Decree of Georgian Parliament Concerning the Law of Georgia "On Investment Activity Promotion and Guarantees"
Law of Georgia On the Investment Activity Promotion and Guarantees
Chapter I. General Provisions
Article 1. Investments
Article 2. Investment Activity Subject ( Investor ) and Object
Chapter II. Legal Status of the Investment Activity Subjects
Article 3. Rights of Investors
Article 4. Duties of Investors
Chapter III. Investment Promotion and Registration
Article 5. Investment Promotion
Article 6. State Registration of Foreign Investments
Chapter IV. Guarantees for Investments
Article 7. Investment Inviolability
Article 8. Compensation for Investment Requisition
Article 9. Prohibition and Restriction in the Sphere of Investment Activity
Article 10. Labour Relations, Social Security and Pensions
Article 11. Investment Activity Taxation
Article 12. Acquisition of Property Right to Land and Other Natural Resources
Article 13. Legal Regime of the Realized Foreign Investments
Article 14. Investment Security during the State of War and Military Conflict
Article 15. Guarantees During Amendment of Legislation
Article 16. Procedure for Dispute Resolution
Law of Georgia Concerning Amendments and Addenda to the Law of Georgia "On
Investment Activity Promotion and Guarantees"
Decree of Georgian Parliament Concerning the Law of Georgia "On Investment
Activity
Promotion and Guarantees"
Parliament of Georgia has decreed:
1. The Law of Georgia "On Investment Activity Promotion and Guarantees" shall be effected from the date
of its publishing.
2. The Law of the Republic of Georgia "On Investment Activity" of 10 August 1991 (Georgian Supreme
Council's Gazette, Art. 588, No. 8, 1991), The Law of the Republic of Georgia "On Foreign Investments"
of 30 June 1995 (Parliamentary Gazette, Art. 654,. NN. 27-30, 1994, 1995) and any legislative act that is
contrary to this Law shall be null and void from the date of its entry into force.
3. President of Georgia shall be requested to submit till this 15 December to Parliament of Georgia for
approval a list of sectors closed to investments.
4. The Financial and Budget Committee of Parliament of Georgia shall be obliged together with the
Committee for Economic Policy and Reforms and respective agencies to work out till 20 December 1996
proposals for making amendments to the tax legislation in order to attract and promote investments.
Edvard Surmanidze
Vice-Chairman of Parliament
of Georgia
Tbilisi, 12 November 1996
No. 474-1S
Law of Georgia
On the Investment Activity Promotion and Guarantees
The present Law defines the legal bases for realizing both foreign and local investments and their protection
guarantees on the territory of Georgia. The purpose of the Law is to establish the investment-promotional
regime.
Chapter I. General Provisions
Article 1. Investments
1. Investments shall be deemed to be all types of property and intellectual valuables or rights invested
and applied for gaining possible profit in the investment activity carried out in the territory of Georgia.
Such valuables or rights may be:
a) monetary assets, a share, stocks and other securities;
b) movable and immovable property - land, buildings, structures, equipment and other
material valuables;
c) lease rights to land and the use of natural resources (including concession), patents,
licenses, know-how, experience and other intellectual valuables;
d) other property or intellectual valuables or rights provided for by the law.
Article 2. Investment Activity Subject ( Investor ) and Object
1. An investor shall be deemed to be a natural or legal person as well as an international organization
investing in Georgia.
2. A foreign investor shall be deemed to be:
a) a foreign citizen;
b) a stateless person temporarily residing on the territory of Georgia;
c) a Georgian citizen permanently residing abroad;
d) a legal person registered beyond Georgia.
3. An enterprise with a foreign investment not less than 25% shall enjoy the same rights as the foreign
investor.
4. Investments on the territory of Georgia may be realized in an object with any form of ownership which
investment is not prohibited as per paragraph one of Article 9 of this Law. Investments in the objects listed
in Articles 9 and 12 of this Law may be realized only on the basis of an appropriate special permit or
license.
Chapter II. Legal Status of the Investment Activity Subjects
Article 3. Rights of Investors
1. In conducting the investment and entrepreneurial activity a foreign investor's rights and guarantees shall
not be less than the rights and guarantees enjoyed by Georgian natural and legal person.
