Foreign ownership restrictions / limitation of foreign investments and equity in corporations in Georgia

1) Are there any restrictions on foreign ownership in companies?

Georgia offers a highly open and investor-friendly environment for foreign ownership and company establishment. The only major limitation is on farmland ownership, which is constitutionally restricted to Georgian nationals or entities. Outside of that, foreign investors enjoy wide-ranging rights, protections, and economic incentives.

2) Is government approval required for foreign investment in local companies?

In Georgia, the door is wide open for foreign investors looking to enter the local market. The country is known for its investor-friendly policies, and in most cases, foreigners can invest in Georgian companies without needing prior government approval.

Unlike many countries that maintain formal screening processes for foreign ownership, Georgia does not impose equity caps or require foreign ownership approvals in most sectors. This means that whether you're investing in a startup or acquiring a significant share in an existing business, the process is straightforward and transparent.

3) Which sectors are subject to special rules or restrictions for foreign investors?

Foreign investors are welcome in most sectors of Georgia’s economy, but those wishing to operate in strategic, sensitive, or regulated industries must comply with licensing and legal requirements.Some sectors, however, are strictly reserved for state control. These include air traffic control, railway systems, defense production, nuclear energy, and the minting of currency. Foreign and private entities alike are barred from entering these areas, which are managed exclusively by the state due to their national security significance.

Certain activities are outright prohibited, regardless of investor nationality. These include the production of nuclear, chemical, or biological weapons, human cloning research, and the cultivation or unregulated distribution of narcotics. These bans reflect Georgia’s alignment with international treaties and ethical standards.

4) Can foreign persons own 100% of a limited liability company or joint-stock company?

One of the most attractive features of Georgia’s business environment is its openness to foreign ownership. Whether you're an individual investor or a foreign company, you can legally own 100% of a Georgian limited liability company (LLC) or joint-stock company (JSC). There's no requirement for a local partner, no mandatory Georgian shareholder, and no residency condition. In other words, you have full control over your business.An LLC requires just one shareholder and one director - both of whom can be foreign individuals or foreign-registered entities. What’s more, there is no minimum capital requirement for establishing an LLC, making it especially appealing for small and medium-sized enterprises.

A joint-stock company (JSC) is equally accessible to foreign investors, though it’s typically chosen for larger ventures or when planning for public share offerings. JSCs must follow stricter governance rules but are just as open to 100% foreign ownership as LLCs.

5) Are beneficial ownership rules applicable to foreign participants?

In Georgia, beneficial ownership disclosure requirements apply equally to both domestic and foreign individuals or entities. This is particularly relevant in the banking and financial sectors, where transparency is a legal obligation.

Under Georgian law, especially as outlined in banking regulations, commercial banks are required to collect, verify, and disclose detailed information about their beneficial owners. This includes any natural person who directly or indirectly owns more than 10% of shares in a bank, whether they are a Georgian citizen or a foreign national. Banks must not only report this information to the National Bank of Georgia (NBG) but also publish it in their annual financial statements, in accordance with international accounting standards and global best practices.

But the scope of these requirements goes beyond just banking.

According to Article 13 of the Law of Georgia on Facilitating the Prevention of Money Laundering and Terrorism Financing, a beneficial owner is defined as a natural person who ultimately owns or controls a legal entity, either through direct or indirect ownership of at least 25% of shares or voting rights, or through other forms of control (like contractual arrangements or dominant influence).

6) Are there any quotas or thresholds on foreign ownership in strategic companies?

Georgia is widely regarded as one of the most open economies in the region and this openness extends firmly to foreign ownership in strategic sectors. In fact, there are no general quotas or equity ceilings that restrict how much of a company a foreign investor can own, even in industries that are considered important to national interests.

Foreign individuals and entities are legally allowed to own up to 100% of a limited liability company or joint-stock company in all sectors. This includes areas often considered "strategic" in other countries such as banking, telecommunications, and energy. While these industries do require specific operating licenses, the licensing process in Georgia applies equally to domestic and foreign investors. In other words, foreign ownership is not treated as a special case—what matters is regulatory compliance, not nationality.

There are, however, a few exceptions. Some areas are reserved for state control due to national security or infrastructure considerations for example air traffic control.Foreign investors can fully own strategic companies in Georgia, with no quotas, equity caps, or nationality-based thresholds in most industries. As long as the required licenses are secured, a foreign entity can legally and freely control its investments. The only substantial restrictions are in state-reserved sectors and agricultural land ownership, which are off-limits by law.

7) Is disclosure of foreign shareholders/participants required when registering a company?

In Georgia, the disclosure of foreign shareholders or participants during company registration depends on the legal form of the business being established.

