The Georgian Constitution guarantees the right to freedom of association in article 26, saying that every individual has the right to create and join any association, including trade unions. This right can be restricted, however, if the association’s goal is to overthrow or change the constitutional order of Georgia by force, violate the independence of the country, violate the country's territorial integrity, advocate war and violence, or attempt to induce ethnic, racial, social and national unrest (Georgian Constitution, Article 26, Paragraph 3).

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In Georgia the Civil Code is providing for two kinds of non-entrepreneurial legal entities, associations and foundations. Associations are defined in article 30 of the Georgian Civil Code as being membership organizations where a number of persons have set a common goal. A foundation is defined as a non-membership organization, to which one or more founders have transferred property for the accomplishment of a useful, common and public purpose (Georgian Civil Code, Article 30, Paragraph 3).

Associations in Georgia registers with the court and foundations register with the Ministry of Justice (Georgian Civil Code, Article 31). To register, the association or foundation needs to present the charter signed by all founders or members of the Governing Board together with the application. If the provisions of the charter are not violating the law, moral standards or the constitutional-juridical standards of Georgia the organization is registered.

The provisions regulating the purpose and activities of not-for-profit organizations in Georgia can be found in article 30 of the Civil Code. This article defines an association as being a "legal person in which a number of persons set a common object" and a foundation as being a legal entity established for a "accomplishment of useful, common and public object".

An association can serve both a private (mutual) and a public benefit purpose. According to article 46 of the Civil Code foundations too may have private purposes. This article states that "the objective of a foundation […] may likewise be the support of certain persons or specifically defined groups of persons". According to Georgian legislation there is no distinction between public benefit and mutual benefit organizations.

According to the Georgian tax legislation charitable organizations are defined as non-entrepreneurial organizations established for charitable activity purposes. These organizations are exempt from profit taxes, unless the profits come from economic activities. Economic activities include profits from investments and dividends on shares of stock in a company. Moreover, certain incomes are specifically exempt from profit tax, such as grants, membership fees and donations (Tax Code, Article 47).

The governing body of an association in Georgia is the General Assembly of its members. The General Assembly is responsible for electing the Governing Board, creating commissions to which it delegates some of its functions between meetings, creating advisory bodies and amending the charter and the statutory purposes of the association (Georgian Civil Code, Articles 40-43). A foundation consists of a Governing Board that is responsible for the management and representation of the foundation. It may also have a Supervisory Board appointed by the founder with the task to appoint and supervise the Governing Board (Georgian Civil Code, Article 48).

Article 49 of the Georgian Civil Code grants the Ministry of Justice the right to require information on the activity of foundations and to investigate their documents. However, the legislation does not contain any provisions for the general transparency of associations. For these organizations the law is only regulating internal mechanisms of control. Both associations and foundations also need to provide annual financial statements to the State Tax Inspectorate, including profit and loss accounts, employment form and social insurance form. The accounting standards for not-for-profit organizations are the same as for commercial companies in Georgia.

A not-for-profit organization in Georgia can be liquidated according to the organization’s charter, if its purpose has been achieved, if the registration is revoked or if it is bankrupted (Georgian Civil Code, Article 39). The liquidation is carried out by the Governing Board, but in cases of "extraordinary circumstances" the court or the Ministry of Justice can appoint another liquidator. The law does not regulate which cases should be regarded as "extraordinary".

Analysis provided by: Maria Bideke, International lawyer and Director of Law Association Justice International.

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