation is designed to be flexible, encouraging both local and foreign investment.
Key Aspects:
- Minimum Requirement: A company in Georgia can be managed by a single director.
- Nationality and Residency: Directors can be of any nationality and are not required to reside in Georgia.
- Eligibility: Both individuals and legal entities are eligible to serve as directors.
Primary Responsibilities:
- Acting as the legal representative of the company in business and legal matters
- Ensuring compliance with corporate, tax, and financial reporting obligations
- Maintaining accurate and complete business records
- Submitting necessary reports to Georgian authorities, including tax declarations
2. Corporate Structure in Georgia
The most commonly used business structure in Georgia is the Limited Liability Company (LLC). This type of entity is suitable for small and medium-sized businesses, offering operational flexibility and limited liability protection.
Standard LLC Structure:
- Shareholders: Legal owners of the company
- Directors: Appointed to manage the company’s operations
- A single person or entity may act as both shareholder and director
Company registration is conducted through the National Agency of Public Registry (NAPR) and typically completed within one business day.
3. Nominee Director and Shareholder Services
Definition and Purpose
- A Nominee Director is an individual or entity appointed to appear in public records as the director of a company, acting under instructions from the beneficial owner.
- A Nominee Shareholder is appointed to hold shares on behalf of the actual owner (the beneficial owner), often through a legally binding declaration of trust.
Common Applications:
- Privacy Protection: Public company registers in Georgia disclose directors and shareholders. Nominee services help preserve confidentiality.
- International Structuring: Useful for cross-border holdings, estate planning, or protecting business interests.
- Administrative Support: Local nominees may assist with bureaucratic processes and language barriers.
- Remote Setup: Enables business establishment without requiring the beneficial owner to be physically present in Georgia.
4. Legal Framework for Nominee Arrangements
While Georgian law permits the use of nominees, all arrangements must adhere to legal and regulatory requirements.
Key Legal Instruments:
- Declaration of Trust or Nominee Agreement: Establishes that the nominee is acting on behalf of the beneficial owner.
- Power of Attorney (POA): Grants authority to act on specific matters.
- Confidentiality Agreements: Used to safeguard sensitive information.
Compliance Obligations:
- Service providers offering nominee services must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.
- Disclosure of Ultimate Beneficial Ownership (UBO) may be required to financial institutions or regulatory bodies, although it may not be made public.
5. Advantages and Risks of Using Nominee Services
Advantages:
- Confidentiality: Helps maintain the privacy of beneficial ownership in public records
- Operational Flexibility: Facilitates business management and entry into the Georgian market
- Local Representation: Simplifies communication and regulatory compliance
- Asset Protection: Adds a layer of separation between assets and personal liabilities
Risks and Limitations:
- Legal Risk: Improper or poorly documented arrangements may lead to disputes
- Reputation Risk: Association with disreputable service providers can damage business credibility
- Regulatory Scrutiny: Nominee arrangements may trigger review under international tax compliance frameworks such as CRS and FATCA
6. Selecting a Nominee Service Provider
Reputable nominee service providers in Georgia typically include licensed legal firms, accounting firms, and corporate service providers.
Evaluation Criteria:
- Demonstrated experience in corporate structuring
- Clear legal agreements outlining responsibilities and liabilities
- Adherence to AML and KYC procedures
- Transparent pricing and service scope
Process for Company Formation with Nominee Services
Standard Procedure:
- Engage a Service Provider: Choose a qualified firm with knowledge of Georgian corporate law.
- Submit Required Documentation: Includes passport copy, proof of address, and business description.
- Sign Legal Agreements: Including nominee declarations and POA documents.
- Register the Company: Appoint nominees as necessary during registration.
- Open Bank Account: A UBO declaration may be required for compliance purposes.
- Begin Operations: The company can commence business activities upon completion of registration.
Taxation and Reporting in Georgia
Georgia operates under a tax on distributed profits system, offering favorable conditions for reinvestment and capital growth.
Key Tax Features:
- Corporate Tax Rate: 15% on distributed profits
- VAT: 18% standard rate
- Free Industrial Zones (FIZs): Eligible companies may benefit from 0% corporate tax and VAT exemptions
Despite these advantages, beneficial owners must remain compliant with tax regulations in their country of residence, particularly under international exchange frameworks such as the Common Reporting Standard (CRS) and FATCA.
Implications for Business Establishment in Georgia
Georgia offers a highly favorable environment for business incorporation, with straightforward regulations, low taxes, and open access for foreign investors. The use of nominee director and shareholder services can enhance privacy, facilitate remote company management, and streamline administrative tasks.
However, these arrangements must be legally structured, professionally managed, and aligned with both local and international compliance standards to mitigate potential risks. Engaging qualified legal or corporate advisors is essential for secure and compliant business operation in Georgia.
For more information or queries, please email us at
enquiries@chandrawatpartners.com
Key Contact
Surendra Singh Chandrawat
Managing Partner
