Forex license in Georgia

Obtaining a forex trading license in Georgia provides several advantages:

Regulatory flexibility
Forex companies in Georgia are regulated by the National Bank of Georgia, which has a relatively liberal and transparent approach to licensing and supervision. The licensing process is quick and simple, and capital requirements are low.

Compliance with laws
Operating with a forex trading license ensures compliance with the legal and regulatory framework established by the government. This is important to maintain the reliability of financial transactions.

Ease of doing business
Georgia has a favorable business environment with low levels of bureaucracy, corruption, and political risks.

No established minimum wage
In Georgia, labor laws do not set mandatory minimum wage rates for employers, unlike other European countries. As an employer, an investor in Georgia can attract qualified employees at reasonable prices.

Tax benefits
According to the Tax Code of Georgia, an international financial company is exempt from paying income tax, and income received in the form of dividends is not taxed. There are also no employer and reinvestment taxes.

Market Access
Forex companies in Georgia can access the large and growing Eurasian market as well as the European Union market.

Confidence of the parties
A forex license contributes to the overall credibility of a broker. It demonstrates a commitment to professionalism and ethical behavior, which can have a positive impact on brand image and attract more clients.

To obtain a Forex license in Georgia, your company must meet certain requirements:

• registered legal entity in Georgia;
• a corporate bank account with the National Bank of Georgia;
• a minimum of one resident director or local representative with 4 years of experience in the financial industry;
• a person may have significant stakes in several brokerage companies or hold employee positions in several of them, but this information must be disclosed to NBG;
• no criminal record of the company’s executives within the last 10 years for economic crimes, within the last 5 years for violations of Georgia’s securities laws, as well as for especially serious crimes;
• the company must have a physical office in Georgia – owned or leased;
• the minimum paid-up capital required to obtain a Forex license is 500,000 GEL (approximately 200,000 USD).

Complying with the legal requirements for obtaining a Forex license can be challenging, but our Fast Offshore Licenses team has extensive experience in successfully obtaining various offshore financial licenses.

According to Article 6 of the Law on Licenses and Permits, certain financial activities conducted in the country are subject to compulsory licensing, in particular:

• banking activities;
• depository services;
• brokerage activities;
• stock exchange activities;
• asset management.

By Article 23 of the Law of Georgia “On Securities Market”, a brokerage license grants a brokerage company the right to perform operations and provide services related to shares in the authorized capital, shares, bonds, certificates, bills of exchange, checks, and other types of securities.

Thus, this license is required for companies that plan to provide various types of financial services, such as:

• providing direct advice to investors on investment matters, including securities prices, foreign exchange transactions, and the purchase and sale of securities;
• researching financial instruments and their issuers, and providing recommendations and investment strategies based on that research;
• advising issuers on issuing securities and attracting investments;
• preparing and executing transactions in issuer securities on a non-guaranteed basis;
• accepting and transmitting securities orders from clients for their benefit, and managing clients, including managing pension funds and investment portfolios;
• conducting deposit and accounting of investment funds and/or client securities;
• performing securities transactions in its interests;
• preparing and conducting transactions with the issuer’s securities on a guaranteed basis;
• granting loans to clients and borrowing securities, as well as using its funds to purchase securities for clients, participating in “short sales”, according to the established norms of the National Bank of Georgia;
• performance of operations on the purchase of currency and other financial instruments by the current legislation.

A license to trade on the Forex market may be revoked on the following grounds:

1. Submission of a written application of the company for its revocation.
2. Submission of forged, incomplete, or non-compliant documents when obtaining a license.
3. Carrying out broker’s activities that do not comply with the legislation of Georgia.
4. Liquidation of the brokerage company.

Decision on license revocation shall be made by the National Bank of Georgia within 30 days.

Until recently, no license was required to operate in the Forex market in Georgia. However, due to increasing cases of abuse and violations, as well as to protect the rights of clients of brokerage companies, the Georgian government introduced mandatory licensing of all participants of the Forex market through the National Bank of Georgia in early 2018. Since April 11, 2018, companies cannot attract clients or advertise their services without a proper license in the Forex market in Georgia.

As of today, this market is subject to the following regulations:

• Law “On Securities Market”;
• Law “On Licenses and Permits”;
• Tax Code.

One of NBG’s key functions is to protect and serve consumers in the financial markets. Therefore, they set rules to protect traders and investors from fraud and abuse. NBG has the power to revoke the licenses of any companies that do not meet standards or do not comply with them. In addition, NBG accepts complaints from customers and conducts formal investigations when necessary.

Requirements imposed on brokers include submitting periodic reports to NBG and undergoing a financial audit by an independent third party. In addition, brokerage and finance companies are required to train their employees and conduct business according to established regulations.