The Parliament of Georgia approved the Law of Georgia on Ownership of Dematerialized Securities and related amendments to the Law on Securities Market and several legislative acts.

Improvement of the legislation regulating the ownership, circulation and settlement of securities, combined with the market infrastructure prepared accordingly, is an important tool for protecting the interests of investors in the capital market and promoting the image of Georgia as a reliable jurisdiction for securities transactions.

The legislative package was prepared with the participation of experts from the NBG and the International Monetary Fund. The Ministry of Economy and Sustainable Development was also closely involved in the process. Representatives of the local financial sector were consulted on the matter as well.

Dematerialized securities exist as entries in the accounts. These securities are issued in the central depository system, and their ownership and change of owners is confirmed by an account statement. This modern form of securities issuance requires an appropriate infrastructure. A new securities settlement system already implemented in the NBG is based on the requirements of the new legislative package. Two independent central depositories - the NBG and Central Securities Depository of Georgia JSC are included in the said system. It serves all securities issued in Georgia, including corporate and state issues, bonds and shares.

The new law specifies the legal status of dematerialized securities and covers the legal aspects of issuance, custody and disposal of securities, payment of coupons and dividends, and repayment of securities. The law also establishes the role, obligations and rights of issuers, central depositories, custodians and other financial intermediaries at all these stages. With the legislative act, the securities market of Georgia becomes better compatible with EU standards and international best practices. Adoption of the new law will also simplify the process of issuing securities in Georgia and better protect investors' interests.

The law is based on the Geneva International Convention on Securities and the EU Regulation on the Improvement of Securities Settlements and Central Depositories. Important international central depositories such as Euroclear and Clearstream are regulated under a similar legal regime. Eurobonds are issued in these international central depositories, trusted by issuers and investors from all over the world.

In order to implement the law, the NBG will issue pertinent regulations, with the drafts to be available in advance for consultation and stakeholder feedback. The law also provides for a transition period for current issuers of public securities. They will be obliged to sign an agreement with the central depository and register public securities in the central depository system before June 1, 2024.

The legislative changes will come into effect on March 1, 2024.