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Law of Georgia "On Promotion and Guarantees of Investment"

The Law determines legal grounds of realization of both foreign and domestic investments and guarantees of their protection. The target of Law is establishment of instrumental legal regime of investments.

Chapter I.
General Provisions

Article 1.Investment

1.Investment is any kind of property or intellectual value or right contributed and used within the entrepreneurship implemented on the territory of Georgia for earning of possible income.

2.Such value or right may be:

a)funds, shares, stocks and other securities;

b)movable and immovable property - land, buildings, equipment and other material values;

c)land tenure or right to use other natural resources (concession, as well), patent, license, “know-how”, experience and other intellectual value;

d)other legally recognised property and intellectual value or right.

Article 2.Subject (Investor) and Object of Investment

1.Investor is any physical or legal person, or international organization realizing investments in Georgia.

2.Foreign investor may be:

a)a citizen of foreign country (alien);

b)a stateless person not permanently residing on the territory of Georgia;

c)a citizen of Georgia permanently residing abroad;

d)a legal person registered outside Georgia.

3.Rights of an enterprise with at least 25% foreign investor’s share are equated to the rights of a foreign investor.

4.The investment on the territory of Georgia may be contributed into an object of any legal type investing in which is not prohibited by clause 9.1. of the present Law. Investing in objects listed in Article 9 and 12 of the present Law may be realised on he grounds of appropriate special permit or license.

Chapter II.
Legal Statute of Subjects of Investment

Article 3.Investor’s Rights

1.A foreign investor whilst executing investment and entrepreneurship shall enjoy rights and guarantees in limits not less than those granted to a physical and legal person of Georgia except cases set up by the law.[i]

2.An investor is entitled to open current and other accounts in any currency with any banking institution on the territory of Georgia.

3.An investor is entitled to take a loan in any banking and finance institution, or from physical or legal persons both in Georgia and abroad.

4.An investor in entitled to acquire stocks, bonds and other securities and property existing both on the territory of Georgia and abroad.

5.A foreign investor after payment of taxes and other charges is entitled to convert the earnings (income) gained after investments as well as other funds at the market exchange rate in bank institutions of Georgia as well as to repatriate them abroad without any limitation.

Those funds include:

a)any contribution to the capital stock of an object established with foreign investment;

b)any profit and dividend as well as assets remained after the entire or partial sale or liquidation of foreign investment;

c)payments related to contractual obligations and acknowledgements of debt;

d)property use right tax which shall be determined as percentage of profit gained after use of other’s property, including natural resources, copyright, patent - royalty, as well as managemental and other rent.

6.A foreign investor in entitled to take his owned property abroad.

7.The right provided by Clause 5.5. may be restricted because of bankruptcy, commission of crime recognised by the court or in connection with non-fulfilment of civil duties, as provided by the law.

Article 4.Investor’s Duty

The investor shall carry out his activity in accordance with the applicable law, including laws concerning environment and health protection.

Chapter III.
Promotion of Investment and Registration

Article 5.Promotion of Investment

Working out of state program for promotion of investment and of state policy related to its implementation shall be executed by the Ministry of Economy of Georgia together with appropriate departments.

Article 6.State Registration of Foreign Investment

1.A foreign investor shall within 60 days following the investing register the investment in amount not less 100,000 dollars USA (or its equivalent) at the Foreign Investment Agency existing at the Ministry of Trade and Foreign Economic Relations of Georgia. Otherwise he shall be banned on investment. The aim of registration is creation of a single statistic base of investments realised in Georgia.

2.A foreign investor shall once a year (till the end of a fiscal year) to submit information of amount of additional investments to the Foreign Investment Agency.

3.For registration a foreign investor shall submit:

a)full title of investment objects; brief description of main directions of investment;

b)copy of certificate on corporation of appropriate enterprise;

c)certificate on investment value;

d)special permit, including licence, for events stipulated in Articles 9 and 12 of this Law.

4.The agency has no right to require on submission of any other data from the investor except those listed in Clause 3 of this Article.

5.In 5 days following the submission of application for registration the Foreign Investment Agency existing at the Ministry of Trade and Foreign Economic Relations of Georgia shall pass a foreign investment through registration. Should the agency not examine the matter of registration within the fixed term such investment will be considered as registered under the law.

6.Refusal of state registration may be given only in the event if investor does not meet requirements specified in Clauses 1 and 2 of Article 9 of this Law.

7.Refusal of state registration may be appealed against according to the order established by Article 16 of this Law.

Chapter IV.
Investment Protection Guarantees

Article 7.Inviolability of Investment

1.The investment is entirely and unconditionally protected in Georgia by the applicable law.

2.Investment may be withdrawn in cases directly specified by the law only, by court ruling or in case of emergency established by the fundamental law and with appropriate compensation.

3.Decision on withdrawal of investment as well as compensation terms may be appealed against at the court, and if the investor is an alien, the matter shall be settled in accordance with order established by Article 16 of this Law.

Article 8.Compensation for Withdrawal of Investment

1.Compensation to be given to the investor shall correspond to the real market valor of the withdrawn investment by the very moment of the withdrawal.

