Director service agreement in Georgia:
why it is not a labour contract.

A Georgian company director—called a manager in the English translation of the Law on Entrepreneurs—does not become an ordinary employee merely because the company pays monthly remuneration. The shareholders or competent supervisory board first appoint the manager. The company then concludes a service agreement with that manager.

For an LLC, joint-stock company or cooperative, Article 45 of the Law on Entrepreneurs expressly requires the service agreement after appointment and says that labour-law provisions do not apply to it. Article 124 reinforces the point for an LLC: the manager’s relationship with the company and remuneration are determined by the Entrepreneurs Act and the service agreement.

The corporate decision, registry record and service agreement therefore do different jobs. The decision appoints the manager; the registry tells third parties who can represent the company; the service agreement regulates the internal mandate, payment and accountability. A registry extract alone is not a substitute for a complete agreement.

A labour contract is designed for an employee performing work under organised employment conditions. A director occupies a corporate office: the director manages and represents the legal entity, makes decisions within the company’s governing framework and owes statutory duties to the company. Georgian company law treats that relationship through a special corporate-law instrument.

Using an employment contract for the management mandate can create contradictions about appointment, removal, notice, authority and post-termination duties. For example, the Entrepreneurs Act allows the competent corporate body to dismiss a manager at any time without stating a reason, and dismissal ordinarily repudiates the service agreement unless the agreement provides otherwise. Those rules should not be rewritten as if the directorship were an ordinary employee position.

The safe formulation is not “directors have no rights.” It is that the director’s management mandate is governed by company law and the negotiated service agreement, not by the Labour Code’s standard employee protections. That makes careful drafting more important, not less.

At minimum, identify the appointing resolution, company and manager; the start date and term; whether representation is individual or joint; remuneration, benefits and payment frequency; reimbursable expenses; reporting duties; reserved matters requiring shareholder approval; confidentiality; intellectual property; conflicts of interest; non-competition; document retention; liability; insurance if applicable; termination consequences; and a practical handover procedure.

Article 45 specifically expects the amount, form and frequency of remuneration, benefits and the obligations that survive termination to appear in the agreement. If remuneration is omitted, the law presumes that the manager serves free of charge. That consequence makes vague or copied templates risky.

Internal financial limits can govern the relationship between company and director, but they should not be confused with external representation. Article 42 states that the management body represents the company toward third parties and that representative authority cannot generally be limited against third parties. If the company wants two directors to sign jointly, its statute and registry position must be aligned—not merely a private spending-limit clause.

Potentially, but only for a genuinely separate employee function. A person appointed as director might also perform distinct technical, clinical or operational work that is not simply another label for managing the company. The documents should separate the roles, duties, reporting lines, remuneration and termination consequences.

A second contract should not be used to recreate the directorship as employment or to obtain a result inconsistent with mandatory company law. Where the roles overlap heavily, obtain a fact-specific legal and payroll opinion before creating two parallel relationships.

A sole shareholder who is also the sole director should still keep a clean corporate file: shareholder decision, consent and registry evidence, plus a service agreement signed on behalf of the company by the person authorised under Article 45. The fact that one individual stands on both sides commercially does not erase the company’s separate legal personality.

An unpaid director should not simply leave the subject ambiguous. State clearly that the appointment is unpaid, define expense reimbursement and record any later change by the correct corporate decision and amendment. Under Article 45, silence on remuneration creates a presumption of free service.

For a foreign national, the service agreement does not by itself grant immigration status or a right to work in Georgia. The 2026 right-to-work, visa and residence rules must be screened separately. Contract wording also does not decide tax treatment: the accountant must assess withholding, payroll, pension and reporting from the actual facts and current law.

The agreement should distinguish removal from corporate office, contractual payments and the operational handover. A manager may be removed by the competent body; a manager may also resign under the statutory and contractual procedure. The company must then handle any registry update, final remuneration or reimbursement, revocation of powers of attorney and access to bank, Revenue Service and accounting systems.

A useful handover schedule lists company seals if used, originals, contracts, accounting records, devices, passwords transferred through a secure process, bank tokens, RS.ge access, email and cloud accounts, pending deadlines, disputes and counterparties. Confidentiality, intellectual-property ownership and return-of-property duties should survive where appropriate.

Never rely on the registry change alone to close the relationship. It changes the public corporate position; it does not automatically reconcile money, information, equipment or responsibility for unfinished matters.

First, review the statute and identify who appoints the manager and who may sign the service agreement for the company. Second, adopt a properly worded shareholder or supervisory-board decision stating the person, term and representation model. Third, obtain consent and complete the required registry filing. Fourth, execute the service agreement with remuneration and authority aligned to the decision and statute.

Next, give the accountant a signed copy and a clear payment instruction; complete bank and platform mandates; and store the corporate documents together. For a foreign director, add the right-to-work and immigration screening. When any material term changes, check whether the service agreement alone can be amended or whether a shareholder decision and registry change are also required.

The result should be one coherent governance file—not a registry extract saying one thing, a copied labour contract saying another and bank access operating without recorded approval.