The number of Russian companies in Georgia has reached a historical peak. The increase in the number of companies founded by Russian citizens began after the start of the Russia-Ukraine war and the arrival of Russian migrants in Georgia. In many cases, large Russian companies enter the Georgian economy through offshore or intermediary companies, making it difficult to determine who exactly is behind a specific company. In addition, there are cases when companies owned by persons with dual Georgian-Russian citizenship, or only Russian citizenship, are not entered into the official data of the National Statistics Office, which also leads to inaccuracies when trying to see the number of Russian companies operating in Georgia and their fields of activity. Because companies use the same legal addresses during registration where a building is either not located at all, or the area is only a few square meters, it is also impossible to trace both the legal and actual addresses of thousands of Russian LLCs and individual enterprises.

Large Russian companies are found in almost all sectors of the economy, including energy, telecommunications, industry, gaming, etc.

According to the data provided by the National Statistics Office, as of June 1, 2024, about 37,400 companies in Georgia were owned by Russian citizens (including 494 persons with dual Georgian-Russian citizenships), of which more than 30,000 companies were registered after 2022. 20,885 of the registered companies have an active status. The total number of companies with an active status in Georgia is 257,245, with 8.1% of them turning out to be related to Russia.

The database of companies registered by Russian citizens also partially covers companies founded by persons with dual Georgian/Russian citizenships. Specifically, a total of 494 of these companies were founded by persons with dual Georgian-Russian citizenships, with 100 of the companies having an active status. Among them, for instance, is "Georgian Dream" LLC, the activities of which are sound recording and music recording publishing activities. 100% of the company is owned by Bidzina Ivanishvili's son, Bera Ivanishvili, and according to the latest data from the public registry, dated 2018, Bera Ivanishvili is registered as a dual citizen of Georgia and Russia.

Information about companies established with the participation of dual citizens is not fully represented in the database. For example, among the large companies is the company "K and Georgian Spirit" LLC belonging to Vakhtang Karichashvili, who has been sanctioned by the government of Ukraine and who has a dual citizenship of Georgia and Russia. However, according to the data from the business registry, he owns a number of other companies that are not reflected in the database. For example, he is the founder of Bolero & Company, one of the largest groups producing alcoholic beverages in Georgia, as well as the owner of 100% of GVMT Group LLC and 50% of Alliance and Company LLC.

Financiers of "Georgian Dream" can be readily found among the management of the companies related to Vakhtang Karichashvili. The management of the observed companies donated a total of 556,000 GEL to the ruling party. In addition, the company's subsidiaries receive millions of GEL from the state in the form of simplified procurements; procurements are mainly made within the framework of rtveli subsidies. In total, the LLCs related to the company have received simplified procurements worth 30 million.

Ukraine added Karichashvili to the list of sanctioned persons in 2023. He was sanctioned on the basis of business ties between him and Bidzina Ivanishvili's cousin, Ucha Mamatsashvili. Ucha Mamatsashvili is also on the sanctioned list in Ukraine, and Vakhtang Karichashvili owns "Melikishvili Inns" LLC together with him (50%-50%). The company is building a 10-story hotel on Melikishvili Avenue in Tbilisi. Together with Ucha Mamatsashvili, Karichashvili also owns a company based in Britain - GWP Wines and Spirits Limited.

In addition to dual citizens, the co-founders of 6% (2,041) of companies registered in Georgia by Russian citizens are Georgian citizens. For example, 51% of the Zugdidi Road Management LLC is owned by Russian citizen Alexander Ivanov, 25% by Georgian citizen Soso Sajaia, and 24% by Georgian-Russian dual citizen Zurab Chanturia.

There was no connection with Georgian citizens (the owner is not a dual citizen, or there is no co-founder who is a Georgian citizen) in the case of 34,857 companies founded by Russian citizens. Within the framework of the study, authors additionally examined the size of the share of ethnic Georgians among Russian citizens who are the founders of the mentioned companies. According to IDFI's assessment, only 4% of these companies (1,209 companies) have a founder who is a Russian citizen with a surname of Georgian origin.

