The law and practice of asset protection from creditor claims in Georgia under the Law on Entrepreneurs (2021)

Foreign wealth holders who have structured assets through Georgian entities — or who are considering doing so — often discover that the creditor-claim landscape under Georgian law differs materially from both civil-law jurisdictions in Western Europe and the post-Soviet frameworks many of them know from Russia or Ukraine. The Law on Entrepreneurs adopted by Georgia in 2021 replaced the Soviet-era company legislation that had governed Georgian commercial life for three decades, introducing a coherent set of corporate forms, liability boundaries, and governance obligations that are directly relevant to how creditor claims arise, are contested, and — in well-structured arrangements — are resisted. For family office advisers and private clients positioning assets in the Caucasus, understanding this statutory framework is no longer optional.

Georgia enacted its Law on Entrepreneurs in 2021 as part of a broader effort to align its commercial law with European standards and to signal to foreign investors that the country's legal architecture was modernised and predictable. For asset-protection purposes, the most consequential changes relate to the legal personality of companies, the liability boundaries of shareholders and directors, and the formalities that must be observed for those boundaries to remain intact.

Under the 2021 law, the principal vehicle for private wealth structuring in Georgia remains the limited liability company — the "ShrOO" (შ.პ.ს.) in Georgian notation — alongside the joint-stock company. Both forms are recognised as legal persons entirely separate from their participants. A shareholder's exposure to the company's creditors is, as a general rule, limited to the value of their contribution. This separation of personality is not merely a formality: Georgian courts have, in practice, treated the corporate veil as a genuine barrier to creditor claims against shareholders, provided that the corporate form has been properly maintained and that no grounds for lifting the veil can be established.

The 2021 law introduced clearer rules on the circumstances in which courts may disregard that separation — what practitioners refer to as piercing the veil. The statutory grounds broadly mirror those recognised in modern European corporate law: commingling of assets between the shareholder and the company, systematic undercapitalisation that was foreseeable at the point of contribution, and deliberate abuse of the corporate form to defraud creditors. These are not novel doctrines, but their explicit codification in the 2021 law gives Georgian courts a more structured basis for applying them — and gives advisers a more predictable set of boundaries within which structuring decisions can be made.

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The central protection for assets held through a Georgian company is the principle of limited liability as codified in the Law on Entrepreneurs (2021). For this protection to function effectively in a creditor-claim scenario, three conditions must be satisfied in practice.

First, the company must have been maintained as a genuine, operating legal entity — with its own bank accounts, its own contracts, its own record of decision-making. Where a Georgian ShrOO has been used as a pure holding shell with no independent governance, creditors have argued — and Georgian courts have at times accepted — that the formal separation of personality does not reflect economic reality. The 2021 law's governance requirements, including the obligation to maintain a charter (statute) that sets out the company's objects and governance structure, serve a dual function: they are compliance obligations, but they also constitute the evidentiary foundation on which a company resists a veil-piercing claim.

Second, the company's capitalisation must be defensible. Georgian law does not prescribe a minimum registered capital for limited liability companies in the way that some European jurisdictions do, but it does impose an obligation on management to act when the company's net assets fall below its registered capital. A creditor seeking to reach a shareholder's personal assets may argue that the company was used to incur obligations that it could not realistically discharge — a form of undercapitalisation fraud that the 2021 law's veil-piercing provisions are designed to address.

Third, transactions between the shareholder and the company must be conducted at arm's length and documented. Related-party transactions that transfer value out of the company to the detriment of its creditors are a standing target for avoidance claims under both the Law on Entrepreneurs and the broader Georgian Civil Code. Georgian courts have jurisdiction to set aside transactions that were conducted with the intent or effect of placing assets beyond the reach of creditors — an equitable principle familiar to practitioners from common-law systems and from the Roman-law origins of the actio pauliana.

