Breach of Fiduciary Duty is one of the most critical aspects of corporate law, concerning the failure of company executives (directors, supervisory board members) to fulfill their obligations of trust. The "Law of Georgia on Entrepreneurs" strictly mandates that directors must act in good faith and primarily in the best interests of the company. A breach occurs when an executive harms the company for personal gain, misappropriates corporate opportunities, or acts under a conflict of interest. Such actions lead to personal financial liability. Unfortunately, abuse of power by directors is common in business, damaging shareholders and partners. Legal.ge offers access to experienced corporate lawyers who will help you identify fiduciary breaches, gather evidence, and claim damages.
What Does Breach of Fiduciary Duty Service Cover?
This service focuses on protecting the company and its partners from dishonest management. Services include:
- Breach of Duty of Care: Cases where a director acted negligently or made an obviously unprofitable decision without proper analysis.
- Breach of Duty of Loyalty: Situations where a director acts in personal interest, e.g., signing a contract with a relative on terms harmful to the company.
- Misappropriation of Corporate Opportunity: Disputes where a director personally exploits a profitable project intended for the company.
- Conflict of Interest: Uncovering hidden deals and demanding their nullification.
- Claiming Damages: Preparing a lawsuit to recover losses caused to the company from the director's personal assets.
Real-World Scenarios Where You Need a Lawyer
For example, a company director signed a contract with a supplier charging 30% above market rates, and it turns out the supplier is the director's friend. This is a classic breach of the duty of loyalty. A lawyer will research market prices, establish the connection, and demand recovery of overpaid funds from the director. Another example: a director learned of a lucrative tender but participated with their own private firm instead of the company. This is misappropriation of a corporate opportunity. You need a lawyer to ensure the profit earned is returned to the company.
Georgian Legal Framework
Fiduciary duties are regulated by the "Law of Georgia on Entrepreneurs". The law establishes the "Business Judgment Rule," which protects a director from liability if they acted informedly and in good faith. However, if a conflict of interest or gross negligence is proven, this presumption does not apply. Director liability is joint and several if multiple persons were involved in the breach. The statute of limitations for such claims is typically 3 years.
The Process Step-by-Step
1. Audit and Investigation: Financial and legal analysis of suspicious transactions. 2. Evidence Gathering: Obtaining contracts, bank statements, and correspondence. 3. Internal Demand: Raising the issue at a partners' meeting and demanding an explanation. 4. Lawsuit: Filing a claim in court (often as a derivative action) for damages. 5. Freezing Assets: Seeking a freezing order on the director's personal property to secure the claim.
Why Choose a Specialist on Legal.ge?
Fiduciary disputes are legally complex because it is hard to draw the line between ordinary business risk and intentional misconduct. On Legal.ge, you will find corporate law experts capable of piercing the corporate veil and holding guilty parties accountable.
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