2.Compensation shall be given without any delay and shall estimate those losses which have occurred from the moment of withdrawal till the payment of a compensation amount.

3.A foreign investor has right to convert the compensation amount market exchange rate in the bank institutions of Georgia and transfer it abroad freely and without delay.

Article 9.Ban and Restriction in the Sphere of Realization of Investment

1.The list of those fields and branches where investing is prohibited shall be approved by the Parliament of Georgia after nomination of the President of Georgia.

2.An investor has no right to carry out the following activity without permit or license of appropriate department:

a)preparation and sale of the arms and explosives;

b)preparation and sale of medicines and substances subject to special control;

c)use of forestry and entrails;

d)arrangement of casinos and other games of chance and lotteries;

e)banking activity;

f)insurance activity;

g)issue of marketable securities, stocks and bonds;

h)wireless connection service and creation of broadcast channels;

i)other activity determined by the legislation of Georgia in force.

Article 10.Labour Terms, Social Protection and Pension Provision

1.An investor has right to take an alien on work in accordance with the applicable law of Georgia. The alien not permanently residing in Georgia has right after payment of taxes and charges to transfer or take his income abroad without delay and hindrance.

2.No mandatory minimal number of citizens of Georgia to be elected or assign to the governing bodies of enterprise may be fixed.

3.The legal requirements for social insurance, mandatory payment of taxes and contributions for social and pension welfare shall not be applied to those foreign employees who permanently not reside in Georgia.

Article 11.Taxation on Investment

Regime and conditions of taxation related to the investment shall be regulated by the tax legislation of Georgia.

Article 12.Obtaining Property Right on Land and Other Natural Resources

Obtaining property right on land and other natural resources as well as the right on treatment and development of natural resources shall be regulated by the Laws of Georgia “”On Ownership of Land for Agriculture Use”, “Concerning the Lease of Land for Farming”, “Concession Law”, “On Entrails” and other legal acts.

Article 13.Legal Regime of foreign Investment Having Been Realised

Enterprises established with foreign investments and having obtained the foreign investment license in accordance with the applicable before the putting into force of the present Law, shall reserve benefits determined by the Law of Georgia “On Foreign Investments” of 30.06.1995 in the field of activity provided by the issued foreign investment license within 5 years from the day of the issue of license.

Article 14.Protection of Investment in Time of Martial Law and Armed conflict

A foreign investor suffered within the period of martial law and armed conflict shall enjoy the terms of loss compensation not worse than the domestic investor.

Article 15.Guarantees under change of Legislation

1.A new legal act worsening the terms of investment established by the present Law shall not be applied to the investment having already been realised, within 10 years of its taking the effect. In such event the investor shall carry out his activity in accordance with the laws applied till the coming in force of a new legal act.

2.Articles 7, 8, 14 and 16 of the present Law shall not be subject to legislative modification of future.

Article 16.Rule of Resolution of Disputes

1.Disputes between a foreign investor and enterprise registered in Georgia shall be settled by amicable agreement as established by procedure or by the court of Georgia.

2.Disputes between a foreign investor and governmental body, if the order of its resolution is not agreed between them, shall be settled at the court of Georgia or at the International Centre for the Resolution of Investment Disputes. Should dispute be not considered in the International Centre for the Resolution of Investment Disputes the foreign investor is entitled to refer a dispute to the additional institution of the Centre or to any international arbitration established in accordance with regulations provided by the arbitration and international agreements of the Commission of the United Nations for international Trade Law - UNCITRAL.

3.The award of the international arbitration mentioned in Clause 2 of this Article is final and shall be without appeal. Its enforcement shall be provided by the state.

 

President of Georgia

Eduard Shevardnadze

Tbilisi

 

12.11.1996

 

No. 473-Is

 

Resolution
of the Parliament of Georgia
Concerning Law “On Promotion and Guarantees of Investment”

The Parliament of Georgia resolves:

1.The Law of Georgia “On Promotion and Guarantees of Investment” shall come into effect on promulgation.

2.From the day of promulgation of this Law the Law of Republic of Georgia “Concerning Investments” of 10.08.1991 (“Bulletin of Supreme Council of Georgia”, 1991, N 8, Art. 588), the Law of Republic of Georgia “On Foreign Investments” of 30.06.1995 ("Bulletin of Parliament of Georgia”, 1994-1995, N 27-30, Art. 654) and other legislative acts which contradict this law shall be declared null and void.

3.To require from President of Georgia to submit the list of those fields where investments will be prohibited, to the Parliament of Georgia for consideration till December 15.

4.To charge the Finance and Budget Committee of the Parliament of Georgia together with Committee for Economic Policy and Reform and appropriate departments with working out of proposals concerning modification in tax legislation till December 20, 1996 for attraction and promotion of investments.

 

Deputy Chairman of the Parliament of Georgia

(singed)

Edward Surmanidze

Tbilisi

 

12.11.1996

 

N 474-Is

 

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[i] Amended by the Law of Georgia Concerning Making Supplements in the Law of Georgia “On Promotion and Guarantees of Investment” dated 14 May 1997.