2. An investor shall be entitled to acquire stocks, bonds and other securities and property both in Georgia
and abroad.
3. An investor shall be entitled to take loans in banking and financial institutions located in Georgia or from
natural of legal persons.
4. An investor shall be entitled to acquire stocks, bonds and other securities and property both in Georgia
and abroad.
5. A foreign investor shall, upon payment of taxes and necessary levies, have the right to convert the profit
(income) gained from investments at the market rate of exchange in Georgian banking institutions and the
right of unlimited repatriation abroad.
Such assets may be:
a) any contribution to the capital of an object established with the foreign investments:
b) any profit and dividend as well as the assets remaining after the whole or partial sale of the
foreign investment;
c) levies associated with contractual (including debt) liabilities;
d) the right to use property tax to be preliminarily fixed as the income interest gained by using
other person's property, including natural resources, copyright, patents (royalty) as well as
payment of administrative and other charges.
6. A foreign investor shall be entitled to export the property being in his possession.
7. The right as per paragraph five of this Article may be subject to restriction under law by court's decision
in connection with bankruptcy, committing an offense or non-performance of a civil obligation.
Article 4. Duties of Investors
An investor shall be liable to conduct activities in accordance with the effective Georgian legislation as well
as legislation concerning the environment and health protection.
Chapter III. Investment Promotion and Registration
Article 5. Investment Promotion
The state policy associated with the development and accomplishment of the investment activity promotion
state programs shall be carried out by the Ministry of Economy of Georgia together with respective
agencies.
Article 6. State Registration of Foreign Investments
1. A foreign investor shall be liable within sixty days from investing to register at the Foreign Investment
Agency attached to the Ministry of Trade and Foreign Economic Relations of Georgia an investment with a
value of USD 100.000 (or its equivalent) or more. Otherwise he will be prohibited to engage in investment
activity. The purpose of registration is to establish a uniform statistical database on the investment activity
realized in Georgia.
2. A foreign investor shall be liable once a year (till the end of the year) to submit to the Foreign Investment
Agency the data on the volume of additionally realized investments.
3. A foreign investment shall provide for registration:
a) a full description of the investment objects; a brief description of main directions of
investment activity;
b) a copy of the document certifying registration of the appropriate enterprise;
c) the document certifying the value of investment;
d) a special permit, including a license in the cases as per Articles 9 and 12 of this Law.
The Agency shall not be entitled to request from the investor the submission of any other data
which is not specified by paragraph 3 of this Article.
5. Within 5 days from the date of filling an application for registration the Foreign Investment Agency
attached to the Ministry of Trade and Foreign Economic Relations of Georgia shall register the foreign
investment. Should the Agency fail to consider the matter of registration in the stipulated time, such an
investment shall be deemed to be valid under the law.
6. Refusal of state registration may be possible only in the case where the investor fails to meet the
requirements provided for by the first and second paragraphs of Article 9 of this Law.
7. Refusal of state registration may be appealed against under the procedure established by Article 16 of
the Law.
Chapter IV. Guarantees for Investments
Article 7. Investment Inviolability
1. Investment shall be fully and unconditionally protected under legislation of Georgia in force.
2. Investment requisition is possible only in the cases directly specified in the law, at decision of the Court
or in the case of urgent necessity established by organic law and only with appropriate compensation.
3. A decision on requisition of investment as well as the compensation terms may be appealed against in
court as well as under the procedure established by Article 16 of this Law, should the investor be a
foreigner.
Article 8. Compensation for Investment Requisition
1. The compensation to be given to the investor shall correspond to the actual value of the seized
investment directly at the time when such requisition took place.
2. The compensation shall be paid without any delay and it shall also comprise the damage suffered by the
investor from the moment of requisition till the payment of the sum of compensation.
3. A foreign investor shall be entitled to convert the sum of compensation at market rate in a banking
institution of Georgia and freely repatriate it abroad.
Article 9. Prohibition and Restriction in the Sphere of Investment Activity
1. A list of branches where the investment realization is prohibited shall be subject to approval of
Parliament of Georgia on presentation by President of Georgia.
