When a shareholder holds at least 95% of the voting shares in a Georgian joint stock company, Georgian law allows that shareholder to initiate a squeeze-out procedure for the compulsory redemption of the remaining shares.
However, reaching the 95% threshold does not automatically transfer ownership of the remaining shares. The procedure is subject to statutory requirements, judicial oversight and the determination of fair price.
Squeeze-Out of Shares and the 95% Threshold
Under article 225.1 of Law of Georgia on Entrepreneurs, a shareholder who holds at least 95% of the voting shares of a joint stock market may redeem the shares held by the other shareholders at a fair price.
The threshold is therefore 95%, not more than 95%. Reaching it creates the legal basis for initiating the squeeze-out, but does not itself result in the automatic transfer of remaining shares.
The provision applies to joint stock companies and specifically refers to voting shares. The statutory threshold must therefore be assessed by reference to the voting rights attached to the shares.
When establishing a joint-stock company or defining its ownership arrangements, businesses should also consider how company ownership structures and governing documents establish shareholders’ rights and decision-making procedures.
Judicial Oversight – Why Does the Transfer not Occur Automatically?
A key feature of the Georgian squeeze-out framework is the involvement of the court. Article 225.2 of the Law on Entrepreneurs expressly provides that a decision on the squeeze-out of shares is made by a court in accordance with the procedure established by the Civil Procedure Code of Georgia. The court also determines the fair price and the record date of the squeeze-out.
The procedure begins before the court application is filed. Under Article 225.3, the buyer must announce the squeeze-out no later than one month before applying to the court. The announcement must provide information on the reasons and conditions of the squeeze-out, as well as the applicable procedure.
The judicial stage is therefore not merely a formal registration step. The court examines whether the statutory requirements and the procedure for the compulsory acquisition of shares have been complied with. Under Article 309¹⁴ of the Civil Procedure Code, if the court establishes that the procedure complies with the law, it issues a judgment on the compulsory acquisition of the shares. Otherwise, the application is dismissed.
The procedure also incorporates an independent valuation mechanism. Under Article 309¹² of the Civil Procedure Code, the court appoints an independent expert or a brokerage company to determine the fair redemption price. The resulting redemption report must set out the relevant circumstances, the valuation methodology and the price determined on that basis. The costs of the expert or brokerage company are borne by the buyer.
This makes judicial oversight particularly significant: the squeeze-out is not simply a corporate decision by the majority shareholder, but a legally regulated process in which the conditions of the compulsory acquisition are subject to court review.
Companies seeking to maintain clear shareholder rights and decision-making procedures can benefit from corporate governance and shareholder agreement services.
Determination of Fair Share Price (Judicial Precedent)
A central element of squeeze out procedure is the determination of fair redemption price.
The assessment may take into account the shares market value, the company’s expected future revenues, its assets and liabilities, as well as factors such as goodwill, business prospects and relationships.
Accordingly, a fair price should not be understood simply as the quoted market price of a share at a particular point in time. The company’s financial position, expected future revenues and broader economic prospects may also be relevant to the valuation.
The practical significance of this assessment is illustrated by Georgian court practice. In a 2025 decision concerning JSC Poti Transterminal, the applicant held approximately 97.77% of the company’s shares and sought the compulsory acquisition of the remaining shares. The court considered an independent expert valuation in determining the redemption price and ultimately ordered the compulsory acquisition at the value established through that assessment.
The case demonstrates that the squeeze-out depends not only on the existence of the statutory threshold but also on compliance with the requirements governing the fair redemption price.
What Does the Squeeze-Out Mechanism Mean for Shareholders and Businesses?
For a majority shareholder, the squeeze-out mechanism can provide a means of consolidating the ownership structure of a joint-stock company once the statutory 95% threshold has been reached. This may be particularly relevant in the context of M&A transactions and corporate reorganisations, where retaining very small minority holdings may create additional legal and practical considerations.
At the same time, the mechanism should not be understood as an unrestricted right of the majority shareholder to acquire the remaining shares at a price determined unilaterally. Georgian law links the squeeze-out to judicial oversight and the requirement of a fair price. These safeguards are particularly important because the mechanism results in the compulsory transfer of a minority shareholder’s property interest.
For majority shareholders and companies considering ownership consolidation, corporate law and shareholder relations services can help address the legal requirements of corporate transactions and governance.
Conclusion
Georgia’s squeeze-out mechanism allows a shareholder holding at least 95% of the voting shares in a joint-stock company to seek compulsory acquisition of the remaining shares, subject to statutory requirements and judicial oversight. The process is not automatic: compliance with the prescribed procedure and the determination of a fair redemption price are essential to protecting the rights of minority shareholders.
For majority shareholders, minority investors, and companies involved in ownership restructuring or M&A transactions, understanding these requirements is essential to managing legal risks and avoiding disputes. NOMOS Georgia advises on corporate governance, shareholder rights, and corporate transactions. Contact our legal team to discuss your corporate or shareholder matters.
