Supervisory Board

In Limited Liability Companies (“LLC”) and Joint Stock Companies (“JSC”), the establishment of a Supervisory Board (“SB”) is optional and is within the Shareholders’ discretion. Nonetheless, in JSCs, an SB is a mandatory body, if (i) the Company’s securities are traded on the stock market; (ii) the Company is licensed by the National Bank of Georgia; or (iii) the Company has more than 100 Shareholders.

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Division of Duties: Duties of the SB are largely subject to discretional determination by the Shareholders under the Articles of Association (“AoA”) or by Shareholder’ Resolution. General duties of SBs are to control the Managing Director(s) (“MDs”) and the Board of Directors (“BoD”) and issue prior approvals in respect of certain matters. The SB is entitled to review the Company books and records as well as to demand reports from the MD(s)/BoD. The SB reviews the annual financial statements of the Company and appoints and dismisses the MD(s)/BoD members and of special proxy representatives. If so stipulated in the AoA, powers and duties of MD(s)/BoD members may be transferred to the SB. Similarly to MDs, SB members shall exercise their powers and discharge their duties with the care and diligence that a reasonable person might be expected to act in the role, otherwise, they will be jointly and severally liable for the damages incurred by the Company.  

Composition: The Law of Georgia on Entrepreneurs does not provide extensive, generally applicable requirements or restrictions for the SB composition. It is only provided that unless expressly allowed under the AoA, an MD/BoD member may not at the same time be an SB member, and even in such cases, such SB member may not be elected as the SB Chairman. Nonetheless, in cases when having an SB is mandatory, the SB must be comprised of at least 3 and not more than 21 persons. In such cases, even if membership of MD(s) in SB is allowed under the AoA, MD(s)/BoD members may not make up the majority of SB members. SB members are elected for the period of 1 year, unless otherwise stipulated in the AoA or Shareholders’ Resolutions.

Appointment/Dismissal Competence: SB members are appointed/dismissed by way of a Shareholders’ Resolution (by simple majority vote unless otherwise provided under the AoA) adopted at a GM or lieu thereof. Prior to the appointment, Shareholders may agree to apply the vote accumulation method as follows: (i) each Shareholder shall distribute all of their votes for any number of candidates so that the total number of their votes cast does not exceed the total number of votes at their disposal; (ii) a Shareholder may only vote for a candidate for the SB by each of their votes (voting against the candidate shall not be permitted); (iii) if the number of candidates is equal to or less than the fixed number of SB members, then all candidates having received at least one vote shall automatically become members of the SB, and if the number of candidates is greater than the fixed number of SB members, the candidates having received the majority of votes shall be elected to the SB.

Alternates: N/A.

For a description of how to change the respective board members, please see the individual steps in the "Step-by-Step"-schedules below. As all information on how to change board members in Georgia on the CBM Site by nature is generic (i.e. does not include specific requirements for listed companies, special requirements in statutory documents or as otherwise stipulated in any type of special law), we strongly recommend seeking legal advice with BGI Legal before actually changing any board members in Georgia.

Appointment
Step Action Documentation Signatures? Timing Originals? Notarization/
Certification?
Waiver of
Step?
Miscellaneous
1

Convening of GM.

Convening notice.

Yes, to be signed by the MD/BoD member or Shareholder who is convening the GM.

At least 7 calendar days prior to the GM. 

No, the convening notice can be sent either by registered mail or other means of communication that enables confirmation of the addressee’s receipt of the information.

No.

Yes, if all Shareholders concur.

2

GM.

Minutes of the GM.

Yes, to be signed by the Chairman elected at the GM. 

At the date as stipulated in the convening notice (unless waived, cf. Step 1).

Yes.

Yes, unless signed directly in LEPL National Agency of Public Registry in which case the signature will be certified by the Agency’s officer.

Yes, if all Shareholders concur to pass a written circular resolution, subject to notarization/certification of signatures. 

3

Filing application with LEPL National Agency of Public Registry.

(i) Application in written form;

(ii) Minutes of the GM (or written circular resolution);

(iii) Written consent of the SB member(s) for the appointment.

Yes, to be signed by the person authorized to file application (the MD/BoD member or an individual authorized on the basis of a PoA (in which case PoA must also be filed)).

No specific requirements.

Yes.

Yes, all mentioned documents (other than the application form), unless signed directly in LEPL National Agency of Public Registry in which case signature will be certified by the Agency’s officer.

No.

Appointment will not be effective before it is duly registered (the processing time with the Registry is often no more than 1 day).

1
Step 1
>7 days*
2
Step 2
0 days
3
Step 3
No specific requirements

0-7 days**

*However, less than 7 days is possible if Step 1 is waived.

**The need for notarization may take additional time.

Dismissal
Step Action Documentation Signatures? Timing Originals? Notarization/
Certification?
Waiver of
Step?
Miscellaneous
1

Convening of GM.

Convening notice.

Yes, to be signed by the MD/BoD member or Shareholder who is convening the GM.

At least 7 calendar days prior to the GM. 

No, the convening notice can be sent either by registered mail or other means of communication that enables confirmation of the addressee’s receipt of the information.

No.

Yes, if all Shareholders concur.   

2

GM.

Minutes of the GM.

Yes, to be signed by the Chairman elected at the GM. 

At the date as stipulated in the convening notice (unless waived, cf. Step 1).

Yes.

Yes, unless signed directly in LEPL National Agency of Public Registry in which case the signature will be certified by the Agency’s officer.

Yes, if all Shareholders concur to pass a written circular resolution, subject to notarization/certification of signatures. 

3

Filing application with LEPL National Agency of Public Registry.

(i) Application in written form;

(ii) Minutes of the GM (or written circular resolution);

Yes, to be signed by the person authorized to file application (the MD/BoD member or an individual authorized on the basis of a PoA (in which case PoA must also be filed)).

No specific requirements.

Yes.

Yes, all mentioned documents (other than the application form), unless signed directly in LEPL National Agency of Public Registry in which case signature will be certified by the Agency’s officer.

No.

Dismissal will not be effective before it is duly registered (the processing time with the Registry is often no more than 1 day).

1
Step 1
>7 days*
2
Step 2
0 days
3
Step 3
No specific requirements

0-7 days**

*However, less than 7 days is possible if Step 1 is waived.

**The need for notarization may take additional time.

Fee quote

BGI Legal has provided all input about changing board members in Georgia. BGI Legal is one of the largest [...] in Georgia with the extensive legal expertise in all aspects of contentious and non-contentious practice. BGI Legal offers an unparalleled diversity and breadth in its ability to guide clients in the increasingly sophisticated environment of Georgia`s fast-paced economic and legal development.

For more information about BGI Legal and changing board members in Georgia, please use the below contacts:

CONTACT: Lasha Gogiberidze, Senior Partner
TEL: +995 322 470 747
EMAIL: lasha.gogiberidze@bgi.ge
WEB: www.bgi.ge