"The Law on Entrepreneurs (2021) provides a structurally sound creditor-protection framework for Georgian holding entities — but only where governance formalities have been observed consistently from the outset." — Nino Beridze, Contributing Regional Analyst — Georgia, Vetrov & Partners

For private clients who are restructuring their wealth position — whether in anticipation of business difficulties, relationship breakdown, or estate planning — the risk that prior transactions will be set aside by Georgian courts is a material concern. The 2021 law, read alongside Georgian Civil Code provisions on voidable transactions, establishes a framework that broadly follows the pattern of modern European insolvency and creditor-protection law.

Transactions entered into with the intention of defrauding creditors are voidable at the instance of the affected creditor. The burden of demonstrating that intent lies, as a general rule, with the creditor — but where the transaction is between related parties, and where the value transferred was materially below market, Georgian courts have in practice applied a presumption of intent that shifts the evidential burden. Advisers structuring asset transfers through Georgian entities should treat any transaction between a shareholder and a connected company as subject to this risk for a period following the transfer, particularly where the transferor carried or subsequently incurred significant creditor exposure.

The temporal dimension is significant. Georgian law does not fix a single statutory look-back period that applies universally to all voidable transaction claims. The applicable limitation framework depends on whether the claim is brought in general civil proceedings or within insolvency proceedings, and the period within which a creditor must act varies accordingly. This creates planning uncertainty that is best addressed by taking formal structuring advice before entering into significant asset transfers — not after the fact.

One dimension of Georgian practice that is frequently underestimated by foreign advisers is the role of the Georgian Registration Court and the Public Registry in recording corporate transactions. Georgia operates one of the more transparent and digitally accessible company registries in the post-Soviet region. Transfers of participation interests in a Georgian ShrOO, changes in management, and amendments to the company's charter are all publicly recorded. This transparency is a feature for investors seeking predictability, but it is also relevant to creditor-claim analysis: a creditor with access to the Public Registry can trace the chronology of corporate restructurings and use that timeline to support an avoidance claim. Structuring through Georgian entities requires an assumption that the corporate record will be examined.

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Georgia is not a member of the EAEU and is not a party to the multilateral CIS conventions on mutual recognition of judgments. This absence of a multilateral enforcement framework has direct consequences for the cross-border creditor-claim analysis that is most relevant to the clients this article addresses — private wealth holders with connections to Russia, other post-Soviet jurisdictions, or European creditor states.

A Russian court judgment against a Georgian individual or a Georgian-registered entity does not automatically carry legal force in Georgia. Recognition and enforcement of a foreign judgment in Georgia requires proceedings before a Georgian court, which will assess whether the foreign judgment meets the conditions of Georgian private international law — including questions of reciprocity, procedural fairness in the originating proceedings, and whether enforcement would be contrary to Georgian public policy. The absence of a bilateral judicial cooperation treaty between Russia and Georgia means that reciprocity cannot be assumed, and enforcement of Russian judgments in Georgian courts has historically been uncertain.

For a wealth holder with assets in Georgia and creditor exposure in Russia, this creates a structural position that advisers should understand accurately: Georgian assets held through a properly maintained Georgian entity are, as a practical matter, relatively insulated from Russian court judgments. This does not mean they are beyond the reach of all claims — a Georgian court could, in principle, reach the same outcome as a Russian court if the underlying claim is presented under Georgian law or under rules of Georgian private international law that recognise the foreign cause of action. But the absence of an automatic enforcement mechanism, combined with the cost and complexity of bringing fresh Georgian proceedings, represents a material structural feature of the Georgian position.

Foreign creditors from EU member states and other jurisdictions with which Georgia maintains bilateral treaty relationships occupy a different position. Georgia has signed a number of bilateral investment treaties and mutual legal assistance agreements. Where such instruments are in force, the pathway to enforcement of a foreign judgment or arbitral award against Georgian assets is more clearly defined — and should be factored into structuring decisions accordingly. Advisers acting for clients with European creditors should not assume that the insulation applicable to Russian-judgment creditors will operate in the same way.

