The Chairman of the ICC Georgia, Mr. Fady Asly addresses the Minister of Justice and cc'd Prime Minister of Georgia regarding the orders N938 and N939 issued by the Minister of Justice of Georgia about the new regulations regarding transactions that are related to real estate and business legal entities.
In a letter sent to the minister, the chairman of ICC Georgia explains that the new regulations contribute to procedural difficulties and additional bureaucracy for businesses, as well as increasing costs and extending the deadlines for registering foreign companies operating on the basis of legal power of attorney for each simple transaction.
Fady Asly urges Rati Bregadze to communicate with representatives of the private sector along with the cancellation of the regulation.
"On behalf of The National Committee of the International Chamber of Commerce (ICC) in Georgia, we would like to express significant concerns regarding Orders N938 and N939, issued by the Minister of Justice of Georgia on October 20, 2023.
The adoption of these new regulations are encouraging procedural complexity and additional bureaucracy, increased costs and extended terms for registering every simple transaction for foreign businesses acting via legally valid Power of Attorney which are legalized in accordance with international legal standards and international treaties which is ratified by Georgia.
New bureaucracy regulations complicates starting of business in Georgia and establishing a company or entering in any agreements regarding immovable property by an international investor.
Notwithstanding the fact that the Public Registry of Georgia had relatively predictable standards even though similar transactions could be treated differently by different registrar of the registry (which is a different problem of bureaucracy system) before the implementation of the new regulations, investor still had a clear understanding of the standards and requirements set by the law for registration of transactions in Public Registry.
Now different notary may request different kind of documents and fees for the same transactions therefore, the lack of uniformity increases the risk of no foreseeability, making it more complex for every foreigner represented through a Power of Attorney issued abroad to navigate these changes and successfully complete a transaction.
Moreover, the notary is required to cross-verify the authenticity of the foreign-issued Power of Attorney or/and additional documents in the respective foreign country. This poses an additional challenge, as coordination is necessary not only with the Georgian notary but also with the foreign notary, further complicating the process.
Furthermore, the situation is aggravated by the fact that Georgia currently has up to 270 active notaries, while there are approximately 900,000 registered business entities which have obligation to update their registered data and corporate documents till the end of 2023, otherwise they will be forced for liquidation.
Consequently, finding an available, cooperative and professional notary has become one of the most formidable obstacles in the process of registering a simple transaction, which previously could have been completed in a single day.
We are also troubled by the fact that imposition of fees under these new regulations is contingent upon the transaction's value, resulting in additional charges.
Crucially, it is vital to note that the Public Registry applies a retroactive force to the regulations established by these orders. This means that the new rules are applicable to registration proceedings, both ongoing and initiated, before these regulations came into force", - the letter reads.