              Source: National Statistics Office - as of June 1, 2024

89% of the registered companies with an active status are small in size, with the number of medium and large companies being only 0.5% in total. The economic size of 10.6% of the companies is still unknown. 93% of companies were founded by individual entrepreneurs.

Large companies with links to Russia registered in Georgia are represented in various fields. For example, VTB Bank belongs to the financial sector. Its portfolio was sold to other banks immediately after the start of the war in Ukraine in order to protect customers from the anticipated sanctions.

Jettycloud LLC operates in the IT field. The owner of 100% of the company is Russian citizen David Slonimsky, who registered the company in Georgia two weeks after the start of the war in Ukraine – on March 10, 2022. The annual profit of the company in 2022 amounted to 14.6 million GEL.

JSC United Energy System Sakrusenergo is an important player on the Georgian energy market. The company owns and controls power transmission lines, including the lines through which Georgia transmits or receives electricity to and from Russia. 50% of the joint-stock company "Sakrusenergo" belongs to the state of Georgia, and 50% to the Russian company "Federal Grid Company of United Energy System".

KDV Georgia LLC is engaged in the import and distribution of various food products in Georgia; 100% of the company is owned by KDV joint-stock company registered in Russia. According to the company's report, it supplies products to more than 7,500 stores, the largest of which are chains "Nikora"; "Carrefour"; "Dale". KDV Georgia LLC supplies consumers with up to 700 brands of food products, 100% of which are supplied by the Russian head company JSC KDV.

Among the large companies is also Vivamed LLC, whose 100% owner is Russian citizen Ali Thanriverdiyev. The company was founded in 2010 and owns medical centers and hospitals across the country. "Vivamed" has received more than 25.5 million GEL from the state through simplified procurement. Of these, the largest procurements were seen from the Special Penitentiary Service, as the agency takes prisoners primarily to "Vivamed" for treatment. The largest procurements were made in the last three years - the agency paid Vivamed 8 million GEL for various services from 2022 to June 2024. Ali Thanriverdiyev became the owner of 100% of "Vivamed" in 2022. He was a 50% shareholder of Thanriverdiyev Medical Center since 2012.

3 large companies are engaged in gambling activities: LLC Marlo (18% of the company is owned by Russian citizen Samir Mudugov), with the company operating the casino "Black Opal"; Georgian Capital Group LLC (40% of the company is owned by Russian citizens: 13% is owned by Ekaterina Ogorodnikova, 13% is also owned by Russian citizen Oleg Andreev, and 14% by Alexander Dorogov), which manages Shangri-La Casino; Royal Gambling LLC (100% of the company is owned by Russian citizen Omar Aliyev, who also owns 47% of the company 8 Max Group LLC, which is also engaged in gambling activities). According to the company's 2022 report, its annual profit reached 2.8 million GEL.

       Source: National Statistics Office - as of June 1, 2024

Russian citizens most often choose Tbilisi to register their companies. Almost half of companies and individual entrepreneurs with an active status are registered in Tbilisi. As for the field of activity, most companies are engaged in IT. As sanctions began to be imposed on Russia and against the backdrop of the restriction of various services and technologies, a large number of representatives of the field of information technology left the country, and some of them chose Georgia to continue their activities.

Activities related to real estate and construction are also of interest to Russian entrepreneurs. More specifically, since 2022, they have registered 134 real estate agencies, and an additional 213 companies founded by Russian citizens operate in the field of buying and selling of residential and non-residential buildings and related services. 253 companies with the participation of Russian capital are registered in the field of acquisition/sale of construction materials and construction works. Some of them actively participate in state tenders. As such, Russian companies are found in the field of construction of roads and highways. For example, "Zugdidi Road Management" LLC, 51% of which is owned by Russian citizen Alexander Ivanov, has won 56 tenders and received 20,725,249 million from the state budget. 18 state tenders have been won by the Construction company "Passage-Georgia", which belongs to the Russian company Passage Ltd. and which received more than 15 million GEL from the state budget, has won 18 state tenders. "Lamro Industry" LLC has received 188,460 GEL from the state budget; 100% share of the company is owned by Russian citizen Ibragim Shamaev. Of this number, the company received 86,400 GEL for the construction works of the National Library of the Parliament.

