JMK Consulting Wins Legal Battle to Protect Partners Interests in Entrepreneurs Law

Acourt case in the Tbilisi Court of Appeal has been won by JMK Consulting group which aimed to change an article of the Entrepreneurs Law of Georgia which the company believes is ‘offensive’ for businesses.

According to the statement released by JMK Consulting, the court process has been on-going since 2013, the aim of which was to cancel changes in 5/2 paragraph of Article 3 of the Entrepreneurs Law of Georgia that cancels any registered right of a Partner or assigns to such Partner any obligation that directly and immediately affects the registered rights of said Partner.

According to the Article, a share belonging to a Partner could not increase or decrease without his/her consent. This would mean that the minority shareholder had absolute veto power over the financial issues of the enterprise, including changes in the authorized capital.

“It is difficult to imagine an investor who will invest money in Georgia on the condition that only he carries out funds in the authorized capital, while other minority partners, without their contributions, will receive at least as much benefit as they received before entering partner into the business,” said Gia Kavtaradze, former Minister of Justice and partner of JMK Consulting.

In order to protect business interests, the company appealed to Court to cancel changes to the Entrepreneurs Law carried out in 2012.

The Tbilisi Court of Appeal decided in favour of JMK Consulting and satisfied its requests. As a result, the company states, the development of entrepreneurship and business partnership has become reasonable once more in Georgia.

“5/2 paragraph of Article 3 of the Entrepreneurs Law was clearly contrary to the essence and principles of Commercial Law, creating a significant obstacle to the business community’s economic development and hindering investment in Georgia,” JMK Consulting said.

Regarding this issue, JMK Consulting group will have one further court case in the Supreme Court in future.

Tamar Svanidze