---
title: "Derivative Actions"
url: "https://legal.ge/en/service/dispute-resolution-and-litigation-en/derivative-actions-en"
field: "Dispute Resolution & Litigation"
description: "Derivative actions under the Entrepreneurship Code of Georgia: special auditor, the 90-day term, damages. Legal assistance from Legal.ge."
reviewed: "2026-02-13"
updated: "2026-10-24"
publisher: "legal.ge"
---

# Derivative Actions

> Source: legal.ge, https://legal.ge/en/service/dispute-resolution-and-litigation-en/derivative-actions-en

## The Essence of a Derivative Action

A derivative action is defined in the Entrepreneurship Code: one or several shareholders have the right to bring an action in their own name and for the benefit of the joint stock company in order to enforce a claim belonging to the company, including against the officials of the company — with a demand for compensation of damage caused to the company by their non-performance of duties, for the transfer of profit received in return for the caused damage, or for the renunciation of the right to receive such profit. The derivative character lies precisely in this: the action is brought by the shareholder, but the claim belongs to the company and is enforced for its benefit. An analogous route is provided for limited liability companies as well: under the relevant article, where a partner brings an action for the benefit of the company, the rules of the derivative action apply. In this way the law protects the interests of the enterprise where the organs of the company themselves avoided or were unable to initiate a dispute against its officials.

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### What is a derivative action?

An action brought by a shareholder in his or her own name, for the benefit of the joint stock company, to enforce a claim belonging to the company, including against its officials.

### What is the role of the special auditor?

The auditor examines the economic activity of the company and draws written conclusions; upon the application of holders of at least 5 percent of the shares, the court may also appoint the auditor.

### How long is the waiting period after the application?

90 days from the written application, except in the case of a refusal or a risk of irreparable damage.

### Who reimburses the costs of the action?

With proper standing, the company within reasonable limits; with improper standing, the costs are borne by the shareholder.