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Activities to be Licensed and Licensing Agencies. The types of business activities that require obtaining a license and the respective state licensing agencies are as follows:

1. Insurance activities and intermediary (agency) services in the field of insurance – Insurance State Supervision Service of Georgia;

2. Banking activities, activities of foreign currency exchange points – National Bank of Georgia;

3. Production, repair of and trading with arms and ammunition – Ministry of Justice of Georgia (within the limits defined by National Security Council of Georgia);

4. Air transportation of passengers and goods or/and carrying out aviation related work at the territory of Georgia, maritime transportation and hauling – Ministry of Transport and Communications of Georgia;

5. Activities of the regulated participants of the securities market (brokerage companies, brokers, stock exchanges, central securities depositary and securities registrars) – Ministry of Finance of Georgia;

6. Organizing lotteries and other money-making games – Ministry of Finance of Georgia;

7. Production of medicines and substances that are subject to special control, medicines used in veterinary, activities of health care organizations – Ministry of Labor, Health and Social Protection;

8. Activities of diagnostic centers for technical examination of motor vehicles –Ministry of Internal Affairs of Georgia;

9. Design - construction works – Ministry of Urbanization and Construction of Georgia (in the cases defined by the law);

10. Activities of auditing firms – Parliamentary Council on Audit Activity of Georgia;

11. Activities of private educational institutions – Ministry of Education of Georgia;

12. Production and repair of metrological and measurement equipment – Department of Standardization, Metrology and Certification of Georgia;

13. Production of food products (including child's food products) and tobacco - Ministry of Agriculture and Food of Georgia.

Notification about Carrying Out Activities. The following fields of activities are subject for compulsory notification of the relevant state agencies as defined in this paragraph:

1. Activities related to precious metals, precious stones and their products – Testing Supervisory Inspection of Ministry of Finance of Georgia;

2. Aero photographing of the country's territory, creating state geodesic network, works related to the publication of maps and plans – State Department of Geodesy and Cartography;

3. Activities related to job finding services (including abroad) - Ministry of Labor, Health and Social Protection;

4. Geologic activities - State Department of Geology;

5. Transportation of passengers by a minicab – Relevant Department of local government (self-government) authorities;

6. Activities of public dining halls, which can simultaneously accommodate 25 persons or more - Relevant Department of local government (self-government) authorities.

The notification is made as a statement, which includes:

1. For an individual – data about the identification card of a citizen of Georgia, registration into enterprise register, occupation, home address);

2. For a legal entity - the company's name, legal status, location (legal address), name of authorized representative;

3. Indication about the type of activity and the place, where the person carries out this activity.

Within 15 days from starting the activity, a person is required to notify about starting this activity the relevant agency, which is obliged to issue a document certifying the receipt of such notification within 3 days after receiving the notification.

The Documentation that has to be Submitted for Obtaining a License. A license seeker submits a written application about obtaining the license to a licensing agency. The application about obtaining the license should include:

For an individual:

1. First name, last name, date and place of birth

2. Registration data from the registry

3. Registration number

4. Occupation

5. Work and home addresses

6. Type of license requested

7. Document proving the payment of license fee

For a legal entity:

1. Company name

2. Organizational-legal status

3. Legal address

4. First and last names of company representative

5. Type of license requested

6. Proof of payment for license fee

Licensing Fee. A license seeker pays a licensing fee for issuing a license certificate. The amount of a licensing fee, the procedure of its payment into the budget and claiming back is defined in "Law of Georgia on Licensing Fees". For issuing a copy of a license, the license holder covers the cost of making a copy of the license.

Duration of a License. A license is issued for an indefinite period of time. A license holder carries out the activity defined by the license since the date of making decision by the licensing agency about issuing the license. The transfer of a license to another person is prohibited.

License Register and its Maintenance. There are two types of license register: a) Departmental license register; and b) The state license register. A licensing agency enters the data related to a license into a departmental license register within 3 days after making the decision about issuing a license. The following data is recorded into a departmental license register:

For an individual:

1. Data about the holder of a license (first name, last name)

2. Home address

3. The type (types) of licensed activities

4. The number of a license and the date of issue

5. Data about suspending, resuming, revoking a license or issuing a copy of the license

For a legal entity:

1. Data about the holder of a license (the company's name)

2. The company's legal status

3. The data of the state registration

4. Location (legal address)

5. The data about making amendments into the company's name, legal status and location (legal address), as well as about the reorganization of the company

1. The type (types) of licensed activities

2. The number of a license and the date of issue

1. Data about suspending, resuming, revoking a license or issuing a copy of the license

1. Local Enterprises

1. Joint Stock Companies traded at Georgian Stock Exchange

First, we will analyse the aggregate figures concerning all Joint Stock Companies (JSC) traded at Georgian Stock Exchange (GSE) and then will present the data on individual enterprises.