The enforcement of foreign arbitral awards in Georgia is governed by the New York Convention, to which Georgia is a party. An award rendered by an LCIA, ICC, or other recognised arbitral institution can, in principle, be enforced through the Georgian courts on the basis of Convention obligations. The practical timeline and the grounds on which a Georgian court may refuse enforcement broadly follow the Convention framework, though the procedural particulars of Georgian court practice require local advice from qualified Georgian counsel.

For private clients and their advisers approaching Georgian asset protection with reference to the Law on Entrepreneurs (2021), the following considerations represent the points at which legal design produces the most durable results.

The choice of corporate form matters. The ShrOO (limited liability company) remains the most widely used vehicle for private asset holding in Georgia, and its limited liability framework is well established in Georgian court practice. Where confidentiality of ownership is a priority, Georgia's Public Registry does require disclosure of beneficial ownership information in certain circumstances under its anti-money-laundering framework — advisers should verify the current scope of these requirements with local Georgian counsel and plan accordingly, rather than assuming that nominee arrangements confer anonymity at the registry level.

Governance maintenance is not optional. The most common reason that Georgian entities fail to provide the creditor protection their owners expect is that they have not been maintained as genuine legal entities with independent governance. Meeting minutes, charter amendments, and related-party transaction documentation should be kept systematically. This is straightforward in practice, but it requires ongoing professional support — it cannot be set up once and left unattended.

Timing of structuring. Where a private client is considering restructuring assets through Georgian entities in the context of known or anticipated creditor exposure, the window between initiating that structuring and any crystallisation of creditor claims is legally significant. Transfers that occur in close proximity to insolvency filings or to the accrual of significant obligations carry substantially higher avoidance risk under both Georgian law and, potentially, the law of any other jurisdiction whose courts might examine those transactions.

Multi-jurisdictional layering. The most resilient asset-protection arrangements for high-net-worth clients with Georgian assets are generally those that combine Georgian corporate vehicles with appropriate estate-planning instruments — including succession arrangements that address what happens to Georgian participation interests on death or incapacity — and that are designed with the relevant creditor jurisdictions in mind from the outset. This is not a Georgian-law exercise alone: it requires coordinated advice from counsel with knowledge of Georgian law, the client's home jurisdiction, and any other jurisdiction in which significant creditor exposure exists. For the Russian-law dimensions of such structures, Vetrov & Partners advises directly; for the Georgian-law components, the firm works with trusted Georgian counsel.

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• [Asset Protection in Georgia — Overview](/jurisdictions/georgia/asset-protection/)
• [Private Wealth and Structuring in Georgia](/jurisdictions/georgia/private-wealth/)
• [Company Formation in Georgia under the Law on Entrepreneurs (2021)](/jurisdictions/georgia/company-formation/)
• [Tax Residency and Relocation to Georgia](/jurisdictions/georgia/tax-residency/)
• [Enforcement of Foreign Judgments and Awards in Georgia](/jurisdictions/georgia/enforcement/)
• [Asset Protection in Kazakhstan](/jurisdictions/kazakhstan/asset-protection/)
• [Asset Protection in Armenia](/jurisdictions/armenia/asset-protection/)

Q: Does the Law on Entrepreneurs (2021) in Georgia genuinely protect a foreign shareholder's personal assets from claims against a Georgian company?

A: As a general rule, yes — provided the company has been properly maintained as an independent legal entity. The 2021 law codifies limited liability for participants in Georgian LLCs (ShrOOs) and joint-stock companies, meaning that a creditor's claim against the company does not automatically reach the shareholder's personal assets. The protection is real, but it is conditional: Georgian courts will examine whether corporate formalities have been observed, whether the company was adequately capitalised, and whether related-party transactions were conducted at arm's length. A shareholder who has mixed personal and company finances, or who has caused the company to transfer assets at undervalue, may find that the veil-piercing provisions of the 2021 law expose them to personal liability. Early-stage structuring advice, followed by consistent governance maintenance, is what sustains the protection in practice.

