New regulation of foreign grants in Georgia

On 16 April 2025, Parliament adopted changes in the Law on Grants establishing a new system for the issuance and monitoring of foreign donor grants in Georgia.

The Law of Georgia on Grants was enacted in 1996. Until the amendments, the issuance or receiving of grants was not subject to any official government approval or registration.

Per the Law, "grant" is defined as "a free of charge transfer of monetary or in-kind donation by the donor to the grantee used for specific humane, educational, scientific, research, healthcare, cultural, sport, environmental, agricultural development, and social projects or for the implementation of programs having state or public importance."

Pursuant to the amendments, grants issued by foreign organizations are subject to pre-approval by the Government of Georgia or a body designated by the Government. Receiving grants without the required approval is prohibited. The same applies to using grants for purposes other than those determined in the grant agreement without approval.

For obtaining the approval, the donor organization shall submit the written grant agreement draft to the relevant body including the following information: purpose, amount, specific directions, and timeline for spending as well as other requirements of the donor. Authorized body may request additional information from the donor. The same rules apply to any other monetary or in-kind donation, which is substantively a grant, but the true nature of it is disguised based on a fraudulent or sham transaction.

Compliance and monitoring functions are assigned to the Anti-Corruption Bureau authorized to determine specific implementing rules and procedures. The Bureau is entitled to:

• Request the financial report from the person in case of the existence of substantiated suspicion of non-compliance

• Interview physical persons

• Interrogate physical persons before the magistrate judge

• Obtain the required information, including any personal data and secrets (except for state secrets) from public authorities, physical persons, legal entities (including the payment services providers), and other subjects. If such information is not public information, the Bureau shall obtain a court order for access.

The Law determines a specific procedure for interviewing physical persons who may have information required for monitoring compliance by the Bureau. Such an interview is voluntary and no one may be compelled to submit evidence or provide information. Persons have the right to have counsel at their own expense, the right to not disclose information against themselves or close relatives. Interviewees shall be warned about their rights, liability in case of false statements, and the potentiality of being brought before a magistrate judge for questioning.

The Bureau has 3 months for consideration of administrative cases under this Law. This term may be extended one time for not more than an additional 3 months in case of need based on the decision of the Head of the Bureau.

Violations of the Law are qualified as an administrative offense. The Bureau executes the offense protocol and immediately submits it to the district (city) court. In case there is a circumstance which may hinder the enforcement of the penalty, the Bureau is authorized to freeze the assets (including the bank accounts) of the person in proportion to the administrative sanction. The freeze shall have immediate effect and is submitted to the court for confirmation together with the protocol on administrative offense.

The district (city) court shall make a decision within 15 days. The decision may be appealed to the court of appeals within 10 days after delivering the court decision. The court of appeals has 15 days to make a decision on appeal, which is final. A special timeline is determined for the election period. The court makes a decision in 5 calendar days, which may be appealed within 72 hours and the court of appeals has 5 calendar days to make a final decision.

The district (city) court makes a decision on confirmation of the freezing order within 48 hours. This decision is subject to one-time appeal to the court of appeals within 48 hours after delivery. The court of appeals shall make a final decision within 48 hours. The appeal of the freezing order does not suspend the freeze.

Any person receiving a grant without the required approval faces a penalty in the double amount of the received grant. Providing false statements during an interview at the Bureau or questioning before the magistrate judge results in a penalty of GEL 2,000. Repeated violation causes a double penalty. The statute of limitation for the liability is 6 years after committing the violation.

The new grant regulation and relevant liability entered into force upon publication of the Law on 16 April 2025. Grants issued before that date are exempt unless there is a change in the grant agreement after the entry into force of the amendments.