Market Capitalization. The figures describing the market capitalization of all Joint Stock Companies traded at GSE are presented in Table 4.1.1.1:

Table 4.1.1.1 Market Capitalization of all JSCs

Year	2000	2001	2002
Market Capitalization (GEL)	66,799,785	184,017,886	218,402,008
Source: GSE

The more useful benchmark for judging the market performance of the private companies usually is the ratio of the market capitalization over the Gross Domestic Product (GDP) of that country. Figure 4.1.1.1 shows the values of this ratio for Georgia and also for other Eastern European (mainly former Soviet Block) countries, whose economies are in transition mode from the command economy to a market driven system likewise Georgia. It can be seen from this Figure that Georgian stock market is rather underdeveloped in comparison to other Eastern European countries, not to speak about the Western European Countries and the USA, which have much higher values of this ratio.

Fig. 4.1.1.1. Market Capitalization as % of GDP for Eastern European Countries, including Georgia

It is interesting to note that about 82.8% of the total market capitalization is formed by only 10 companies. The remaining 278 companies that are admitted for trading at the GSE constitute to only about 17.2% of the total market capitalization. This is shown in Fig. 4.1.1.2:

Fig. 4.1.1.2 Market Capitalization of 10 Leading Georgian Joint Stock Companies

Volume and Value of Trades. The figures given in Table 4.1.1.2 reflect the combined volume and value of trades of all Joint Stock Companies conducted at GSE since its inception to date.

Table 4.1.1.2 Volume & Value of Trades at GSE

Year	2000*	2001	2002	2003**
Volume of Trades (Shares)	4,354,640	10,862,784	11,418,196	5,103,555
Value of Trades (GEL)	5,892,326	13,077,244	8,401,206	1,398,781
* Apr. – Dec. 2000; ** Jan. – Oct. 2003. Source: GSE

Value Turnover. The value turnover is calculated by dividing the annual value of trades over the total market capitalization in that year. This is shown in Table 4.1.1.3 for years 2001 and 2002:

Table 4.1.1.3 Value Turnover at GSE

The large part of the total value of trades comes on the trading of the securities of 10 leading companies mentioned in the above. This is shown in Fig. 4.1.1.3:

Fig. 4.1.1.3 Value of Trades of 10 Leading Georgian Companies

Liquidity. All the factors considered in the previous paragraphs, i.e. Low Market Capitalization, low Volume and Value of Trades, and low Value Turnover, all indicate that there is little (or even no) liquidity at the GSE. Indeed, out of 282 companies, whose shares are currently admitted for trading at the GSE, the shares of only 93 companies (i.e. 33%) were traded in 2002. The shares of the remaining companies were not traded during the year at all. This is shown in Figure 4.1.1.4:

Fig. 4.1.1.4 Number of Admitted Companies Actually Traded in 2002

Even those companies, whose shares have been traded in the past, do not satisfy the requirements for getting listed at the GSE. The main listing criteria are: a) Company should be functioning for more than 3 years; b) Equity Capital of a company should be greater than 100,000 USD; and c) Company should be profitable for 2 years during the last 3-year period (GSE, 2003). Out of 282 companies, only 2 companies were listed at the GSE in 2001, while only 1 company has been left listed in 2002, after the GSE removed 1 company from the list. Furthermore, the total number of trades and therefore an average number of trades per trading session are also extremely low, as shown in Tab. 4.1.1.4:

Table 4.1.1.4 Average Number of Trades per Trading Session

In total, 309 trading sessions have been held during 2000 – 2003 and 3780 trades have been executed during this period. It then follows, that average number of trades per trading session (i.e. per day) is equal to 12. This figure gives some idea about the number of buyers and sellers participating in trades each day. Also note that the total number of the securities admitted for trading at the GSE is equal to 282. All these means that there are virtually no liquid shares at the GSE.

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