Companies with Russian connections also participate in the process of state privatization. For example, the company "TBN Group" won in one of the biggest auctions of the current year. The company received a non-agricultural plot of land of 3,299 square meters located on Ketevan Dedofali avenue in Tbilisi and the buildings on it for 6.5 million GEL. 50% of the company is owned by Russian citizen Yahya Audakh, and 50% by Zurab Akhalaia, a dual citizen of Georgia and Russia. 

              Source: National Statistics Office - as of June 1, 2024

Hundreds of Companies under the Same Legal Address and Fictitious Execution of the Law

Companies and individual entrepreneurs registered in Georgia by Russian citizens are usually registered by specifying a fictitious address. One encounters dozens of legal addresses in Georgia where hundreds of LLCs and individual entrepreneurs are registered at the same time. There are cases where up to 1500 persons are registered at one legal address. Most of the mentioned addresses do not even have buildings, most of the territories comprising uninhabited lands, the legal owners of which are for the most part citizens of Georgia. The exact name of one of the legal addresses located in Ponichala (where 1467 private entrepreneurs are registered) is the "discontinued garbage disposal unit" of a residential building; hundreds of private businesses are located at this very address with a territory of 2.7 sq.m.

What does the law have to say? 

Registration of an LLC or an individual entrepreneur in Georgia does not involve complicated procedures, although a person who wants to engage in economic activity needs a legal address for registration. Specifically, if a person owns real estate, it is not mandatory to submit an additional document to determine the legal address. However, if a person does not own real estate, he must additionally submit to the registration authority the consent of another real estate owner (e.g., a leaser) drawn up in a proper form or a document confirming the right to use the real estate. 

Russian citizens generally choose the status of an individual entrepreneur to initiate their economic activities in Georgia. An individual entrepreneur is not a legal entity and performs his/her rights and duties in business relations as a natural person. In terms of tax obligations as well, the individual entrepreneur is personally responsible, with all their assets. Said responsibility also applies to the obligations arising within the scope of entrepreneurial activity before/after registration as an individual entrepreneur. In a standard case, the income of an individual entrepreneur is taxed at 20%, although entrepreneurs in Georgia enjoy various benefits in relation to the small business status. Income received by a person with small business status is taxed only at 1% if the income does not exceed 500,000 GEL in a single year. If the taxable income exceeds 500,000 GEL annually, the income is taxed at 3%.

The law does not prohibit a natural person from registering another person's LLC or individual entrepreneurs on their own real estate. Nevertheless, hundreds of entrepreneurs getting registered at the same address indicates that Russian citizens obtain legal status fictitiously – presumably in return for paying a specific fee to the owner of the property. This makes it difficult to trace Russian companies in Georgia. It should be noted that the physical addresses of specific individual entrepreneurs are usually not indicated in the statistical data. Most of them have fictitious addresses registered as their legal address. There are cases, however, when specific individual entrepreneurs have the same spot registered as their legal and actual address, all while hundreds of other persons are also registered at said address. In total, out of 20,886 companies with active status registered in Georgia by Russian citizens, only 20% (1,664) have an actual address.

Based on the observed legal addresses, it can be assumed that at least every second Russian entrepreneur registered in the country has a fictitious legal address.

Thousands of Russian companies have fictitious legal addresses (legal addresses and Russian LLCs and individual entrepreneurs registered on them).