2. An investor shall not be entitled without a permit or license issued by an appropriate agency to engage in
the following activity:
a) manufacture and sale of weapons and explosives;
b) preparation and sale of medicines and substances that are subject to special control;
c) use of forest resources and entrails;
d) setting up of casinos and other gambling houses which provide for arranging games and
lotteries;
e) banking activity;
d) insurance activity;
i) issue of securities for public circulation;
f) wireless communication service and TV and radio channels' creation;
g) other activities defined by the effective Georgian legislation.
Article 10. Labour Relations, Social Security and Pensions
1. An investor shall be entitled to hire a foreigner in accordance with the effective Georgian legislation. A
foreigner not permanently residing in Georgia upon payment of taxes and mandatory levies shall have the
right to freely transfer or export the gained income.
2. The minimum number of Georgian citizens to be mandatorily elected or appointed to the management
body of an enterprise shall not be fixed.
3. Requirements of the law concerning the payment of necessary taxes and fees for social insurance,
security and pensions of employees shall not apply to the workers not residing permanently in Georgia.
Article 11. Investment Activity Taxation
1. The taxation regime associated with investment activity and its favourable treatment shall be regulated
under the tax legislation of Georgia.
Article 12. Acquisition of Property Right to Land and Other Natural Resources
Acquisition of the property right to land and other natural resources as well as the right to develop natural
resources shall be regulated under the laws of Georgia "On Property of Agricultural Land", "On Lease of
Agricultural Land", "On the Procedure for Granting Concessions to Foreign Countries and Companies",
" On Entrails" and other legislative acts.
Article 13. Legal Regime of the Realized Foreign Investments
The enterprises established with foreign investments that had taken a foreign investment license under
established procedure before the present Law came into force shall, within 5 years from the date of its
issue, retain privileges provided for in the Law of Georgia "On Foreign Investments" of 30 June , 1995 in
the sphere of activity for which the foreign investment license has been granted.
Article 14. Investment Security during the State of War and Military Conflict
A foreign investor who has suffered damages during the state of war and a military conflict shall not be
subject to the terms of compensation worse then those of a local investor.
Article 15. Guarantees During Amendment of Legislation
1. A new legislative act which worsens investment conditions established under this Law shall nor apply to
the already realized investments within ten years from the date of its entry into force . In such a case an
investor shall conduct his activities in accordance with legislation being in force before the new legislative
act has been effected.
2. Later on , Articles 7,8 and 16 shall not be subject to the legislation amendment.
Article 16. Procedure for Dispute Resolution
1. A dispute between a foreign investor and an enterprise registered in Georgia shall be subject to
resolution under the agreement of the parties or in courts of Georgia.
2. A dispute between a foreign investor and a state agency shall, unless the procedure for its resolution is
not defined by way of their agreement, be subject to resolution in courts of Georgia or in the International
Center for the Resolution Investment Disputes. Unless the dispute is considered in the International
Center for the Resolution of Investment Disputes, a foreign investor shall be entitled to apply to any
international arbitration body which has been set up by the Commission of the United Nations for
International Trade Law - UNCITRAL to resolve the dispute in accordance with the rules established
under the arbitration and international agreement.
3. Any award of the international arbitration bodies as indicated in paragraph 2 of this Article shall be final
and not subject to appeal. Its observance shall be secured by the state.
President of Georgia
Eduard Shevardnadze
Tbilisi
12 November 1996
No. 473-1S
Law of Georgia
On Making Addendum in the Law of Georgia
"On Investment Activity
Promotion and Guarantees"
The Parliament of Georgia decrees:
I. Item one of Article 3 of the Law of Georgia "On Investment Activity Promotion and Guarantees" of
November 12, 1996 (The Parliamentary Gazette, 1996, Nos. 29-30/5) be supplemented with the words:
"except the cases provided for in Law".
II. The Law be put into effect upon its promulgation.
President of Georgia
Eduard Shevardnadze
Tbilisi
May 14, 1997
No. 705-IIs.
