THE LAW OF GEORGIA ON LICENSES AND PERMITS

					October 2005


  SUMMARY OF THE LAW OF GEORGIA ON LICENSES AND PERMITS

                                    COMPARISON

The new Law of Georgia on Licenses and Permits was adopted by the Parliament of
Georgia on 24 June 2005. Thus the old system of licenses and permits (adopted as
Law on 14 May 2002) was replaced with the new and modern law improving the
business climate and abolishing some administrative barriers for doing business in
Georgia.
The law introduces innovations and efficient changes to the existing system of
licenses and permits abolishing compulsory insurance and obligatory standards and
liberating the system of the certification.

The scope of the law broadens and regulates not only entrepreneurial activities but any
organized and some non-organized activities. Apart from this, the law shall not apply
to the activities and actions defined by this law provided that these activities are
undertaken by the governmental body.

One of the novelties of the new law is that the state shall regulate the activity by the
issuance of licenses or permits only in cases where these activities are directly related
to the fields of human life and health, state and public interest. Proceeding from the
above-mentioned, the main principles of the law are:

   -   Security and protection of human life and health;
   -   Security and protection of life conditions and cultural environment of humans;
   -   Protection of state and public interests.

According to the law the types of licenses and permits are significantly reduced and
new licenses introduced, such as licenses for activity and usage, general and
specialized licenses.

The law defines new principles for issuance of the license:
    “One-window” principle (one shop stop) – which is a new concept in this
      law and means that the administrative body issuing the license shall ensure the
      approval of additional licensing conditions by the other administrative body on
      its own;
    “Silence gives consent” – the administrative body issuing the license is
      obliged to make a decision in due term after the submission of the application.
      The license shall be deemed issued if a decision is not made in the determined
      time period.
    An “umbrella principle” – the holder of the general license is not obliged to
      apply for a specialized license too (example: stationary license > ambulatory
      license).

The chart below compares the major changes between the old and new law.
October 2005


State bodies issuing permits and the number of permits:

                                                                        Quantity of
№                            Issuing body                                 permits
                                                                       New      Old
 1   Ministry of Agriculture                                            3         16
     Ministry of Environmental and Natural Resources
 2                                                                       15        318
     Protection
 3   Ministry of Justice                                                 5          2
 4   Ministry of Internal Affairs                                        3          8
 5   Special Service of State Security                                   1          1
 6   Energy Regulatory National Commission                               2          2
 7   Ministry of Economic Development                                    2          9
 8   Ministry of Culture, Monuments Protection and Sport                 3         16
 9   Ministry of Finance                                                 6          9
10   Customs Department of the Ministry of Finance                       4          8
11   Administration of Public Aviation                                   1          4
12   Administration of Auto Transport                                    3          7
13   Medicine Agency                                                     2          4
14   National Commission of Communications                               0          9
15   State Inspection of Technical Supervision                           0          9
16   Administration of See Transport                                     0          1

The state bodies issuing the licenses for usage and quantity of the licenses:

                                                                        Quantity of
№                            Issuing body                                 licenses
                                                                       New        Old
     Ministry of Environmental and Natural Resources
 1                                                                       7         31
     Protection
 2   Administration of Public Transport                                  1          2
 3   National Commission of Communications                               2          4

The state bodies issuing the licenses for activity and quantity of the licenses:

                                                                        Quantity of
№                            Issuing body                                 licenses
                                                                       New        Old
 1   Ministry of Agriculture                                            2          81
     Ministry of Environmental and Natural Resources
 2                                                                       7         22
     Protection
 3   Ministry of Justice                                                 2          3
 4   Ministry of Internal Affairs                                        2          0
 5   National Commission of Communications                               3          4
 6   Energy Regulatory National Commission                               5          1
October 2005


     State Agency of Regulation of Petroleum and Gas
 7                                                                   3          4
     Resources
 8   Ministry of Education and Science                               9          8
 9   State Supervision Agency on Insurance                           4         17
10   Customs Department of the Ministry of Finance                   3          2
11   National Bank                                                   2          3
12   National Commission of Securities                               6          9
13   Ministry of Labor, Health and Social Affairs                   43        320
14   Medicine Agency                                                 6         13
15   Tax Department of the Ministry of Finance                       0          4
     State Department of Standardization, Metrology and
16                                                                   0          2
     Certification
17   Ministry of Finance                                             0          3
18   Ministry of Economic Development                                0         21
19   Administration of See Transport                                 0          1

Overview of the total number of licenses and permits issued by different state bodies
and quantity of the licenses and permits which will remain according to the new law:

                        MINISTRIES                           LICENSE PERMIT
Ministry of Culture, Monuments Protection and Sport               0      4
                                                         New      0      3
Ministry of Education and Science                                 6      0
                                                         New      4      0
Ministry of Finance/Customs Department/ State Supervision
Agency on Insurance/National Bank/ National Commission on        18     10
Securities
                                                         New     17     10
Ministry of Economic Development / Administration of Public
Aviation / Administration of Auto Transport /                    30     27
National Commission of Communications
                                                         New      6      7
Ministry of Power Engineering/SEMEK/State Agency of
                                                                 18      2
Regulation of Petroleum and Gas Resources
                                                         New     10      2
Ministry of Agriculture                                          81      9
                                                         New      6      3
Ministry of Labor, Health and Social Affairs                    320      4
                                                         New     49      2
Ministry of Internal Affairs                                      0      4
                                                         New      4      4
Ministry of Justice                                               1      2
                                                         New      2      5
Ministry of Environmental and Natural Resources Protection       59    318
                                                         New     11     14
October 2005



                                                LICENSE PERMIT                TOTAL
                                        Old law    533    376                  909
                                       New law     109     50                  159

The chart below defines the rules for issuance of a permit:

                Procedure                                 Time period
Registration of the application             Immediately upon submission
Determination of compliance of the          Within 3 days after receipt of the
application with the requirements of law    application
Submission of the copies of documents to    Within 3 days after determination of
other administrative body                   compliance
Receipt of relevant documentation,          Within 15 days after submission of the
copies, conclusions from other              application
administrative body
Issuance of the administrative act          Within 20 days

Rules on issuance of license on activity:

                Procedure                                 Time period
Registration of the application             Immediately upon submission
Determination of compliance of the          Within 3 days after receipt of the
application with the requirements of law    application
Submission of the copies of documents to    Within 3 days after determination of
other administrative body                   compliance
Publication of the note on public           Immediately after registration
discussion
Public discussion of the documents,         Within 20 days after publication of the
submission of the opinion                   note
Receipt of relevant documentation,          Within 25 days after submission of the
copies, conclusions from other              application
administrative body
Oral hearings                               Not later than 7 days after expire of the
                                            period for submission of opinions
Issuance of the administrative act          Within 30 days after submission of the
                                            application

One of the important novelties of the new law is the control on the fulfillment of the
conditions necessary for licensing/permissions by the means of selective examinations
and annual reporting. The issuer of the license/permit shall implement control only
within their competences. Save as otherwise provided the control shall be
implemented only once in a year.
October 2005


The mechanisms for the control and responsibility on the non-compliance with and
violations of the conditions of licensing/permission are changed as well, and namely,
the form of sanctions thereon – the suspension of the license and permit has been
changed with penalties. The violation of the conditions on licensing/permissions
causes the increase of the amount of penalty (double triplication of the initial penalty
possible). Suspension of the license/permit takes place only after non-eradication of
the irregularities.

				
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