The New Law on Entrepreneurs: Bringing Predictability to Business

Guide to Economic Reforms

The Law on Entrepreneurs, which entered into force on January 1, 2022, has been positively evaluated by businesses in Georgia, as it regulates issues that were not covered by the previous law. This was noted by Lasha Tsertsvadze, an expert in corporate law from USAID, in a recent interview.

Tsertsvadze explained that while the law is good, there are still certain challenges that need to be addressed. For instance, certain amendments need to be made to issues related to registration, convening of meetings of partners, and lawsuits against directors.

However, the Law on Entrepreneurs is more complete than its predecessor and has regulated issues that were not previously covered. As a result, a uniform judicial practice should be formed in the areas of exiting or expelling a partner from a company, as well as issues related to the dissolution of the enterprise.

While the new law brings predictability to business, certain obstacles remain. For example, some cooperatives are having difficulty finding all partners and bringing their agreements into compliance with the law. Disputes between partners can also prevent the submission of updated agreements to the registry, potentially resulting in the removal of the enterprise from the register.

Despite these challenges, the new law is expected to increase predictability and establish a unified judicial practice in Georgia, which will help businesses know the outcome of a dispute beforehand. This is vital for the business environment, and the USAID's Economic Governance Program, along with the Investors Council, is closely monitoring the implementation of the law to ensure that it achieves its objectives.

In conclusion, the Law on Entrepreneurs has filled the gaps left by the previous law and is expected to bring predictability to the business environment in Georgia. While there are certain challenges that need to be addressed, the law provides a solid foundation for the development of a uniform judicial practice, which is essential for businesses to plan and operate successfully.