Q: Can a Russian court judgment be enforced against assets held in a Georgian company?

A: Not automatically. Georgia and Russia do not have a bilateral judicial cooperation treaty in force, and there is no multilateral instrument that requires Georgian courts to recognise Russian judgments on the basis of reciprocity alone. A creditor holding a Russian court judgment would need to bring fresh proceedings in a Georgian court, seeking recognition and enforcement under Georgian private international law. Georgian courts will assess whether the conditions for recognition are met — including whether the proceedings in Russia were procedurally fair by Georgian standards and whether enforcement would be contrary to Georgian public policy. In practice, this pathway is uncertain and costly for Russian-judgment creditors. It does not mean Georgian assets are invulnerable — a creditor could also bring a fresh claim under Georgian law — but the absence of an automatic enforcement route is a material structural feature of the Georgian position.

Q: What transactions are most vulnerable to avoidance claims under Georgian law when assets have been transferred to a Georgian entity?

A: The highest-risk transfers are those between related parties — a shareholder and a company connected to them — conducted at below-market consideration, particularly where the transferor carried significant creditor exposure at the time of the transfer or shortly afterwards. Georgian law, drawing on both the Law on Entrepreneurs (2021) and the broader Civil Code framework, permits creditors to seek the avoidance of transactions that were entered into with the effect or intent of placing assets beyond their reach. Transactions at arm's length, for full market consideration, documented contemporaneously and supported by independent valuation where material, carry substantially lower avoidance risk. Timing matters: the closer a transfer is to the crystallisation of a creditor claim, the more scrutiny it will receive. Advisers structuring asset transfers should build in a documented rationale for each transaction that stands independently of any creditor-protection motivation.

Q: How does Georgia's Public Registry affect confidentiality of asset structures?

A: Georgia's Public Registry is one of the more transparent and digitally accessible registries in the post-Soviet region. Transfers of participation interests in a Georgian ShrOO, changes in management, and charter amendments are all recorded and searchable. Anti-money-laundering regulations require disclosure of beneficial ownership information in certain circumstances, and the scope of these requirements has evolved in recent years. Foreign wealth holders should not assume that nominee arrangements provide complete anonymity at the registry level. The practical consequence for asset-protection planning is that the corporate record is likely to be examined in any serious creditor-claim scenario, and the chronology of transactions it reveals will be used by creditor counsel. Structuring decisions should be made with this transparency assumption in place from the outset.

Q: Does Vetrov & Partners advise on Georgian law directly?

A: Vetrov & Partners is a Russian-qualified law firm. For matters governed by Georgian law, the firm collaborates with trusted Georgian counsel and works with contributing analysts — including Nino Beridze, who covers Georgia — to provide coordinated cross-border advice. For clients with both Russian and Georgian legal exposure, this collaboration allows the firm to address the Russian-law dimensions directly while ensuring that Georgian-law components are handled by practitioners with the relevant local qualification. Enquiries covering both jurisdictions are welcome at info@vetrovpartners.com.

Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 — Russia's principal legal directory — for eight consecutive years, and listed as a trusted adviser by the German Consulate General in Novosibirsk.

The firm's asset protection and private wealth practice advises foreign high-net-worth individuals, family offices, and their advisers on structuring arrangements that engage Russian law — including cross-border structures that also involve Georgian, Kazakh, Armenian, and other post-Soviet jurisdictions. Where matters require local counsel in those jurisdictions, the firm coordinates with trusted practitioners on the ground. Georgia-side analysis and structuring advice is provided in collaboration with Nino Beridze, Contributing Regional Analyst.

With over 1,000 matters handled since inception, the team combines deep knowledge of Russian-law exposure with direct partner involvement on every engagement.

Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

— Nino Beridze Contributing Regional Analyst — Georgia, Vetrov & Partners vetrovpartners.com/contributions/

This publication is provided for informational purposes only and does not constitute legal advice under Russian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.