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.