- Tbilisi, Ponichala settlement 3, building 5, auxiliary storage room - 1467

- Tbilisi, Samgori district, police lane I, N5, N4a - 1381

- Borjomi City, Meskheti Street, N31c, office space N3 - 850

- Tbilisi, Chugureti district, Ivane Javakhishvili Street, N91 - 776

- Akhaltsikhe municipality, Abi, (below the lake) – 744

- Ambrolauri, Khvanchkara village - 451

- Tbilisi, Chugureti district, Chitaia Street N38, apartment N1 - 402

- Adigeni municipality, Varkhani village, Street 07, house N07 - 411

- Rustavi City, VIII micro-district, N 5a, basement - 283

- Abasha, Cholobani village - 274

- Dmanisi, Mashavera village - 266

- Dedoplistskaro municipality, Ozaani village - 244

- Tbilisi, Gldani massif, III micro-district, building 80, apartment 4 - 208

- Tbilisi, Samgori District, Mikheil Gakhokidze Street, N 49 -126

- Tskhvarichamia village - 224

- Georgia, Adigeni municipality, Untsa "Baghebi" village - 214

- Tbilisi, Saburtalo District, Bakhtrioni Street N22, b. 75 – 206

- Tbilisi, Didube District, Murman Lebanidze Street, N10, Floor N1, Apartment N3 - 212

- Georgia, Adigeni municipality, Untsa village, at the house - 205

- Dusheti municipality, Grigolaantkari village - 181 

- Vake district, Ilia Chavchavadze Avenue, N37, building 3a, apartment N54 - 104

- Zugdidi municipality, Narazeni village, Kondrate Tatarishvili street, N18 – 96

- Mtskheta city, Antioch Street, N12 - 70

- Kharagauli municipality, Akhalsopeli village - 66

That the given legal addresses are fictitious is evidenced by the fields of activity in which the persons registered at a specific address are engaged. For example, all of the Russian companies and individual entrepreneurs registered in the entire Ambrolauri municipality are registered in the 451st village of Khvanchkara. All of them have been registered since 2022, with only 9 having the status of an LLC, with the remaining 437 being individual entrepreneurs. As of August 1, 2024, there are a total of 1,355 business entities with active status in Ambrolauri municipality, almost every third of these turning out to be Russian. The field of activity of registered Russian companies is diverse, with the field of activity of most of the individual entrepreneurs, almost 70%, being IT. This while, according to the data of the public registry, there is not even a building at the indicated legal address.

What are the fields of activity of the companies registered in Khvanchkara by Russian citizens?

- Computer programming activities - 168 

- Other activities of information technologies and computer services - 96 

- Other software provision - 28 

- Activities of advertising agencies - 15 

- Specialized design activities - 9 

- Retail and wholesale trade - 8 

- Restaurants and catering facilities - 5 

- Web portals - 4 

- Sound recording and music recording publishing activities - 3 

- Other - 115

Conclusion

Transparency of companies registered in Georgia by Russian citizens is strategically important for Georgia, especially considering the fact that Russia is a country sanctioned by the international community.

A number of factors complicate examination of companies linked to Russia in Georgia: hundreds of LLCs and individual entrepreneurs being registered at the same legal address, lack of actual addresses, companies of Russian citizens not reflected in official statistics, and the use of intermediary companies. In addition, it is impossible to say how many companies are actually operating in Georgia with the participation of Russian capital based on official statistical data.

These companies are actively involved in economic activities—they participate in the state privatization process, state tenders, and simplified procurements–for which they receive tens of millions of GEL from the state budget. Just the companies examined within the present study and their affiliates have received more than 90 million GEL from the state budget through tenders and simplified procurement.

In recent years, the increased foreign trade with Russia and the influx of Russian companies has led to an increase in the dependence of the country's economy on Russia, which is a significant risk for Georgia. Traditionally, Russia uses economic dependence as a political weapon. This is evidenced by the history of economic relations with Russia and the imposed embargoes.