---
title: "Breach of Fiduciary Duty"
url: "https://legal.ge/en/service/dispute-resolution-and-litigation-en/breach-of-fiduciary-duty-en"
field: "Dispute Resolution & Litigation"
description: "Fiduciary duty under Georgia's Entrepreneurs Law: care, insolvency within 3 weeks, non-compete and corporate opportunity. Legal.ge."
reviewed: "2026-02-13"
updated: "2026-10-15"
publisher: "legal.ge"
---

# Breach of Fiduciary Duty

> Source: legal.ge, https://legal.ge/en/service/dispute-resolution-and-litigation-en/breach-of-fiduciary-duty-en

## The Content of the Duty of Care in the Entrepreneurs Law

The Law of Georgia on Entrepreneurs imposes on the managerial person of an entrepreneurial society duties of a special, fiduciary character. Under the first part of Article 50, the managerial person must direct the affairs of the society lawfully and with the diligence of a fair and conscientious manager — caring for it as an ordinary, prudent person would care under analogous conditions, with the belief that the action is economically most favorable to the society. This formulation unites three components: lawfulness, an objective standard of care, and the priority of the society's economic benefit.

Where the duty is breached, the managerial person answers to the society for damage caused by the culpable non-performance of the duty of good faith. The law draws an important boundary here: neither the charter nor a decision of the partners may limit the managerial person's liability for the intentional non-performance of this duty — protection against intentional harm cannot be secured either by the charter or by a resolution of the meeting.

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### By what standard is a manager's conduct judged?

By the diligence of a fair and conscientious manager: caring for the society as an ordinary prudent person would under analogous conditions, in the belief of economic benefit to the society.

### Is commercial error punished?

No, if the decision was taken on sufficient and reliable information, in the society's interests, independently and free of conflicts — this is the freedom-of-decision rule.

### What awaits a manager upon insolvency?

Insolvency must be declared without culpable delay, no later than 3 weeks from the moment it arose, under the rehabilitation-law procedure.

### What do the non-compete and opportunity norms prohibit?

Without consent, carrying on the same activity and taking the society's business opportunity are forbidden; both obligations survive dismissal for no more than 3 years.