For limited liability companies (LLCs), general partnerships, and limited partnerships, Georgian law-specifically the Law of Georgia on Entrepreneurs-requires that all founders or partners, including foreign individuals or entities, be registered in the public business registry. This means that during the registration process, the identities of all shareholders or partners must be submitted, along with details such as their citizenship and the size of their shareholding. This information becomes publicly available through the National Agency of Public Registry. In this case, disclosure of foreign participants is not only required but also fully transparent.

For joint-stock companies (JSCs), the process is different. The names of shareholders are not registered in the public registry at the time of company formation. Instead, shareholder information is recorded in the company’s internal share register. If the company has fifty or fewer shareholders, it may maintain the share register internally or choose to use a licensed securities registrar. However, if the number of shareholders exceeds fifty, the law requires the company to maintain its share register through a licensed registrar in accordance with the rules set by the National Bank of Georgia. Although this information is not part of the public company registry, it must still be properly maintained and available within the company or through the registrar.

In the case of dematerialized shares - those issued and transferred electronically-ownership is recorded through digital systems managed by financial institutions or a central securities depository. If such shares are held outside Georgia, the shareholder’s rights are confirmed by the records of the financial institution holding the shares on their behalf.

In summary, foreign shareholders must be disclosed when registering most types of companies in Georgia, particularly LLCs and partnerships. In joint-stock companies, while not disclosed in the public registry, shareholder information must still be properly documented and verifiable, either internally or through licensed institutions.

8) Are there any restrictions on the acquisition of real estate by foreign legal entities?

Foreign legal entities in Georgia generally face no restrictions when acquiring commercial or residential real estate - they can purchase and freely hold such properties under the Law on Entrepreneurs and the General Civil Code. These laws permit foreign companies to own buildings, offices, and homes without nationality-based limitations.

However, the Law on Agricultural Land Ownership does impose restrictions concerning farmland. Under this law, both foreign individuals and foreign-owned legal entities are not allowed to acquire agricultural land in Georgia. This restriction aligns with constitutional provisions aimed at preserving national agricultural resources In general, foreign legal entities are prohibited from owning agricultural land in Georgia. This restriction is part of a broader constitutional and legal framework aimed at protecting the country’s strategic agricultural resources.

However, the law provides specific exceptions under which foreign entities may legally hold such land:

• First, if the land is inherited, an individual alien (foreign natural person) may retain ownership. This is a personal right and cannot be transferred to corporate entities unless further conditions are met.
• Second, and more relevant to foreign businesses, a foreign-owned legal entity registered under Georgian law may own agricultural land if the Government of Georgia approves it based on an investment plan. This applies even when:
  • The dominant partner is a foreign individual or company; or
  • The dominant partner cannot be clearly identified (as outlined in Article 1(d) of the law).

In such cases, ownership is conditional - the company must present a viable investment plan related to agriculture, rural development, or another relevant sector, and the acquisition must be explicitly authorized by the Government of Georgia. Without such approval, the restriction remains in force.

9) Are there any business or office localization requirements for foreign investors?

In Georgia, when a company is registered, the law requires it to have a legal address, and this must be a physical address located within the territory of Georgia. This requirement is not merely administrative; the address must correspond to an actual, verifiable physical location. It serves as the company’s official domicile and is used for legal correspondence, inspections, and formal communications. 

This means that foreign investors are not allowed to register a company using a foreign address or a virtual address outside Georgia. Even though the business owners and directors can be entirely foreign, the company itself must be rooted, at least legally, within the country through a valid Georgian address.

10) Are sanctions or other restrictions applied to investors from specific countries?

Georgia maintains an open and non-discriminatory investment environment, where foreign investors are generally welcomed regardless of their country of origin. There are no formal legal restrictions that ban investment based solely on nationality. In principle, any foreign individual or entity may register and operate a business in Georgia on equal terms with Georgian nationals.

However, in practice, sanctions compliance plays a significant role - particularly when it comes to financial institutions. Since February 26, 2022, under the directive of the National Bank of Georgia, the country’s financial sector has been operating in full alignment with the sanctions imposed by the United States, the European Union, and the United Kingdom against the Russian Federation and other designated entities. Georgian banks are legally obliged to follow these international sanctions regimes.

This means that although Georgia does not maintain its own country-specific list of prohibited investors, any individual or company that appears on Western sanctions lists - such as the U.S. OFAC SDN list or EU restrictive measures-cannot effectively invest or operate through Georgia’s financial system. Georgian banks are required to block accounts, freeze assets, and deny services to such designated persons.

Author: Sophiko Gogishvili