Law of Georgia Concerning Amendments and Addenda to the Law of Georgia
"On Investment Activity Promotion and Guarantees"
The Parliament of Georgia decrees:
I. The following amendments and addenda shall be made in the Law of Georgia "On Investment Activity
Promotion and Guarantees" (The Parliamentary Gazette, No.29-30/5, 11 December 1996):
1. Paragraph 3 shall be withdrawn from Article 2, and paragraph 4 shall be correspondingly considered as
paragraph 3.
2. Article 3 shall be added with paragraph 5 of the following content:
"5. The rights to possess, use, dispose of investment results may, upon the investor's decision, be
transferred to another legal and/or natural person under the statute-established procedure. Relationships of
the parties upon transfer of such rights are regulated on the basis of a contract"; paragraphs 5 to 7 shall
accordingly be considered as paragraphs 6-8.
3. Article 6 shall be worded as follows:
"Article 6. Georgian Investment Centre
With the aim to promote investments, a Georgian Investment Centre shall operate under the Ministry of
Trade and Foreign Economic Relations, with functions as follows:
a) to serve investors and promote the entrepreneurial activity initiated thereby;
b) to show Georgia as an investment-beneficial country; to obtain and disseminate information on the
investment environment, the legislative base, tax system and other investment-associated matters;
c) to reveal potential partners in Georgia and beyond its borders and give recommendations for their
participation in joint investment projects;
d) with a view to improving the investment environment, to prepare recommendations and submit them to
the legislative and executive bodies;
e) to attract investments, identify foreign countries and companies and establish individual contacts with
them".
4. Article 9 shall be worded as follows:
"Article 9. Prohibition and Restriction in the Investment Implementation Sphere
1. On the territory of Georgia it is prohibited to invest in:
a) the manufacture and spread of nuclear, bacteriological and chemical weapons;
b) the construction of ranges to test nuclear, bacteriological and chemical weapons;
c) the bringing from abroad of nuclear and toxic wastes with the end of their burial and decontamination;
d) the conduct of research work associated with human cloning;
e) the manufacture of narcotic substances;
f) the cultivation of opium poppy, coca and cannabis;
g) the activity prohibited by international treaties of Georgia.
2. Only the State of Georgia may invest in:
a) the production of bank-notes, coins, state award signs, postage-stamps;
b) the activity associated with the hall-marking of articles made of precious metals;
c) the activity associated with the import, export, delivery, wholesale trade of medical narcotic drugs and
the production of new narcotic drugs;
d) the production, processing, import, export, shipment, wholesale trade of psychotropic preparations
subject to special control and the production of new kinds thereof;
e) the energy dispatch activity.
3. A foreign country and private investor may, without the right of management, invest on the territory of
Georgia in:
a) the activity associated with the traffic regulation of marine transport means in the territorial waters and
seaport areas of Georgia, their safety ensuring and control;
b) the railway transport dispatching activity;
c) the activity associated with the traffic regulation of aircraft in the airspace of Georgia, their safety ensuring
and control;
d) the development and testing of new kinds and modified weapons in the military-combat equipment
production and realization in coordination with the National Security Council at the President of Georgia,
with the purpose of strengthening the defence potential of the State;
e) the military industrial complex;
f) the activity associated with the peaceful use of nuclear energy".
5. Article 12 shall be worded as follows:
"Article 12. Acquisition of Property Right to Land and Other Natural Resources
Acquisition of the property right to land and other natural resources, as well as the right to process and
develop natural resources is regulated under the Civil Code of Georgia, the laws of Georgia "On
Agricultural Land Property", "On the Procedure for Granting Concessions to Foreign Countries and
Companies", "On the Entrails" and other statutory acts".
6. The Law shall be added with Article 17 of the following content:
"Article 17. Transitional Provision
Enterprises and facilities which activity guidelines and investment sources do not comply with the
requirements of this Law shall within a 6-month period alter their profile or cease functioning and ensure the
compliance of the realized investments with the Law. Otherwise the mechanisms provided by Articles 7 and
8 of this Law shall apply thereto".
II. This Law shall be enacted upon publication.
President of Georgia
Eduard Shevardnadze
Tbilisi
26 June 1998
No. 1513-II s