JSC is a legal entity the charter capital of which is divided into shares of equal nominal value. A Joint Stock company can be established by a single shareholder. There are no restrictions regarding the number, nationality or residence of the directors/shareholders. And shareholders are not personally liable for the debts incurred by the company. Shareholders can be natural persons or legal entities.
A Joint Stock company is normally used when funds are to be raised from the general public, for example on stock exchanges. Commercial banks and insurance companies can only be organized as joint stock companies.
The management structure of a joint stock company is very much like a Limited Liability company. A director or the board of directors represents and manages the company. However, certain issues can be resolved only with the prior consent of the shareholders at a shareholders’ meeting. The issues that require shareholder approval are set out in the Entrepreneurs Act. In particular, the shareholders must approve the number of dividend distributions and any increase or decrease in share capital. As well, shareholders appoint the members of the supervisory board, approve annual financial reports, etc. In addition, the company’s charter can include additional matters requiring shareholder approval.
The management structure of a joint stock company must include a supervisory board where:
- The shares of the company are traded on the stock exchange
- It is licensed by the National Bank of Georgia, or
- It has more than 100 shareholders.
A Joint Stock company is subject to more complicated regulations than a Limited Liability company. For example, if a shareholder or group of shareholders acting jointly purchase more than 50% of the shares, they must make a tender offer to the other shareholders to purchase the remaining shares from them or reduce their percentage of shares below 50%. There are, however, some exclusions from this requirement.
There are other complicated regulations applicable to Joint Stock companies. For this reason, entrepreneurs often prefer to establish a Limited Liability company.